patrick.net

Again, I would caution you. It ain't over yet, so don't count them chickens.

But I wish you luck!

SubOink says

the lack of rationale like....uh...wow, this house is twice the size than my rental in a better neighborhood and the mortgage is what I pay in rent in the dump. How ridiculous of a rational...
And how ironic that now a year later, that house is actually cheaper than my rental ever was due to the refi. Saving more money than ever.

This is likely impossible without one of a few caveats that you for some reason are failing to disclose:

-You put 20% or more down...and considering the prices in Encino, were talking a minimum of $80K to meet this requirement.
-You were paying a ridiculous sum in rent.
-You moved from a very high demand area like South Pasadena, Santa Monica, or the Westside.
-You moved from a great school district.

As a for instance, my rent in downtown LA for a loft is around $1600/mo. Thats right around the average for downtown LA overall, and on the low side for the portion I live in.

To have a comparable ownership cost, just on mortgage:

$420K@20% down ~1600/mo payment
$350K@3.5% down ~1600/mo payment

So to get into a house at less than I pay in rent, I'd need to purchase a house in those price ranges.

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

And if I don't want a commute over 30 minutes, that leaves just a handfull of halfway safe neighborhoods in that price range...Highland Park, and El Sereno. Keep in mind that also means that I'm committing myself to living in a very small place...certainly under 1200 sq ft and likely under 1000 sq ft....for an extended period of time...until home prices increase by at least 12-15% or until such time as I can rent it out.

Note also that the entire game changes if I can get a home under 350K with 20% down or under ~$300K with 3.5% down as we are now talking about a ~$1350/mo mortgage...a payment point where renting at $1600-1700/mo actually yields quite a nice cashflow.

Thats around a 18% price decline and I don't really know if that will happen or not, but clearly you can see that the rent/mortgage ratio is not necessarily in favor of the home debtor.

dodgerfanjohn says

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

Actually, for an apples to apples comparison, you'd need to buy a loft/condo downtown, not a single family house outside of downtown, right? I no longer know what such loft/condos go for, however.

JG1 says

dodgerfanjohn says

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

Actually, for an apples to apples comparison, you'd need to buy a loft/condo downtown, not a single family house outside of downtown, right? I no longer know what such loft/condos go for, however.

I've done that before on this site and the answer was that it's not even close. Selling prices on equivalent units start at 300-350k with $600+ HOA. There's a few cash only building where prices are in the 100's.

But Suboink is using a house vs crap rental so I was trying to provide a equivalent comparison to that scenario.

Buy now or be priced out forevah!

How clever and creative of you ducky.

dodgerfanjohn says

But Suboink is using a house vs crap rental so I was trying to provide a equivalent comparison to that scenario.

I am using a house vs house comparison - the houses I could afford renting and now the house I can afford paying off. apples n apples. It just happens to be that compared to the house I bought my rental houses were rotten apples in comparison. Quality, size and neighborhood comparison.

Your comparison is apples an oranges on the other hand.

Where was the rental located?

I guess each individual situation is different. Glad it worked out well for you. Still too pricey for me in the Bay Area.

dodgerfanjohn says

Where was the rental located?

woodland hills

GameOver says

Game Over.

huh?

I agree - if Aliens come to invade us, the whole buying vs renting discussion is obsolete...

?!?!

SubOink says

I agree - if Aliens come to invade us, the whole buying vs renting discussion is obsolete...

?!?!

That depends on whether they are staying long term, and what their incomes are.

The sooner the masses learn WHY house prices became detached from reality, the sooner they will back away and wait for phenomenal values to return. In the meantime we must prepare to bailout the blind, or rich.

Literally, the trend shows housing prices going to zero, and below, so we should all wait until they are paying people to take houses, and then "buy".

I wonder if the price of tulips is more now than it was Feb 3, 1937?

Also, no one really needs tulips, they do need places to live.

Which the landlord has to buy or already own (not sell).

No, renters still have to live in and pick from the rental stock. Because this tends to be inferior, is one reason to own. And your landlord's problems are indirectly yours (it's like Democrats calling for high[er] taxes on corporations - which becomes a cost of doing business and is usually passed along to... the end consumer).

Not all problems can be passed along, but on the flip side no one I know of ever got rich renting, while the same cannot be said of owning.

There have been discussions here and on Redfin forums about renters buying because they couldn't find what they wanted, or got sick of tolerating their options.

That's true about passing on costs/losses, in the short term, for the individual renter. But as with corporate taxes, these costs usually, generally, over the long term, get passed along to renters as a whole. The cost of roof maintenance, repair, and replacement, and insurance on the rental, are all built into your rent payment.

The benefits of appreciation (when applicable, which is, historically, over time, usually), however, never get passed along to the renter.

And while SoCal is a bit of an unusual market, in most of the country, landlords make positive cash flow (profits) in addition to appreciation, which means that renters are not only losing out over time, but month to month as well. Of course, there are exceptions, it's better to rent than own when price depreciation is occurring, etc.

GameOver says

You say not all problems can be passed along, but in fact almost NO problems can be passed along from landlord to renter, since the renter ALWAYS has the option of simply picking-up stakes and moving on.

and when your landlord cant pay his debt? That's when it becomes your problem.

GameOver says

Good for you! I'm glad it's working out well and hope it continues to do so for you. All I can say is that I have a friend who bought a house last year too. It was a short, listed at $360K which after about 6 months of back & forth negotiating became $380K.

Now, a full year later, there are NEWER houses on the market with all the same amenities as my friend's; featuring BIGGER lots, MORE sq footage, in BETTER areas, and for LESS. Many of which are standard sales or REO's.
So there's DEFINITELY an advantage to waiting

As long as prices keep declining. But what makes you and your friend think you are better market timers than Wall Street, real estate developers, and other buyers and sellers? In other words, it just as easily, IMO, could have gone the other way, and eventually, in whatever particular market you are talking about, that day will come. Sure, it may be smart to wait til the bottom or even for the upswing - if you can figure out what this is. In the meantime, for most people, a place to live isn't and shouldn't be an investment, so timing the market and sitting on the sidelines forever doesn't make sense for most people.

Also, if the friend is married, does he regret that because he saw a prettier, younger girl walk by one day?

gameover - you seem to be in some sort of panic. What's the cause? Are you unemployed? Has your wife left you? You seem to be in a very dark place, I feel bad for you. It's called hysteria.

Things aren't nearly as bad as you say. Just go out, enjoy life. Book a flight to Hawaii...you'll notice that most of them are sold out. Buy an ipad...go to a very expensive restaurant, they are all packed with people enjoying life.

Everyone still has to eat, drive, live somewhere etc - nothing has changed. Car's need to be fixed, surgery's need to be performed, goods have to be produced etc...

Not sure where you get the idea of an implosion. I guess a meteor could fall out of the sky and crush us all.

You remind me of the guy that predicted that the world would end in 2011.

SubOink says

go to a very expensive restaurant, they are all packed with people enjoying life.

I notice that! I keep asking, 'where's the recession, why aren't these people at Denny's or at home?' whenever I walk into one.

toothfairy says

GameOver says

You say not all problems can be passed along, but in fact almost NO problems can be passed along from landlord to renter, since the renter ALWAYS has the option of simply picking-up stakes and moving on.

and when your landlord cant pay his debt? That's when it becomes your problem.

Which happened to a renter friend of mine. LL got foreclosed on, she had to move somewhere else.

SubOink says

Everyone still has to eat, drive, live somewhere etc - nothing has changed. Car's need to be fixed, surgery's need to be performed, goods have to be produced etc...

Not sure where you get the idea of an implosion. I guess a meteor could fall out of the sky and crush us all.

You remind me of the guy that predicted that the world would end in 2011.

In fact, housing-wise, of the two developer/investor types I know, one is holding rather than selling, and the other is buying. (I also know some flippers, who are flipping, but that are market agnostic, more or less.) So it's interesting to me that while many here who would be in the market for one house for themselves are waiting for prices to drop, the big boys - at least the two I refer to here, not much of a sample, I know - won't sell because he thinks a better time to sell will emerge later, and is buying, because he thinks now is a great time to buy, respectively.

GameOver says

SubOink says

What's the cause? Are you unemployed? Has your wife left you? You seem to be in a very dark place, I feel bad for you.

My tummy hurts. I need a belly rub AND a BJ. Hope you REALLY feel bad enough for me that you'd be willing to help me out with either one or the other?

No, I can't help you because I am too busy packing my stuff - in case the economy implodes...and the world as we know it ends. No time for belly rubbing, or BJ's.

Although, I could meet you at BJ's for a burger though. It's sunday so there is only going to be a 45min. wait...must be all people eating their last meal :)

Like I said, I am sorry you feel that way :)

GameOver says

NEWSFLASH: We've had a MENTAL RETARD as president (twice!) then a CORRUPT black dude and now it looks like next we'll be going with the polygamist cult member from America's homegrown make-believe religion..

We are probably going to be doing better soon because (a) business cycles come and go, and tend not to last forever, (b) the housing bubble burst recovery is either already here or will be one day, and (c) Obama's incompetence will likely earn him a ticket out of the WH this year.

As far as Bush, he was actually smarter than at least his last opponent, so if you were voting based on IQ, you would have to have chosen him, at least once, maybe twice:

http://isteve.blogspot.com/2005/06/my-article-on-john-f-kerrys-iq.html

And anyway, everyone agrees Nixon and Carter were smart, so picking presidents based on IQ, maybe not the best idea.

GameOver says

Thanks to some EXCELLENT tequila, I'm glad to report that I can't feel a single thing.

Ah, that explains a lot!

We were also going to have a couple of drinks and dinner tonight but we bailed because the restaurant we like to go to was too crowded due the "shitty" economy...(blink blink)

I agree Sub, if you can afford a home, go for it. The only problem is when you're negative equity and you have to move due to job relocation or something else. The work arounds for that don't fit every lifestyle or situation.

I also don't beleive a home has to be cheaper than renting a similiar unit. I'm not sure why Pat and others think this is a golden rule while he has no problem buying vehicles that depreciate every year. Nobody expects to buy a car and have it's value increase with inflation. They buy it expecting a 30% drop after a few years and nobody complains. A home doesn't have to be an investment just like everything else you buy in life isn't.

Good luck

GameOver

An imploding economy DOES NOT mean that the end of the world has arrived. It simply means your societal environment becomes crappier and crappier as your standard of living slides slowly into ThirdWorldhood status.

Not sure why I hear so many folks talk about their crappy standard of living or how it's sliding. Just the opposite. Ask your parents how many restaurants they had growing up, or how much a TV and car was inflation included. I remember a plasma TV cost 60,000 now it's 600 for a 50inch. Cell phones are out of the question but used to be only for the rich. I saw a samsung flip phone in the paper for $5 bucks. Considering that 60% of Americans are fat asses, I'm sure food prices aren't that much either. As far as real estate, I thought the US had some of the cheapest real estate amongst all non third world countries. Unemployment is at 8.5% and other countries like Bosnia is 40% and is normal for them. (according to this Bosnian guy so not for sure on that). I think the real problem with you and others is you compare yourself to rich people and their lavish life style and can't just be happy with a shack and food on the table like how your parents had it when supposedly everything was so much better, right?

well put, snyderkv

GameOver says

I never mentioned a high IQ score as a potential presidential candidate's requirement, I was simply commenting on GW's lack thereof.

I personally think we should go with the guy who's been CONSISTANT. Who holds the same clearly stated values TODAY that he did 30 years ago. Who actually FORESAW the economic bubble YEARS before it happened. In fact, he WARNED everyone and everyone laughed. They're STILL laughing today.

Is there some candidate that did this, you have in mind?

GWB, like him or not, was clearly of above average, but not genius level intelligence - in the 120s to 130s most likely. He was also far more consistent over time than Kerry, so again based on your own standards, if you were going to vote for either of the two candidates who had half a chance of winning in 2004, you'd have to have voted for Bush. Bush v Gore, one could reasonably differ on who was most consistent, I suppose. McCain v Obama, Obama had a lot less time to be consistent.

gameover, so you don't have an iphone 4S?

OMG, no wonder you think the economy is imploding :)

-message sent from my iphone 4S

.

GameOver says

YOU on the other hand seem to be one of those materialistic slobs who judges everything by the amount of 'stuff' you possess.

What's that Mr straw man? Wow I must of really hurt you. Sorry for giving you my opinion. If you disagree with me, you could have chosen different words over making yourself sound like a fool. I guess there is nothing more for us to discuss then.

I will go on record today to predict that there will be another economic bubble.

toothfairy says

I will go on record today to predict that there will be another economic bubble.

Good call tooth, bubbles happen before we see them. Next one might be the school loan bubble, energy bubble but most likely something we don't predict. Someone quote this for me

GameOver, You are taking this way too seriously.

game over hates kids, hates cars, hates progress, hates life, hates himself. Poor guy.

I wouldn't worry too much about what an individual like that thinks...

GameOver says

SubOink says

game over hates kids, hates cars, hates progress, hates life, hates himself. Poor guy.

I wouldn't worry too much about what an individual like that thinks...

Then it's settled. Have a nice day.

Boy, you showed me!! LOL.

SubOink says

game over hates kids, hates cars, hates progress, hates life, hates himself. Poor guy.

I wouldn't worry too much about what an individual like that thinks...

I don't know how many times he's going to ignore people before he actually commits to it. I kinda feel bad for him too.

Sorry to contribute to the derailing of this thread. Good luck everyone!