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temeculaguyParticipant
The greater fool theory is what caused the bubble but the same ignorant sheeple will cause it collapse. A portion won’t be allowed to line up because of their credit score and income. Another group won’t be able to line up because they lack a down payment. Future landlords won’t line up because it doesn’t pencil out. Speculators/flippers won’t line up because they don’t expect appreciation. High paying jobs are not being created and all demographic studies on migration indicate a flight of high earners and an influx of low wage/low skilled people. Some that could buy before, now can’t and some that would buy before won’t and there’s no new demographic on the horizon to save the day. Yes, your friend has a cash positive rental and he won’t be ruined if his property falls to 400k, when the tide goes out he will have a bathing suit on but not everyone will and they will drag him down just like they dragged him up. Baby boomers inheriting money cannot be counted on as a large enough group to keep things status quo. The ignorant sheeple have changed their mindset and they won’t change back for a few years (the wise investor beats them to it), the watercooler talk has switched from how much money your co-worker made in r/e to who’s in foreclosure, there’s no stopping the invisible hand of economics.
Another poster has said before that as soon as Time magazine puts a picture of a foreclosure on the cover and declares that real estate is dead, that’s when he will buy, more and more I am subscribing to that theory.
temeculaguyParticipantI’m with Perry, keep your cash at the ready and when you rent, read your lease and make sure you can get out of it without too much in penalties in case the right house comes along. It is too hard to pick a month or a year and say that will be the bottom for a specific area but 2010 is as good a guess as any however 2008 or 2009 might see some interesting events. The problem with what you want is that you have picked one of the most desirable areas (not just in the county but the country if not the world) and you won’t be the only one hunting for bargains. The premium areas aren’t immune but they tend to dip last and will have more support at lower levels, your window of time of to act will be short. Go to zillow and find properties that you like that sold in 2003 and that will be close to what you can expect in 2009. Even if everything goes to hell, there will still be people with money and that is where they will want to live.
temeculaguyParticipantI’m with Perry, keep your cash at the ready and when you rent, read your lease and make sure you can get out of it without too much in penalties in case the right house comes along. It is too hard to pick a month or a year and say that will be the bottom for a specific area but 2010 is as good a guess as any however 2008 or 2009 might see some interesting events. The problem with what you want is that you have picked one of the most desirable areas (not just in the county but the country if not the world) and you won’t be the only one hunting for bargains. The premium areas aren’t immune but they tend to dip last and will have more support at lower levels, your window of time of to act will be short. Go to zillow and find properties that you like that sold in 2003 and that will be close to what you can expect in 2009. Even if everything goes to hell, there will still be people with money and that is where they will want to live.
temeculaguyParticipantThe NAR shills will always talk like bhagdad bob but I was shocked to see how honest the home builders economist, David Seiders, was on t.v. yesterday. He dismissed the slight rise in median as not seasonally adjusted and “a problem with the data composition,” he tried early on in the piece to say we are through the lion share of the bad stuff but then said no recovery in 2007, it will get worse and maybe/maybe not in 2008. He admitted that there is more than just price discounting with builders, there are a lot of non price incentives and this will increase. Then he made the most honest statement I’ve seen from a paid spokesman “We really dug a big hole for ourselves starting in 2003 and going until early 2006, it is going to take some time to sort through this” and then something about it is hard to predict the bottom because there are factors at play that we have never experienced. He also said that prices have to come down further, the builders know this and the resellers are only just now understanding this.
If he keeps talking like this he is going to do two things, gain the respect of the average piggintonian and be out of a job.
temeculaguyParticipantThe NAR shills will always talk like bhagdad bob but I was shocked to see how honest the home builders economist, David Seiders, was on t.v. yesterday. He dismissed the slight rise in median as not seasonally adjusted and “a problem with the data composition,” he tried early on in the piece to say we are through the lion share of the bad stuff but then said no recovery in 2007, it will get worse and maybe/maybe not in 2008. He admitted that there is more than just price discounting with builders, there are a lot of non price incentives and this will increase. Then he made the most honest statement I’ve seen from a paid spokesman “We really dug a big hole for ourselves starting in 2003 and going until early 2006, it is going to take some time to sort through this” and then something about it is hard to predict the bottom because there are factors at play that we have never experienced. He also said that prices have to come down further, the builders know this and the resellers are only just now understanding this.
If he keeps talking like this he is going to do two things, gain the respect of the average piggintonian and be out of a job.
temeculaguyParticipantI looked at the data and my assumption was wrong because the sales are spread out too far. I was trying to remember my college days and what rents were, I remember in the mid 80’s paying 600-700 month for 2br/2ba rentals, not just at sdsu but in gangland within 5 miles of school. Compared to the areas I lived in, El Cajon would have been a step up (bed placement was always based on where stray gunfire was most likely to come from). I also remember in 1991 looking to buy my first house and the condo’s were close to 100k, even in Oceanside and Vista so it seemed har to believe that 40-60k was the price for a condo in El Cajon. During a down cycle there are always huge bargains to be found where rentals can be cash positive from day one and these may have been just that, too bad we missed it. I still hold to my assertion that you will see a time where the one you want will find it’s way below 150k and will not find it’s way below 100k.
temeculaguyParticipantI looked at the data and my assumption was wrong because the sales are spread out too far. I was trying to remember my college days and what rents were, I remember in the mid 80’s paying 600-700 month for 2br/2ba rentals, not just at sdsu but in gangland within 5 miles of school. Compared to the areas I lived in, El Cajon would have been a step up (bed placement was always based on where stray gunfire was most likely to come from). I also remember in 1991 looking to buy my first house and the condo’s were close to 100k, even in Oceanside and Vista so it seemed har to believe that 40-60k was the price for a condo in El Cajon. During a down cycle there are always huge bargains to be found where rentals can be cash positive from day one and these may have been just that, too bad we missed it. I still hold to my assertion that you will see a time where the one you want will find it’s way below 150k and will not find it’s way below 100k.
temeculaguyParticipantQuote taken from forbes/msnbc today
“Consider house hunters in San Diego. There, the single-family home market is experiencing a significant price correction. In 2006, the market dropped 4.5 percent. Renters pay 38 percent of the cost of an owner’s mortgage payment, according to data from Torto Wheaton Research, a research firm owned by CB Richard Ellis. That’s compared with 79 percent nationwide.”
The context was ten tips for first time buyers and never buy when rents are out of line with prices, the assumption is S.D. prices are twice what they should be but most of the country is fine.
I posted that quote on another thread and I think the reason there isn’t much action on this one is that this theme is running through about ten threads and is routinely rehashed, read through some of the older ones. The El Cajon condo blowout thread has a alot of pretty in depth analysis of rent to price ratios. It’s easier to get into specific situations. In that situation, rents are about 1k and prices just broke through below 200k but most feel 150k isn’t too far away. The more desirable areas are holding stronger and are futher in time from when they will feel the pinch so it’s hard to give a pure number in all areas right now. Good rule of thumb is the national average, 20% premium over rent makes people buy, even with rent makes most buy, but more than double rent should make you rent.
temeculaguyParticipantQuote taken from forbes/msnbc today
“Consider house hunters in San Diego. There, the single-family home market is experiencing a significant price correction. In 2006, the market dropped 4.5 percent. Renters pay 38 percent of the cost of an owner’s mortgage payment, according to data from Torto Wheaton Research, a research firm owned by CB Richard Ellis. That’s compared with 79 percent nationwide.”
The context was ten tips for first time buyers and never buy when rents are out of line with prices, the assumption is S.D. prices are twice what they should be but most of the country is fine.
I posted that quote on another thread and I think the reason there isn’t much action on this one is that this theme is running through about ten threads and is routinely rehashed, read through some of the older ones. The El Cajon condo blowout thread has a alot of pretty in depth analysis of rent to price ratios. It’s easier to get into specific situations. In that situation, rents are about 1k and prices just broke through below 200k but most feel 150k isn’t too far away. The more desirable areas are holding stronger and are futher in time from when they will feel the pinch so it’s hard to give a pure number in all areas right now. Good rule of thumb is the national average, 20% premium over rent makes people buy, even with rent makes most buy, but more than double rent should make you rent.
temeculaguyParticipantWhat is the total price to own and how much more is it compared to your $1065. I took this from a forbes article on msnbc, they used San Diego as the owrst case scenario about rent to purchase ratio. Both those are about 100k away from being within fundamental rent to mortgage ratios. also 700 sq ft will likely be outgrown real quick and you job isn’t locked in for more than another year, I wouldn’t buy in your situation even if prices were stable.
“Consider house hunters in San Diego. There, the single-family home market is experiencing a significant price correction. In 2006, the market dropped 4.5 percent. Renters pay 38 percent of the cost of an owner’s mortgage payment, according to data from Torto Wheaton Research, a research firm owned by CB Richard Ellis. That’s compared with 79 percent nationwide.”
temeculaguyParticipantWhat is the total price to own and how much more is it compared to your $1065. I took this from a forbes article on msnbc, they used San Diego as the owrst case scenario about rent to purchase ratio. Both those are about 100k away from being within fundamental rent to mortgage ratios. also 700 sq ft will likely be outgrown real quick and you job isn’t locked in for more than another year, I wouldn’t buy in your situation even if prices were stable.
“Consider house hunters in San Diego. There, the single-family home market is experiencing a significant price correction. In 2006, the market dropped 4.5 percent. Renters pay 38 percent of the cost of an owner’s mortgage payment, according to data from Torto Wheaton Research, a research firm owned by CB Richard Ellis. That’s compared with 79 percent nationwide.”
temeculaguyParticipantGary, you are correct that you are mistaken. Without going into all the gory details, the best way to run scenarios is to take yor tax software from last year and do a run through with some estimates if you were to have owned a house, then you can get real close to what you would have saved. If you don’t have tax software you can borrow 2006 turbo or tax cut or even find it dirt cheap in stores since it is obsolete now.
The big thing you missed was that even when you itemize you still get a deduction per person of 3,300. The standard deduction is not 16,9k it is 10,300k, then you add on 3300 per person but you wont lose that when itemizing. State, local and property taxes are also deductable when you itemize and not so when taking the standard so you probably come close to covering the threshold right there and all your interest would be over the top. Once you begin itemizing you can take a few more things that you weren’t (work expenses, safety deposit box, etc.) that you don’t get to when taking the standard, so it opens the door to other deductions. I didn’t own a house last year for the first time in a long while and my tax software still said it was better to itemize than go standard, so for me I know the entire mort interest will be above the threshold, best advice, run a pretend tax scenario and compare it to your real one. If you have this simple of a tax situation and you pay someone to do your taxes for you, stop doing that and do your own while it’s simple just for the education. save the receipt for the software, it’s deductable as well.
temeculaguyParticipantGary, you are correct that you are mistaken. Without going into all the gory details, the best way to run scenarios is to take yor tax software from last year and do a run through with some estimates if you were to have owned a house, then you can get real close to what you would have saved. If you don’t have tax software you can borrow 2006 turbo or tax cut or even find it dirt cheap in stores since it is obsolete now.
The big thing you missed was that even when you itemize you still get a deduction per person of 3,300. The standard deduction is not 16,9k it is 10,300k, then you add on 3300 per person but you wont lose that when itemizing. State, local and property taxes are also deductable when you itemize and not so when taking the standard so you probably come close to covering the threshold right there and all your interest would be over the top. Once you begin itemizing you can take a few more things that you weren’t (work expenses, safety deposit box, etc.) that you don’t get to when taking the standard, so it opens the door to other deductions. I didn’t own a house last year for the first time in a long while and my tax software still said it was better to itemize than go standard, so for me I know the entire mort interest will be above the threshold, best advice, run a pretend tax scenario and compare it to your real one. If you have this simple of a tax situation and you pay someone to do your taxes for you, stop doing that and do your own while it’s simple just for the education. save the receipt for the software, it’s deductable as well.
temeculaguyParticipantHere’s an easy way to figure out all the little details, Just look at the P&I vs. rent. The principle and interest doesn’t take into account the hoa, taxes, maint, ins., etc, but the tax deduction is about equal to all that so just compare the principal and interest to the average rents. When it is an absolute tie with a 20% downpayment it is time to buy, this represents a 20% margin over rent. If rent is 1900/mo then 360k is the correct price using this formula, adjust up and down based on current rents in the chosen area and house size. a purchase price of 600k is justified if rent is $3160, if rent is cheaper, then rent.
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