I am in Escrow, but extremely nervous now...what should I do.

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Submitted by andymajumder on April 27, 2010 - 5:22pm

I have been a member of this site for a while and waited for a while for home prices to be more affordable....though prices have gone down, I wouldn't call them affordable in the areas I would like to live in.
Finally, in the past few months we started looking for a house and just went into escrow today on a 1744 sqft townhouse in RB. Basically, I am paying late 2003 price on it...and looks like maybe able to lock in a very good rate this week, (rates went down today after the markets crashed). I have 20% down and can afford this house, though I will be spending much more than i used to while renting a 2 bedroom in Mira Mesa. I have been waiting for the shadow inventory for a while but just gave in I guess...

Just read this article today
http://blogs.wsj.com/economics/2010/04/2...

Makes me very nervous about buying a home. Should I just back out? My earnest money deposit is already in escrow.....
Though I can afford it, I am really scared that with the next leg down by deposit (hard earned money for the past 5 yrs will be gone).....

Submitted by SD Realtor on April 27, 2010 - 6:16pm.

You should be nervous. It is a very unsettling time to buy a home right now. I agree that the shadow inventory is disturbing but I am much more concerned about how things will be when the world comes to a realization that our country simply spends to much money and the bond market either collapses or interest rates move sharply upward. That will have a more profound effect, more then the inventory issue in my opinion. However the big question is, how long will this take to happen. Then again some people look at it like, they are happy to have a 5% mortgage when we could see way way way higher mortgages in the future, just how much will prices adjust is the real question and again, how long will this take. We have gotten good at kicking the can.

Submitted by Waiting to feel... on April 27, 2010 - 6:22pm.

Well, I'm trying to buy right now too. Part of me worries about pricing continuing to go up, and part of me worries about the double dip. Overall the consensus seems to be that prices will likely go down some more before they've totally bottomed out, but a lot depends on location and the type of property.

I'd say that if you were able to get 2003 pricing then you're probably OK for the long run. Could you live with it if the value of your townhome went down 10% more in the next year or so? Are you planning to be in the property for several years? Would you prefer to live there than the rental that you have now? If yes to all of those, then buy.

Good luck. I'll need it too.

Submitted by andymajumder on April 27, 2010 - 6:26pm.

I understand that....it is unsettling times, I came to the conclusion that FED would forcibly inflate our way through this, after all this is helicopter Ben in charge and everything he has done so far indicates that he believes deflation is a much bigger threat than inflation and reducing the value of our debt through infaltion is something he will continue to attempt.

If the bond market does collapse, what affect will that have on the dollar, wouldn't that crash too...in that case in dollar denomination home prices might go up even though the dollar will be worth much less...

Submitted by andymajumder on April 27, 2010 - 6:33pm.

Its late 2003 price...so its not that great a deal, there's a big difference between early 2003 prices and late (nov-dec 2003) prices...in fact the demand in the market for sub 500K houses is very strong (at least till the tax credits are there) and its almost impossible to get early 2003 price in Rancho Bernardo, 4S Ranch, Poway or Scripps Ranch unless the house has some serious issues.

Submitted by ctr70 on April 27, 2010 - 7:14pm.

I'm also making offers in central SD on the lower end (planning to eventually move out and turn into rental). I wonder if there is a "mini-bubble" from the tax credit (ends Friday). I've waited this long to buy, wondering if waiting another 3 days until the tax credit to expire would be smart:) People have a sense of urgency b/c of the tax credit and are willing to get in bidding wars driving a house up by $30k just to get a $8k credit! FHA buyers get crazy and they are tough to compete with. We have not seen a housing market with NO tax credit in like 2 years, so it may be interesting post tax credit. You couple the strong possibility of more inventory and it seems like the market has a high probability of softening in the 2nd half of 2010.

I'm looking at stuff that is more 2002 price points. I think the better parts of North County have not come down past 2003 yet.

When I study all the sold comps in the areas I'm looking in, you can REALLY see how the low end bottomed in 2009...in early 2009 people were getting stuff for 2000/2001 prices, especially when they paid cash.

Submitted by FormerSanDiegan on April 27, 2010 - 8:15pm.

What is your monthly PITI plus hoa ?
What could you get in rent for this property ?

If these numbers are reasonably close (e.g. rent being within a couple hundred bucks of PITI plus hoa) then you are in a good long-term position buying today at 2003 prices.

Submitted by scaredyclassic on April 27, 2010 - 8:28pm.

you should not be scared. I am not in the least bit nervous talking about your money. It's all gonna work out in the end. Sure you might, possibly, be underwater for a few years, but in 5, 6 years, you'll be floating nicely and you'll be socking away equity like there's no tomorrow. Everything's gonna be fine!

Submitted by scaredyclassic on April 27, 2010 - 8:29pm.

on the other hand, if we were talking about my money, I would be terrified.

Submitted by looking on April 27, 2010 - 8:34pm.

I am also in escrow after an extremely long time watching the market. I am also nervous and I fully expect that the prices of houses in the higher end areas will continue to go down in inflation-adjusted terms; however, I think the actual price may not drop that much. If it does, oh well. I need to get on with the rest of my life and things like school for my kids start to come into the picture. Good luck with whatever you choose to do.

BTW, I think the inventory will be dribbled out over a prolonged period depressing prices for 5-10 yrs. It's unclear to me whether inflation or the inventory will win out.

Submitted by scaredyclassic on April 27, 2010 - 8:39pm.

because we want inflation so badly we will not get it. until we give up on it and it comes roaring in so horrifically we just wat it to stop.

Submitted by AN on April 27, 2010 - 10:22pm.

You said you can afford the house. As long as you're prepared to stay in it for long term and ride out any down turn, you should be OK. You would also be better off if, like FSD said, compare your PITI vs rent of similar area. There's a cost of housing, be it renting or buying. No one really knows how this whole thing will play out. But you're already in escrow, so the ball is definitely rolling for you. I say, trust in your instinct and trust in yourself and your own decision. Take everything you read on here with a grain of salt. We all have your bias. Only you know what's right for you.

Submitted by HLS on April 27, 2010 - 10:36pm.

1. Are you looking at a 30 YR Fixed loan at 5% or below ?

2. Have you been told that with 25% down you might get a lower cost for the same rate ?

3. If you knew that a lower selling price would come with a higher interest rate but your payments were similar, would you still be "extremely nervous" ?

Submitted by ctr70 on April 28, 2010 - 6:25am.

I think that is some very smart advice to think what you would pay for rent for a house you would be happy living in, and compare to your PITI minus tax advantages(don't forget water bill + $100-$150/mo maintenance expenses in you PITI!) on the house you are buying.

Right now there is no reason to make a big jump in payment from going from renting to buying (plus lost interest you would get on the down payment investing it somewhere else other than the house). Especially if you think prices will remain flat for many years at the mid to high end.

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