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renterclint
ParticipantWow, I didn’t realize how long that thread was… sorry about the novel. Thanks sdrealtor! Good luck to you as well.
ParticipantOops!! The thread got cut off…
Anyway $87k price was even less than market at that time. They even offered to sell to us on installment, holding the note themselves. Being the ever risk-averse accountant, I respectfully declined because the property would not quite cash-flow as a rental & finances were tight. Unbeknownst to me, this was a crucial step down the road to being a bitter So Cal renter.
Around 2005, we started looking to move back to SD. I found a unit in the same San Marcos condo complex selling for $380k. Despite the “sticker shock”, we decided to move back anyway. We sold our modest 4 bdrm home in South Spokane at a tidy gain, and my young family (3 small kids) moved in to a nice rental in La Costa where my monthly rent was slightly less than double my mortgage payment in Spokane.
I knew before we moved that we would not be able to own a home right away, but I honestly thought I did not care about owning a home anymore & as long as I was back in SD, I would be satisfied. I was wrong about that – I’ve been obsessed with owning a home since we returned.
I discovered Piggington just after moving back, and found Rich’s analysis to be very much in line with my suspicions about this over-inflated market. I’ve really enjoyed everyone’s analysis – especially perrychase, powayseller, bugs, sd realtor, sdrealtor, PD, sdduuuude, formersandiegan, and rankandfile. There are some brilliant people posting here.
After almost two years, we have decided to throw in the towel. We’re closing on a house back up in Washington in a couple of weeks. Despite myself & all I have learned here, I am really excited to be a home-owner again. Even with all the knowledge in this website, I personally feel renting really sucks!
I hope someday the San Diego market will return to fundamentals if not soon.
But for those of you living in other states wanting to move to Southern Cal, do your homework! Be aware almost EVERYTHING in your budget will be more costly than it is outside of California. Not just the obvious housing costs, but groceries, preschool, healthcare, car insurance, gas, etc… and for goodness sakes do not assume that because the weather is way, way better here that you will get a big break on your utility bill.
Even with all the extra costs, I believe San Diego is the best place in the country to live – just leave no stone unturned in your deciding whether it’s financially viable. Unless you make well into 6-figures, be prepared to rent for a long while. Please be aware that when you have kids, being okay with giving up your home to renting requires a different mindset. Sorry if this might all seem obvious, but it was not to me two years ago.
Thank you everyone! May you all find a decent home with a 30-yr fixed payment that you can live with!!
Warmest Regards,
RenterClint (soon to be HomeownerClint)
ParticipantOops!! The thread got cut off…
Anyway $87k price was even less than market at that time. They even offered to sell to us on installment, holding the note themselves. Being the ever risk-averse accountant, I respectfully declined because the property would not quite cash-flow as a rental & finances were tight. Unbeknownst to me, this was a crucial step down the road to being a bitter So Cal renter.
Around 2005, we started looking to move back to SD. I found a unit in the same San Marcos condo complex selling for $380k. Despite the “sticker shock”, we decided to move back anyway. We sold our modest 4 bdrm home in South Spokane at a tidy gain, and my young family (3 small kids) moved in to a nice rental in La Costa where my monthly rent was slightly less than double my mortgage payment in Spokane.
I knew before we moved that we would not be able to own a home right away, but I honestly thought I did not care about owning a home anymore & as long as I was back in SD, I would be satisfied. I was wrong about that – I’ve been obsessed with owning a home since we returned.
I discovered Piggington just after moving back, and found Rich’s analysis to be very much in line with my suspicions about this over-inflated market. I’ve really enjoyed everyone’s analysis – especially perrychase, powayseller, bugs, sd realtor, sdrealtor, PD, sdduuuude, formersandiegan, and rankandfile. There are some brilliant people posting here.
After almost two years, we have decided to throw in the towel. We’re closing on a house back up in Washington in a couple of weeks. Despite myself & all I have learned here, I am really excited to be a home-owner again. Even with all the knowledge in this website, I personally feel renting really sucks!
I hope someday the San Diego market will return to fundamentals if not soon.
But for those of you living in other states wanting to move to Southern Cal, do your homework! Be aware almost EVERYTHING in your budget will be more costly than it is outside of California. Not just the obvious housing costs, but groceries, preschool, healthcare, car insurance, gas, etc… and for goodness sakes do not assume that because the weather is way, way better here that you will get a big break on your utility bill.
Even with all the extra costs, I believe San Diego is the best place in the country to live – just leave no stone unturned in your deciding whether it’s financially viable. Unless you make well into 6-figures, be prepared to rent for a long while. Please be aware that when you have kids, being okay with giving up your home to renting requires a different mindset. Sorry if this might all seem obvious, but it was not to me two years ago.
Thank you everyone! May you all find a decent home with a 30-yr fixed payment that you can live with!!
Warmest Regards,
RenterClint (soon to be HomeownerClint)
ParticipantThanks for the info SDR!
And I appologize if I called your & Chris’s neighborhood “hoity toity”, afterall I am just a bitter renter. I personally think this is the best area of SD (I grew up in Escondido, so I know how less-desirable a lot areas can be…) The schools here flat out rock! I kind of feel like I’m just pretending though because as your data points out, the decline will not likely hit this area as hard, and I probably can’t even afford a condo. I’ve already started trying to sell my wife on the natural beauty of Texas…LOL!
Hipmatt, you said earlier…
“Some have assumed, that buyers in a tight spot will magically “figure out a budget” to allow them to afford ballooning payments. While if this was possible in theory, which it is not…”
I honestly hope your right (well I only sort of do, because this really means trouble for a lot of families which is sad – even if they made the stupid decisions in the first place), but this point of yours kind of speaks to the beginning topic that RottedOak was addressing. You are ASSUMING that these people do not have the ability to make it – no hard evidence to quantify how many & to what degree (because many of them could find a way). For example, maybe a good portion of these troubled borrowers are young families currently operating on a single income. IF (not necessarily when) they can not refi the problem down the road, maybe the non-working spouse can go back to work. I do not have any data to back that up, but I do not think you have evidence of the contrary. Maybe I am reaching a little too far here, but it is so common that posters will throw out a general point or two and then they finish with “it’s really going to get ugly” or whatever as if what they say has proven anything, which in many cases it has not.
ParticipantLurkor,
You are right about the “second approach” being the easier method. It would be great to just simplify all of the recent developments and say “we will revert to the mean”. When the dust finally settles, that could very well be the end result.
But what if all of the reasons we have sited for a major decline: ARM resets, RE industry job loss, HEW funds drying up, evil 80/20 & exotic loans… etc – what if the true proportion of the SD population effected (or is it affected?) by these factors is mostly insignificant? What if most of the homeowners here bought at the right time and are not in over their heads? Maybe the larger influx of wealthy foreigners moving in has caused SD to become the new San Francisco, and our underlying characteristics of our hometown are under a major transformation. Could it be that we will revert back to the mean, but “the mean” is now a redefined, less affordable mean?
I would love to see someone attempt to quantify the factors sited so often on this site. I for one am dying to know how many people who live on my hoity-toity La Costa Valley street are really under-water and at the verge of ruin. Maybe 50% or maybe only 1%. It would be interesting to know. I think I saw somewhere that 80% of purchases in the last 3 years where made w/ ARMs. And a large % (can’t remember the exact portion) were zero down. Could we apply this to the number of homes sold from ’04 to ’06 and come up w/ # of homes in trouble? That is probably simplifying things a bit. But it would be cool to see the results.
LA renter, you’re right about the impact of troubled borrowers who can find a way to survive – their disposable income is squeezed & there goes our local economy. But again how many people are we talking about?
ParticipantRotted Oak,
I like what you’re trying to do here. And I agree that there are a lot of folks here who make unfounded predictions throwing out huge % of decline without having a firm argument or explanation of how they quantified such declines.
Maybe those who site the re-setting ARMs & lack of equity can provide a way of applying the impact of these factors. It would be great to hear “3000 SD households or 35% of all current home-owners have less than 5% equity (95% financed), and of this group 85% are facing interest rate reset during 2007.” I would guess this type of info is not available, but if it were we could come a lot closer to having reference data to serve as inputs into your model, and come up with a slightly more meaningful prediction of the housing decline.
BTW, I do not believe that you can compare stock-market busts to our housing situation. Prices are much stickier on the way down for housing. People dump loser stocks pretty quickly – obviously they will not slash the price of their homes in the same manner. Stocks & houses are definitely apples & oranges.
Must-sell housing inventory will certainly put pressure on the whole market, but to what degree really? So many of us are banking on the foreclosures & short sales to drag the whole market down, but what if 90% of the home-owners actually have the ability adjust their personal budgets to hang on and keep their homes for the long haul? They will not sell if they do not have to. Will the other 10% really create a 40-50% in value? I am not so sure.
ParticipantDang it, Perry! It figures you would respond to the “never” comment. You, as usual, are correct. Never say never.
Your comment to meadondale about opportunity cost is sound, but I just wanted to echo meadondale in his response that many of us (especially w/ young families) do not focus on the investment aspect of house, but are looking for a “home” for the long-term.
Maybe us Alt-A folks are a little part of the problem like you say, but maybe the view that you have regarding housing is part of the problem as well. Afterall, looking at a home like it’s an investment is what fueled the speculative component of this bubble.
ParticipantJosh,
“As to my comment about entitlement, that merely comes from the tone and tenor of renterclints response to my post…”
That’s funny, we’re in some kind of loop here… I swear it was your first comment about “entitlement” that got me fired up in the first place. You rudely accused the initial poster of feeling entitled soley because he was looking into 100% financing.
The truth is I agree with most of your views on this issue. Bankers probably should not be assuming 100% of the risk in most cases(even though they often do at the moment). Homeownership IS a big responsibility, and the prospective borrower/buyer SHOULD show that he is ready to take on such responsibility.
Proof of a borrower worthiness does not soley come from their propensity to save $$. Personally, I’ve owned two homes so far, and I purchased both w/ less than 20% down, and the world did not come to an end. I just do not think it is necessary, and I do not think not having a big down means you are not worthy of getting financing. Does that really make me “entitled”? I live in crappy rentals & drive POS cars like yourself, but my situation is more like the intial poster. I have a “dead-beat” wife (hi, sweetie)& 3 kids. I do not save much, but I am still a fiscally responsible person.
When things come back to “normal” and tried & true lending practices are back (as they seem to be w/ a bullet), hopefully my meager 5 figure equity that I generated from my last home sale will likely be enough for a down-payment. If not, hopefully I’ll still find some crazy, reckless, fly-by-night outfit to finance 100% of the purchase. But I guarantee I will never miss a payment.
ParticipantBob G,
I regret my post that you are referring to. You are obviously neither ignorant nor the other thing. I appreciate your humor and I really apologize. In retrospect, my recent posts have not been the most civilized. I think I’ll keep my trap shut, chill out, & just lurk for while…
ParticipantBarnaby33,
“If you don’t have a down payment, you shouldn’t buy a house.”
Why do so many of you tie the notion of affordability and possesion of down payment together? They are not necessarily the same thing.
If my monthly budget allows me to pay $3,100/month on rent/mortgage, that means I can afford a $400k loan (PITI @ 8% int).
Whether I have the good fortune of having $80k sitting in the bank makes no difference as to what I can afford to pay.
What having the $80k for a down pmt DOES mean is I can buy a house for $480k rather than $400k. Down payment or not, I still have a $400k mortgage & I still have the same $3,100 check to pay each month.
Maybe 10 years ago when you could buy a starter home here for $150k, saving $30k was not to unreasonable, but expecting every first-time buyer to come to the table w/ $100k is just absurd.
I guess the point is that if we hadn’t deviated from good sense lending standards like the 20% down pmt deal, we would not be in this mess, and thus would not have to come up a six-figures down. But here we are – and some of us still want to own a home.
“Sense of entitlement” – really? You sound so damn pompous. If you are in a position to save that kind of $$ and have done so, good for you. Here’s your freakin’ cookie.
ParticipantBob G!
I’ve seen your posts elsewhere, and I was initially bewildered by the negative responses that you got with people questioning your intellect. After your comment above, I get it…
You start your comment boldly with “Hate to bust your balloon…” and your delivery is a quote from Zillow?!! Seriously, maybe you really an ignorant dipsh*t.
ParticipantYep. I agree.
One can get in to trouble comparing those two medians in that way. I believe the bubble has indeed been greatly exacerbated by easy lending, but that wasn’t the best angle to make my point. Anecdotally, I know several middle-earners who have bought in that last couple years (not all median homes mind you), but clearly MOST people in the middle range are not out buying $500k homes.
ParticipantHey,
I’ve actually seen some PS comments here & there. They are very short. I wouldn’t blame her if she has cut back b/c all the flack she gets around here. I do miss some of her threads – didn’t always agree, but at least she had an entertaining delivery.
Does anyone know the address to her new website?
ParticipantFutureSDguy,
Is 6% truly a “normal appreciation” rate? Aren’t most of these guys on this thread going into detail about how housing tracks long-term to inflation? Come on!
Bottom line, when you have a community with a median household income of $62k and the median house is selling for $500k+, something is seriously wrong. These median wage earners are still buying homes! They are focusing on monthly payment (an artificial introductory one at that…) which is why 1 out of every 3 homes is purchased with a Neg-am loans during the last year. I do not recall what the remaining 2/3 of buyers are using in SD, but I would bet that a majority of those loans are ARMs w/ below market intro rates.
The local SD bank I recently worked for had 80% of their portfolio in gimmick loans (Neg-am, teaser Arms, I/O). Why? Because they can! The regulators are a joke. The cheap $$ has allowed many, many of these around-the-median earners to get into houses they can not afford.
If the lending regs were tighter, these people could not get loans for $500k+. If these people could only get loans for what they could truly afford, they would not be able to buy an average tract home for half a freaking million dollars! If most people could not buy the median home at $500k, the price would never have gotten to that level in the first place.
Yes. It is not entirely the banks fault, but without the cheap money, I can almost guarantee this ridiculous bubble would not have gotten so large.
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