Most everyone reading this blog is reading it because they are looking to purchase a home. I am wondering what it will take for you to take the plunge.
There are some facts we know and some we don't. We know prices have fallen considerably in the last 2 years. We know that prices in most of the IE are still above historical norms. We know the economy is in bad shape. Interest rates are still low. Inventory is still high. Sales numbers have picked up but they are still some of the lowest in the last 20 years.
We don't know how much farther the prices will still fall. We don't know what the interest rates will do in the future. We don't know how bad this recession will be. Some of us are in industries that may be affected by job losses (like me in defense) and we could lose our jobs.
So what will it take to get you to buy?
28 comments:
It will take until I can convince my husband (hi there if he's reading this) that although waiting until the market hits rock bottom would be ideal - sometimes you have to buy a house because you need a place to live.
I don't doubt that prices will continue to fall. I don't know where interest rates will go either. But we can not stay where we are at much longer, and we have to jump in at some point. I'm ready now - prices have dropped a ton, and interest rates are great. I know it's not the bottom, but after weighing all of the pros and cons, the scale has officially swayed to the "ready to jump in" side for me.
Of course that is also dependent upon getting a good deal and finding a house I love.
It would take prices to get down to about 3x's the average income of the specific area that I am looking to buy for me to jump in. Maybe even 4x the income. Prices are falling, and I don't feel like catching a falling knife. We still have a lot to go, just look at Japan's housing bubble, looks like we are following the same path.
I'm ready to buy now. I've waited since 2003 and I can't wait any longer for my sanity.
Prices are down 50% from peak in temecula and I put in an offer at $238,000 for a beautiful big foreclosed house.
I hope to have my own garage and nice house, its worth it to me even if it falls to zero, at least I have an affordable payment and my own roof over my head.
3x's the average income seems to a long time pattern. Why? Because it is sustainable.
Been renting for a year and a half and would like to buy but it is very hard to stand up to a train coming down the tracks at you. If I had bought six months ago I would have lost all my down payment.
What would it take to buy? 1. Capitulation of Banks or sellers. 2 A change in finance terms,i.e.,a return of AITD or Wrap financing. 3. A price that does not reflect bubble pricing but reflects the new reality that all of us will be getting by with less.
Not yet. I would rather wait til the prices are on their way up and the prices at this time are still too high for the IE.
After all, this IS the Inland Empire! Most people who are salaried types that can afford to make payments under $3K do not want to live in a 3 bedroom 2 bath composite roof with the neighborhood looking a potential demilitarized zone.
I sold our house in Diamond Bar in 2003 and I will wait for 1999 prices to come around. Absolutely no one believed me in 2007 that prices have to come down over 60% in the IE and that no house in the IE is worth more than 350K. If you run across one, then it must be one of those that simply forgot the old adage about Location, Location, Location... Most of the IE dwellers who bring in a decent income are commuters. Sure gas is going down and interest rates are in the talking stages to go lower. But jobs being as they are with Obama in office especially in the Defense Aerospace industries, I think that there will be more fence sitters sitting longer.
It is better to rent and not lose more money that you can save and not take a chance on ruining what could potentially be a 7 to 10 credit rating hit if one cannot pay mortgage payments. My recommendation I make to people is to save money now, downsize household budgets and only live on a cash basis.
What will get me off the fence? When home prices are 3X my annual income. The house and property should be of recent construction not needing of immediate repairs, the updates in the interior completed and the landscape immaculate.
I have to say I finally jumped in 3 weeks ago closing escrow in a week. I have been looking for at least a year in the Eastvale area Corona/ Mira Loma
After looking at probley 50 homes over the last 9 months or so
I found the killer house for our family.
Paid $98 a sq foot for it over 3400 sq and is turn key condition. I think it was a former model home.
I lucked out two weeks ago and the rates shot down and we locked at 5.25% of course I just heard about the 4.5% rates too I hope that they include refi in that program.
We didnt need to move either but as we kept looking at more and more homes you begin to get picky as to what you want in the home, floor plan, size, lot ect ect.
I do have to say I personally have not seen a single house pop up on Redfin that has caught my eye to even look at in the last two months so the process of reo as being bogged down.
There are great deal on the prices but what really might count is find the gem of a house or you end up waiting til it drops out more and you end up settling for something that you are not to excited over except the price.
Good luck to all and I will still check the blog from time to time. to see where everything ends up.
1st I gotta get there, (txfr there in Spring. I, er we (my wife and I) have been watching the housing plummet since mid '07. We've been monitoring everything from Chula Vista/Eastlake -Oceanside/Escondido on up to Temecula. My wife is enamoured with wine country, and it does seem to be the best bet in getting a nice house and not some stucco box. She wants be safe, and for me, that is worth the commute to SD. It seems most areas round San Diego have nice houses, yet a block away, bars on windows. My small-town girl won't live like that. As a bonus, I don't have the same concerns of job loss; course what I gain in job security, I probably eat in salary. So what would it take to buy: We're looking for a 4-6 BR (3 kids) with a lot over min 5000sq ft. Plenty of those around, so lets limit to turnkey/minor repair for less then $2000. I want that monthly 2$grand to cover the mortgage, tax, hoa, and, here's the kicker, basic utilities (w/s/g, elex). Bottom Schmottom, I don't care where the bottom falls (do think round 3x ann. income) As long as I can comfortably afford to live as I live now, only paying the bank instead of the landlord.
Methinks someone is not looking at the bigger picture...
We can do this!
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Do not "love" a house.
We made a very fair offer on an IE (high desert) house last weekend on a home thats been vacant for over a year. The bank has listed it about 30% higher than neighboring homes (for reason I cannot figure out). We made an offer OVER what I think its worth because it is close to our home (which we own free and clear). We make very good money, have reasonably safe jobs with long histories, have fico scores over 800, no debt, had approval letters from our lender, and we dont have to sell anything to purchase this home. The bank countered at almost full price and demanded that it close before Christmas. We were fine with the timeline, but until they come down in price, we're not budging. So the house sits empty. I'm told banks will not accept anything more than 2% off of listing price.
Listen to Bob Chapman, from 7:00-10:50,...
BOB Chapman Dec 5 2008 part 2
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Good luck!
hi everyone,
This is my first post. First and foremost, I just want to personally "thank you" golfer x for all the great posting the past 8 months I've been reading.
Bigdog, congratulation on the great find. I'm in the exact boat as you, if I can get a house in Eastvale around 98-105 sq/ft. I'm satisfy. I do want a large lot at least 8000 square feet. :) Anyhow, can we exchange email and offer some tips and insight on getting such a great deal. I've been outbid of at least 6 solid offers now...
For me, just finding a home for my family and live to I retire. But I'm not willing to play game with the bank. When the bank counter offer, I just tell them I don't want to waste there time, my first offer was my best, take it or leave it. I have no sympathy for banks. All they do is charge all these outrageous fees.
All good thoughts! I'm at the point where we will start seriously looking soon. I really don't care if I time the bottom perfectly. I expect the bottom to be loooong and flat. So waiting for prices to go up is not an option. I don't see that happening for 10 years. I lived through the last cycle and prices stayed flat for 5 years. I just don't want to buy and have the house go down $100k over the next few years. That would suck. I can live with it going down 30 or 40k and not lose any sleep.
3X the median is a good indicator. But remember that will be for a starter home. You're not going to get a 3000 s/f house in a nice area for $150k. Homes in my target areas will never be 3x the median income for Riverside or Corona. Just like they will not be 3X the median income in Laguna Beach.
I'm not ready to spend 3X our income. I'm looking to spend closer to 2X our income for the home I want. That way I will still have money to put into my 401K or go on vacation. Buying at 3X your income will not leave you much after you pay taxes and all your other bills. Been there, done that!
What do I want. I want a newer 3000 to 4000 s/f single story on a large lot. I need at least 4 bedrooms (3 kids). I need a 3 or 4 car garage minimum. And I'm looking to pay around $400K. In the last few months I am starting to see homes that fall into my target zone hit the market. Which is why I plan to start looking soon.
I will be looking for smokin deal. I will be firing the lowball canon. I don't care if I have to make 50 offers.
sean
email me at briandaniella@verizon.net
golfer_x - what are the zip codes you are looking at?
I'm looking in Norco Hills (92860) and South Corona (92883) primarily. But I'm also ok with Riverside (92503, 92504, 92506). The main reason I want Norco Hills or South Corona is to shorten my commute. Although that would make my wife's longer.
im ready to buy now...im flying in to socal thursday to make my final decision on which house and put my offer in. I personally like menifee...wide open spaces and not as congested as the rest of the ie. also, houses are cheaper. i think its a perfect lineup of prices and interest rates. of course, im paying $70 a square foot which i think is reasonable.
I've been reading your blog forever, but don't know that I've ever commented. When we can buy a nice house that totally meets our needs and with all the extras (HOA fees, taxes, some extra for maintenance) still be under what we are paying for rent now. We're currently renting in the OC and paying way too much money (in my mind anyway) towards someone else's mortgage.
I figure even if the market goes down more, we'll still be better off than renting a two bedroom to house a family of four, since rents still seem to be going up here and rent here isn't cheap.
I wouldn't be surprised if we make the jump in the next 6 months. Our only real time constraint is I want to be settled somewhere before my oldest starts kindergarten, so we've got a little under 2 years.
I may be one of the few. I'm waiting for the bottom and maybe even waiting for some up side in the market. Of course I was an owner once before and I know homeownership is more than just the excitement of buying. I'm looking to get into a particular neighborhood if possible. It is in an older area that has not hit 50% off the highs yet. I'm looking for a good price and I am even looking at taking a home I need to remodel. At this moment, I am thinking 2 or 3 years at the earliest but I also keep pushing back my timeline. I am not necessarily looking at 3x the median, as I am looking for price declines to stabilize. If that happens in the next few months, I will still wait because I think the government is trying to artifically inflate prices.
I am surpised at how many of you are willing to jump in with the economy the way it is and with the speed at which prices are declining. The question isn't where your house will decline in price but how much. I just wonder if some of you will be looking to sell in 2 or 3 years if prices continue to fall. Just think about how those who bought only a year ago feel. I know a few and I can tell they are disappointed.
I know this is the IE Blog but I wanted to give my OC perspective.
I am waiting for a Stadium Loft in Anaheim to drop to $200 a sq/ft.
I may consider a single family home in Chino Hills at $150 a sq/ft.
The stadium lofts? You must like looking at a huge hole (The one across the street where Lennar packed up and left town). Why not just lease of the new ones they are building next to the Grove? There's no way you could buy one of those for the cost of leasing. Not even remotely close. With condo's there is absolutely no reason to buy rather than lease except when they are quickly going up in value. LEASE!
I nearly moved out of the state last year because everything was becoming rediculous. Then I found all of the useful data on blogs like this and IHB.
I for one am starting to believe that home ownership may be the biggest lie in the american dream. I could also be jaded from all of the bubble blogs over the last two years, but you know what, most all of them show good deductive reasoning with supporting evidence for their cause. Plus I have become accustomed to calling in to my landlord for any repair work that needs to be done. I'm getting tired of going to my mother's house to do maintenance there, at least I don't have to do that at home.
My tipping point is if owning is cheaper than renting after taxes, tax credits, and maintenance and I fall in love with the house. I am looking at the 3x median income mark but my target house will be median (hopefully a single story) between 1500-2000 sqft. Also, in case we lose an income due to the economy (or child), the house will still be affordable. With all of the McMansions that went up, I think there may be a little excess on the higher end driving up the size of the median home.
The sick part is that rents in my complex right now have dropped 20% since May. I'm going to renegotiate when the lease comes up; but if rent is becoming cheaper, it is just ANOTHER factor in helping bring home prices back into equilibrium. It's also another reason for me to stay out because cash is such a wonderful thing.
Golfer_X, I have been a lurker since this blog's inception but I am a dedicated reader and appreaciate the work you put in.
~Scott "IE Renter"
I am almost to the point where I'm saying "The hell with it." I am actually in the OC but I'm from the IE (family's still there) so I like to keep an eye on it. If there were jobs for my husband out there (firmware engineer), we'd be looking in old Ontario/Upland right now. I want old neighborhoods with lots of trees, big lots and small houses. Those are hard to come by down here in hell - I mean, here in south county.
But I'm sick of watching & waiting in $#@&% south OC and so I think we're just going to buy an investment/rental somewhere we'd like to retire - maybe up in Owens Valley or near Sacramento in the foothills. I've gotten sick of this place and don't want to be tied to it anymore.
Might as well chime in...
I've been a reader for about a year. So first off, Golfer... thanks!
I've been in OC for most of my life. Apartment life has been the norm, and I'm just sick of sharing walls. Can't afford a home here...
McMansions don't bother me. I like newer homes, and I don't need a big-ass yard. No kids here, but a significant other, yes. I have been self-employed in a slow but sure business for many years, and the past few years have been much more prosperous.
The thing that KILLS me is that now I'm ready to buy, all those f'in a-holes that lied on stated loans screwed it up for me. My 800 fico doesn't mean s&*t now. Debt-free? SO WHAT! It's all about AGI, and anyone who is self-employed knows that write-offs are a staple. I CHOOSE to have write-offs that help my business to offset tax. I'd rather give my money to Apple than to the IRS.
So now, I've decided to take a fat tax hit in a month in order to bring up my AGI; in order to bring up the amount that I can qualify for. It's a game, but whatever...I'll play.
Funny thing is, I can afford a home in the IE currently since the prices have dropped so much, and now the the interest rates are taking a dive again.
Either way, I'm in very soon. It's a perfect storm brewing for first-time buyers. I'm over the babies freaking out to the left, the doors slamming to the right and the loud-ass family arguments in Hindi upstairs (no offense).
A four bedroom, 2 bath, approx. 2000 sq. ft., no pool home in Victoria Woods...at a reasonable price. This is an elusive beast, especially since my concept of "reasonable" becomes a lower and lower price each month.
Great job golferX, love your humor
too! We'll get off fence in next 2-3 months, Sliding prices have kept us from buying this year, but bottomline is we're paying too much for rent $3K plus, so come Jan we'll be out there hunting!
for those waiting for lower prices aren't you concerned that with all these mortage help programs and the programs not yet defined are going to put a severe slowdown in foreclosures? Foreclosures is what dropped the price so much. With all these programs, it is conceivable that prices, where they are now or may be in a month or two is going to be the lowest you get and in a year or two go up?
Most likely we'll wait at least until the end of 2009 unless they come up with some irresistable program for buyers.
In May of 2007, we put a solid offer on a house. It was our first and the only offer we ever put on any house. Luckily it was rejected. Thinking about what would've happened is really scary. Now we're very careful. This is one chance in a lifetime and one should not waste it. I know it's very tempting once your target house becomes in your price range, but the wait is worth it. The wait is annoying, but you can make yourself busy with something. Get a kitten!
Everybody, please remember that we're talking about the IE--the worst hit region. In addition, some IE areas have suffered a 60% price decline while others only 30. I would caution everybody who's looking to buy in the areas that have only declined about 30% and have gone to only 2004 levels. There's A LOT of room for more. Regarding Osa's comment, these programs are not working. Golfer-x has just posted on this. There are also the ARMs of '09 and all of the other factors often cited. I think in '09, we'll look back and say how expensive houses were in Dec. of '08.
I'm not at all worried about the market going up. There is no way prices are going up anytime soon. I'm willing to bet a months pay if anyone wants to take that bet! The slowdown in foreclosures is only due to the California AB1137 bill. They are still going up at record rates in the rest of the country. Once the banks streamline their processes the California numbers will pick back up too. The current crop of foreclosures are due to the credit market collapse and the bubble popping. There will soon be another wave hitting. That wave will be from owners that previously could afford their homes but are now unemployed. We have not even seen the start of this wave yet. Unemployed people are not going to qualify for even the most aggressive mortgage program.
Prices still have a way to go. It's anyone's guess if they will go down another 10% or 50%. My guess is that the areas like MoVal, Perris, Hemet, Murietta etc are within 10% of the bottom (10% from the lowest current prices). Riverside, Corona probably has another 20% or more to fall (from the current lowest priced sales).
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