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SD Realtor
ParticipantAlex… aye caramba!
Guys lets get back to basics. Most of you here can skip this post.
When you hear people refer to a 30 year fixed rate loan, (amortized over 30 years) then the following applies; Your monthly payment is a combination of interest and principal. 30 years at 12 payments a year equals 360 payments. When you sign your loan docs you will see an amortization table. This table shows how much interest you pay each payment. You see that with each payment, you will see a bit more of the payment (a tiny tiny bit) be applied to principal compared to the previous payment. Why? Because the lenders want all or as much of the interest paid up front as possible.
Now I will refer to a 10 year interest only loan. This commonly means that you pay a FIXED rate that DOES NOT change or reset for 30 years. The difference is that for the first 10 years you do not pay any principal. You only pay interest. So your monthly payment for the first 10 years is lower then the loan I discussed above. Now after 10 years your payment will go up because you will start paying the principal.
What else is different? Well the biggest difference is the interest rate. The 30 year standard loan will be at a lower rate the then I/O loan. On the average 3/8% more. So your payment will be lower for the first 10 years of the I/O loan BUT over the life of the loan you will pay more sheer dollars in interest.
The moral? It makes NO SENSE AT ALL to get an I/O loan but to pay the principal on it for the first 10 years. Simply get the 30 year standard fixed rate loan and save some money.
SD Realtor
Participantsdcellar – no worries at all!
ddm – Both PQ and RB are served by the Poway school district. PQ kids go to Mt Carmel. As I may or may not have said I rented in PQ for awhile in Village Park. It was okay, not good, not bad. We all have our own tastes ya know what I mean? I will say that the noise from Black Mountain road was noticeable because of the canyon so we could hear it in our bedroom… However I am one of those really anal light sleepers and super sensitive to noise. It did not bug my wife…
Yeah the inventory in PQ is lower this year then last but as many of us have noted this is the case for many regions in the county. I can tell you I have been to many a listing appt where I show people comps and they say forget about it, we will just hold on to our home and not sell. The cheapest part of PQ is the northeast side near the Albertsons but I would recommend to stay on the west side if you can. If you have time, just sit tight as prices will definitely come down to your price range.
Per everyone elses thoughts, if you can wait another 2 years, awesome… if you can wait another year, good… I bet even by late this summer we will more inventory then we have this spring.
SD Realtor
Participantsdcellar – no worries at all!
ddm – Both PQ and RB are served by the Poway school district. PQ kids go to Mt Carmel. As I may or may not have said I rented in PQ for awhile in Village Park. It was okay, not good, not bad. We all have our own tastes ya know what I mean? I will say that the noise from Black Mountain road was noticeable because of the canyon so we could hear it in our bedroom… However I am one of those really anal light sleepers and super sensitive to noise. It did not bug my wife…
Yeah the inventory in PQ is lower this year then last but as many of us have noted this is the case for many regions in the county. I can tell you I have been to many a listing appt where I show people comps and they say forget about it, we will just hold on to our home and not sell. The cheapest part of PQ is the northeast side near the Albertsons but I would recommend to stay on the west side if you can. If you have time, just sit tight as prices will definitely come down to your price range.
Per everyone elses thoughts, if you can wait another 2 years, awesome… if you can wait another year, good… I bet even by late this summer we will more inventory then we have this spring.
SD Realtor
Participanthawk my family is in the same boat. I am in strong agreement with sdr that if you can wait for another 2 years you will find better pricing then you will currently get. We are in a cash accumulation mode as well and this month we will make the last payment on my wifes student loan. Personally we will not be able to hold out for 2 years before we buy for a variety of reasons but I would advise anyone who can wait to do so if the argument is one simply about pricing.
SD Realtor
Participanthawk my family is in the same boat. I am in strong agreement with sdr that if you can wait for another 2 years you will find better pricing then you will currently get. We are in a cash accumulation mode as well and this month we will make the last payment on my wifes student loan. Personally we will not be able to hold out for 2 years before we buy for a variety of reasons but I would advise anyone who can wait to do so if the argument is one simply about pricing.
SD Realtor
ParticipantHi sdcellar –
My question was not why PQ, it was what part of PQ. Many people select PQ primarly because of the Poway school district. PQ is pretty diverse racially. I have client and we submitted several lowball offers on PQ properties this spring that didn’t get accepted. He ended up getting a place in Sabre Springs but he also liked PQ. He was looking at pretty much most of PQ except old PQ (north east side of Black Mountain).
SD Realtor
ParticipantHi sdcellar –
My question was not why PQ, it was what part of PQ. Many people select PQ primarly because of the Poway school district. PQ is pretty diverse racially. I have client and we submitted several lowball offers on PQ properties this spring that didn’t get accepted. He ended up getting a place in Sabre Springs but he also liked PQ. He was looking at pretty much most of PQ except old PQ (north east side of Black Mountain).
SD Realtor
ParticipantHawk I would agree that depreciation on condos is without a doubt a much bigger risk then a sfr. No argument. If it is right for you and you know that going in then so be it. If you are thinking that maybe you are only gonna hold onto it a few years then you may want to be more cautious and hold off.
SDR what do you think of the older twin homes in La Costa Meadows? I don’t know why but I like them. They have nice sized yards, and I listed one last year that sold pretty quickly. The neighborhoods seem nice as well.
SD Realtor
ParticipantHawk I would agree that depreciation on condos is without a doubt a much bigger risk then a sfr. No argument. If it is right for you and you know that going in then so be it. If you are thinking that maybe you are only gonna hold onto it a few years then you may want to be more cautious and hold off.
SDR what do you think of the older twin homes in La Costa Meadows? I don’t know why but I like them. They have nice sized yards, and I listed one last year that sold pretty quickly. The neighborhoods seem nice as well.
SD Realtor
ParticipantActually she is into fixing things up but yeah I tried to tell her that the twin homes out there are few and far between and what is there, is well… well you know… She has a Park Village fixation and also is thinking alot about Summerhill.
The main point as you said is that townhomes out in 92024, especially of better quality seem to have held up well.
SSD Realtor
ParticipantActually she is into fixing things up but yeah I tried to tell her that the twin homes out there are few and far between and what is there, is well… well you know… She has a Park Village fixation and also is thinking alot about Summerhill.
The main point as you said is that townhomes out in 92024, especially of better quality seem to have held up well.
SSD Realtor
Participanthawk I also know Encinitas, not as well as sdr but pretty well. A very nice couple let me list their park village condo and it went very quickly. Lots of people came to look at it and they priced it to sell and it went. Indeed the attached homes in Encinitas have held up much much better then other attached homes throughout the county. It has good schools, it has character, and it seemingly is a desired destination for alot of people.
I have another client and she sold her condo in Hillcrest and has me on high alert for a townhome or a twin home in Encinitas. She is very specific about what she wants and as sdr said the inventory in Encinitas for townhomes is scarce at best. I even tried to show here some of the twin homes that are in 92009 like la costa meadows and that area and she is sticking to her guns and wants Encinitas.
I am agreement with everyone here that the market will continue to depreciate for the next few years. My only variation is that certain submarkets for certain types of homes will hold up better and some will plummet much worse.
The attached housing market in Encinitas has declined off the highs but not nearly as much as other attached housing submarkets. Whether that will continue to hold true is speculative but the demand is there and the supply is not so this bodes better at least for the short term.
She also would really love a detached home in Encinitas but they are out of here price range for now. Sounds like you guys are in the exact same boat.
SD Realtor
Participanthawk I also know Encinitas, not as well as sdr but pretty well. A very nice couple let me list their park village condo and it went very quickly. Lots of people came to look at it and they priced it to sell and it went. Indeed the attached homes in Encinitas have held up much much better then other attached homes throughout the county. It has good schools, it has character, and it seemingly is a desired destination for alot of people.
I have another client and she sold her condo in Hillcrest and has me on high alert for a townhome or a twin home in Encinitas. She is very specific about what she wants and as sdr said the inventory in Encinitas for townhomes is scarce at best. I even tried to show here some of the twin homes that are in 92009 like la costa meadows and that area and she is sticking to her guns and wants Encinitas.
I am agreement with everyone here that the market will continue to depreciate for the next few years. My only variation is that certain submarkets for certain types of homes will hold up better and some will plummet much worse.
The attached housing market in Encinitas has declined off the highs but not nearly as much as other attached housing submarkets. Whether that will continue to hold true is speculative but the demand is there and the supply is not so this bodes better at least for the short term.
She also would really love a detached home in Encinitas but they are out of here price range for now. Sounds like you guys are in the exact same boat.
SD Realtor
ParticipantPretty well said Rustico. The point here is that the IO is not for everyone. However there are many people out there who are sophisticated enough to take advantage of the IO. Most everyone I know who has used an IO actually can afford to make the payments on a standard fixed rate fully amortized loan.
My bottom line is this; If you cannot afford the home, don’t buy the home. If you cannot afford it now, if you won’t be able to afford it in 10 years then don’t buy it. If you are going to move in 5 years for sure, REGARDLESS of the housing market, then it makes sense to pay as little principal as possible. Common sense dictates a clear exit strategy regardless. Again, if all of you have neighbors and friends that have lived in their homes well beyond 10 years then that is great. My feelings are still that a higher percentage of sold homes are owned less then 10 years then over 10 years. I do not have any statistical data to back that up but I will take a sample of a zip code and look.
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