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If you are waiting to buy, how long do you expect to wait?


By 1sfrenter   Follow   Fri, 20 Apr 2012, 3:17am PDT   15,988 views   136 comments
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We need to move and are sick of renting, but worried that the market has another leg down. We've been waiting for this bubble to play itself out since 2001, are getting older, and don't plan on being lifelong renters.

If you've been waiting to buy, are you waiting indefinitely (as we have for the past 13 years) or do you have a time frame (ie., 6 months, 1 year).

If we buy we plan on staying 10-20 years, or forever, whichever come first.

Thanks to this website and a few other housing blogs, we didn't buy during the bubble. I have friends who did and are now seriously underwater and stuck.

Would hate to be the sucker that shoulda waited another 12 months. Waiting another 3-5 years isn't really an option, I'd like to quit being an amateur armchair economist and get on with my life and stop thinking about housing before I retire.

I know none of us have a RE crystal ball, but the group wisdom saved me from being a sucker 6 years ago when everyone else was behaving like lemmings.

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investor90   Mon, 23 Apr 2012, 4:07pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 97

"... and naturally they will coat the information to their advantage. You called this is "lying"..." "Coating" information is when you tell someone an OPINION based with no definitions required or assumed. Lying can be by COmission or Omission. Everyone can make an error. BUT WHEN an agent affirmatively states that the particular property in question has MULTIPLE HIGHER OFFERS and the property OWNER states that they have NEVER SEEN ANY offer, we have a little cognitive dissonance that I DEFINE AS LYING...especially if it is substantially the same lie used over and over again to unfairly (and probably illegal) attempt to deceive the buyer AND seller to the attempted financial advantage of the agent. I know BROKERS who brag about this practice... NO government agency cares. To enforces the law requires tenacity and diligence and caring about consumers. I am looking for those qualities, and they appear absent.

Melissa   Tue, 24 Apr 2012, 12:17am PDT   Share   Quote   Permalink   Like   Dislike     Comment 98

I'm looking in the other south bay (Los Angeles beach cities). I'll probably wait until about this time next year to evaluate the climate. I'm concerned that there is a lot of "propping up" going on in the economy for the elections. I don't know if we'll be able to see which way things are going by next Spring, but I'll re-evaluate then.

At this point, it seems like homes in my area are losing value (using Zillow with a big grain of salt), on average, more than I'm paying each month in rent.

I think the big influx of buyers right now are after fools gold.

I'm single, so it's easy enough to wait, although getting damned old.

noodlesphilly   Tue, 24 Apr 2012, 12:30am PDT   Share   Quote   Permalink   Like   Dislike     Comment 99

Melissa. I agree with you the big influx of buyers right now are after fools gold. I been on the side lines for 7 yrs .I been looking around no hurry to buy I sold in 2005 if I would have brought I would have loss money I am enjoing renting and will see how things work out I ok whatever happens in the housing market . I will just move around and see new places I AM OLD:) 60 And owned a few houses so I'm ok . I see new homes that I feel our over priced imho and I feel I won't get out as rates rise so I'm not buying. Only fools rush in .:) imho

Hysteresis   Tue, 24 Apr 2012, 2:48am PDT   Share   Quote   Permalink   Like   Dislike     Comment 100

noodlesphilly says

Only fools rush in .:) imho

+100000000000

ducsingle5313   Tue, 24 Apr 2012, 3:44am PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 101

Armchair economist comments re housing prices in the SF Bay Area. . . .

Prices have definitely dropped over the past few years, but the price of a single family home on the peninsula is still waaaay out of whack with income. Some will argue "that's the way it's always been", but I'd like to see some historical affordability data to back that up.

The question I like to ask is "How many residents of cities like Palo Alto could afford mortgage and property tax payments on their current home at current market prices and assessed values assuming they had 20% down?" My guess is less than half based on median family incomes for those cities. So you have to ask yourself where will the tens of thousands of 1% earners who can afford to buy these houses come from when baby boomers start to downsize or die?

It's possible Bay Area prices might drop substantially over the next 2-3 years if pent up foreclosures / short sales kick in, and/or potential sellers realize that prices aren't recovering any time soon and they decide to cut losses and move on. Higher interest rates might have an effect too.

If prices don't drop substantially over the next 2-3 years, the local market could be looking at a very prolonged decline. I just don't see enough high end job creation to soak up downsizing/dying baby boomer inventory long term.

I make $200-260k/year and rent a small house in a very nice neighborhood mid-peninsula for $2100/month including utilities. I have more than $150k set aside for a downpayment and auto-deposit $2k/month into a separate investment account, which is the difference between my rent and a mortgage payment. So I'm in a pretty good position to buy if the rent vs. buy math starts making more sense within the next couple of years. That being said, if the prolonged decline scenario looks to be more likely, I will probably move to a more affordable locale if suitable employment opportunities arise.

Hysteresis   Tue, 24 Apr 2012, 4:03am PDT   Share   Quote   Permalink   Like   Dislike     Comment 102

ducsingle5313 says

Prices have definitely dropped over the past few years, but the price of a single family home on the peninsula is still waaaay out of whack with income. Some will argue "that's the way it's always been",

but I'd like to see some historical affordability data to back that up.

http://housingcorrection.com/medianpricechart/CaseShillerAbsoluteVsMHICensus.htm

http:/s.redfin.com/t5/Bay-Area/santa-clara-affordability-1988-2011/td-p/229664

Melissa   Tue, 24 Apr 2012, 4:23am PDT   Share   Quote   Permalink   Like   Dislike     Comment 103

ducsingle5313 says

So you have to ask yourself where will the tens of thousands of 1% earners who can afford to buy these houses come from

This is a question I've pondered a bit myself. I am interested in Manhattan Beach (MB), although I don't think I'll end up there. Prices near the beach have dropped 10%, maybe 15% over all. The whole town has averaged closer to 25% drop. A friend who has a RE license told me not long ago that he's shocked at how many people keep coming who have the means to buy $2M+ houses. He thought they would have dried up by now, but they keep coming in droves. MB is a very desirable area; top schools, low crime, good commute for many, awesome beach weather, etc.

It seems that places like this are small enough, desirable enough, that they'll never exhaust the supply of 1%ers. There are $10M+ homes on the strand that sit idle most of the year. The owner comes with the family for a month or two here and there and the rest of the time they sit empty.

hanera   Tue, 24 Apr 2012, 5:50am PDT   Share   Quote   Permalink   Like   Dislike     Comment 104

ducsingle5313 says

So you have to ask yourself where will the tens of thousands of 1% earners who can afford to buy these houses come from when baby boomers start to downsize or die?

Did you consider those lucky high tech youths? Those working for FaceBook, Zynga, Apple, Google, Instagram, groupon, etc. Many could be like noodlephilly buy a few houses for rental income.

ducsingle5313   Tue, 24 Apr 2012, 6:48am PDT   Share   Quote   Permalink   Like   Dislike     Comment 105

Did you consider those lucky high tech youths? Those working for FaceBook, Zynga, Apple, Google, Instagram, groupon, etc. Many could be like noodlephilly buy a few houses for rental income.

I didn't see this happen during the dot-com heyday, and given what's happened to real estate prices over the past few years, I doubt it will happen now. Even if huge stock option gains filter down to the worker bees at those companies (and they typically don't), I doubt most 20-30 somethings want to be landlords as it's all the hassles of owning a house many times over. And rental property loans are recourse debt, so no free lunch if things go south.

myob   Tue, 24 Apr 2012, 10:23am PDT   Share   Quote   Permalink   Like   Dislike     Comment 106

I'm in the same boat as the OP. I've been renting since 1998, and renting a nice house since 2002, but it's getting too small for my growing family. Placing a bid recently showed me that there's a mania in housing on the peninsula right now, and short term, prices are going to increase, since the entire swath of land from about menlo park to sunnyvale is seeing a huge number of bids and lots of overbidding in desirable neighborhoods. I can put over $500k down without sacrificing my retirement savings and my family income qualifies me borrow around $2M if I want to be a debt slave, and it's depressing just how little that much money gets you around here. For $2.5M I could buy 400 median houses in Detroit :)

bmwman91   Tue, 24 Apr 2012, 11:06am PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 107

myob says

...and it's depressing just how little that much money gets you around here.

Yup. Is it any wonder that the rest of the nation considers CA, specifically the SF Bay Area, to be The Land of Fruits & Nuts?

David9   Tue, 24 Apr 2012, 1:09pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 108

I am going to wait a long F*cking time.

Please correct me if I am wrong. Did this property just sell for $12,482? Yes, that is twelve thousand, four hundred, and eighty two dollars.

It is now on the market for $255,000. That is two hundred, fifty five thousand dollars. oops forgot the property link http://www.redfin.com/CA/North-Hollywood/5604-Rhodes-Ave-91607/unit-304/home/5167637

Um, I didn't see this one either on Redfin.

thomas.wong1986   Tue, 24 Apr 2012, 1:26pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 109

E-man says

I love talking to older & retired folks. They can provide so much insights about the Silicon Valley in the last 40 years. In short, it was never affordable for an average Joe.

Clearly that was never true statement. IT WAS affordable.. even a on a single salary one could buy a decent home after the 1988 peak. The historical prices as you have seen prove that. Further more, we had a booming industry in the 70s and 80s which many ignored. It wasnt until after 2000 that everyone else notice SV. Than you had this massive bubble explode upwards... say beyond our histical norm.

thomas.wong1986   Tue, 24 Apr 2012, 1:30pm PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 110

bmwman91 says

Yup. Is it any wonder that the rest of the nation considers CA, specifically the SF Bay Area, to be The Land of Fruits & Nuts?

The rest of the nation, fruits and nuts, are the ones who migrated to California.. bearly 1 our of 4 Californians are actual natives.. the rest are from Mexico or the North East. Things were very very different here in prior decades..

Charlie dont surf here!

ducsingle5313   Tue, 24 Apr 2012, 2:51pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 111

ducsingle5313 says

And rental property loans are recourse debt, so no free lunch if things go south.

You may want to check your fact again.

E-man, you should do the same. Reference California Code of Civil Procedure section 580b. Note the language "of that dwelling occupied, entirely or in part, by the purchaser".

rooemoore   Tue, 24 Apr 2012, 3:03pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 112

hanera says

Did you consider those lucky high tech youths? Those working for FaceBook, Zynga, Apple, Google, Instagram, groupon, etc. Many could be like noodlephilly buy a few houses for rental income.

Well, Instagram has 13 employees, so I don't think that should be a problem.

Anyway, no matter the company, once it gets big enough the bean counters will come in and move jobs out of the area - or just cut them as new software allows them to. And Facebook, with an expected market cap of $100 billion+ has only 3000 employees. Yes there will be a lot of non-employees that will benefit but not like many are predicting. And let's face it, most who will get rich from Facebook (other than the employees) already own a home.

So, the nice areas of the peninsula will continue to go up. The rest will see more modest gains.

everything   Tue, 24 Apr 2012, 3:11pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 113

Since the RE crash, so many things have happened with local RE, MERS in some states, recourse in some states, the word is out, many foreclosures, and especially short sales are coming, where I do not know because I don't research it like some of you guys do, it still spells opportunity for the savvy, and knowing and I'm sure many investors are licking their chops with the most recent case-shiller data.

People need to remember, the girl chooses the man here, foreign girls marry the white man because he will let her do whatever she wants.

81 Sun, 22 Apr 2012 at 8:27 am Mail Quote Permalink Like Dislike (2)
hanera says
Helloeeze says
... why do white guys marry Asian women so often?

And yet hardly any white gals marry Asian men?

ducsingle5313   Tue, 24 Apr 2012, 3:29pm PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 114

I love talking to older & retired folks. They can provide so much insights about the Silicon Valley in the last 40 years. In short, it was never affordable for an average Joe.

E-man, you must be talking to older folks with alzheimer's. Plenty of average, middle class folks were able to purchase homes in Silicon Valley during the 70's and into the 80's.

Older people love to tell younger people how hard the older people had to work, how easy the younger folks have it these days, etc. And because older folks have mostly benefited from the run-up in Bay Area housing prices and Prop 13, they don't spend a lot of time thinking about the long term negative impacts to the younger generations.

For those of us non-average Joes who can afford to buy here, the question is whether we want to contribute to a massive transfer of wealth from Gen X/Y to Baby Boomers. This of course affects family planning (e.g., having kids) and retirement timing.

ducsingle5313   Tue, 24 Apr 2012, 3:45pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 115

One action rule. How often do you see lender pursuit judicial foreclosure in CA? :)

E-man, I don't have any data, but that would be a business decision for the lender. A judicial foreclosure on a rental property that is $10k underwater wouldn't be worthwhile. But when the stakes go up, a judicial foreclosure would be more likely. Plus there are lots of unemployed recent law school grads around to do the work at low cost.

But back to my original post, rental property loans are recourse. Whether the lender chooses to go that route is another thing.

chip_designer   Wed, 25 Apr 2012, 4:18am PDT   Share   Quote   Permalink   Like   Dislike     Comment 116

everything says

foreign girls marry the white man because he will let her do whatever she wants.

because they can also get greencard for sure.

clambo   Wed, 25 Apr 2012, 4:33am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 117

The asian guys are not as generally interesting to American women because they often lack masculine attributes. This is not genetic, it's imprinted upon them culturally. Of course, the flip side is they aren't obnoxious jerks, so for long term relationships the ladies eventually will gravitate to them.
All of the foreign women I have EVER met in California eventually located a guy to marry so they could stay. This is with just ONE exception since 1982.
Oh I've been introduced to a bunch myself.
I follow the old saw: "why buy the cow when you've got the milk?"
I've been offered cash for the trouble of marrying someone. It was getting pretty profitable but I said no for 1. moral reasons 2. legal liability 3. foolish pride.
I should have taken one up on the offer and bought more AAPL. Darnit.

edvard2   Wed, 25 Apr 2012, 5:11am PDT   Share   Quote   Permalink   Like   Dislike     Comment 118

Question: How come like at least 75% of the posts here talk about the Peninsula? The Bay Area is a huge metro and the Peninsula only takes up a small chunk of it...

dodgerfanjohn   Wed, 25 Apr 2012, 6:45am PDT   Share   Quote   Permalink   Like   Dislike     Comment 119

Edvard, same thing happened on the Westside Meltdown blog for west Los angeles area. Posts shifted at one point to almost entirely the North of Montana area in Santa Monica. A very small portion of the Westside.

Housing bulls *cough realtor* *cough desperate homedebtors* look for the exception when they gasp for air. Already the LA market has begun crumbling anew(right as we enter the peak selling season no less). The bulls gotta grasp at their few remaining straws in the BA first.

rootvg   Wed, 25 Apr 2012, 6:49am PDT   Share   Quote   Permalink   Like   Dislike     Comment 120

Melissa says

I'm looking in the other south bay (Los Angeles beach cities). I'll probably wait until about this time next year to evaluate the climate. I'm concerned that there is a lot of "propping up" going on in the economy for the elections. I don't know if we'll be able to see which way things are going by next Spring, but I'll re-evaluate then.

At this point, it seems like homes in my area are losing value (using Zillow with a big grain of salt), on average, more than I'm paying each month in rent.

I think the big influx of buyers right now are after fools gold.

I'm single, so it's easy enough to wait, although getting damned old.

Avalon? Are you on the island?

David9   Wed, 25 Apr 2012, 6:50am PDT   Share   Quote   Permalink   Like   Dislike     Comment 121

dodgerfanjohn says

Already the LA market has begun crumbling anew

About time. This is a first, a two bedroom two bath in Sherman Oaks for 159k. And, it is not trashed. (High HOA, but we know that.)

http://www.redfin.com/CA/Sherman-Oaks/4501-Cedros-Ave-91403/unit-126/home/4825527

edvard2   Wed, 25 Apr 2012, 7:05am PDT   Share   Quote   Permalink   Like   Dislike     Comment 122

dodgerfanjohn says

Edvard, same thing happened on the Westside Meltdown blog for west Los angeles area. Posts shifted at one point to almost entirely the North of Montana area in Santa Monica. A very small portion of the Westside.

I think it might also be because even though places like the east bay and other areas in the Bay Area are still expensive and for the most part overpriced, they did cool quite a bit. The Peninsula on the other hand is still nutty and I think that draws people's attention.

clambo   Wed, 25 Apr 2012, 7:26am PDT   Share   Quote   Permalink   Like (2)   Dislike     Comment 123

Peninsula prices are caused by the 1. guys making just enough money to qualify for the mortgage 2. the social climbing females pressing them into the market 3.the females short-circuiting the brains of the men by direct stimulation of the hypothalamus. 4. men reacting to hypothalamus tickling by females and wanting to "keep her" and thereby buying the over-priced house.
The wages are high enough so the guys will keep struggling to buy.

bmwman91   Wed, 25 Apr 2012, 7:30am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 124

clambo says

Peninsula prices are caused by the 1. guys making just enough money to qualify for the mortgage 2. the social climbing females pressing them into the market 3.the females short-circuiting the brains of the men by direct stimulation of the hypothalamus. 4. men reacting to hypothalamus tickling by females and wanting to "keep her" and thereby buying the over-priced house.
The wages are high enough so the guys will keep struggling to buy.

My god, we must know completely different women. Or maybe men...what sort of spineless loser lets himself be controlled like that? While I would believe that a lot of house-buying inevitably gets driven by the woman, I sort of doubt that gold-diggers / "tiger moms" are the ones behind the peninsula price lunacy.

clambo   Wed, 25 Apr 2012, 7:44am PDT   Share   Quote   Permalink   Like   Dislike     Comment 125

yeah, and we must also know completely different men too.
I think the prices are just high because the location is commuting distance to jobs and of course, foreign women in particular do not care how much a house costs. I could relate an anecdote but I'll skip it for now.

clambo   Wed, 25 Apr 2012, 7:45am PDT   Share   Quote   Permalink   Like   Dislike     Comment 126

hardly any guys I know who are married have to fulfill the dreams of a nice female. They just like to struggle for its own sake.
How silly of me.

bmwman91   Wed, 25 Apr 2012, 8:03am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 127

clambo says

because the location is commuting distance to jobs

Agreed, there. Some of it may be socio-political too. Super greenie weenies with money also flock there because it is full of them already. It's like a bug lamp for them or something. Lots of people also cite the "weather" as an attraction. I guess it is worth all that money to enjoy the lack of snow & humidity when walking between your office & car.

bmwman91   Wed, 25 Apr 2012, 8:05am PDT   Share   Quote   Permalink   Like   Dislike     Comment 128

clambo says

hardly any guys I know who are married have to fulfill the dreams of a nice female. They just like to struggle for its own sake.

How silly of me.

Sorry, you lost me a little here.

ducsingle5313   Wed, 25 Apr 2012, 10:56am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 129

Please stop with the comments about white dudes and Asian chicks. There are plenty of other forums for those discussions, and a lot of the comments are demeaning.

Back to our regularly televised program - - - I agree that women can have a big influence in a couple's decision to buy a home. And this can affect how long you are able to wait in a major way.

One co-worker's wife was hell bent on buying a home in Palo Alto because their kids (oldest is 2) need to go to the best schools. It took my co-worker several months and a lot of wasted time visiting open houses in PA to convince her that between her PhD and his JD, they were just too ghetto to buy there. They wound up buying in Los Altos instead.

Another co-worker's wife is having a kid. They had a nice Eichler in a decent area of Mountain View, but she insisted that they immediately buy a place in Los Altos, again playing the "best schools for the kid" card. Their new place might even be a little smaller than their old Mountain View house.

These are just two examples. Other (male) co-workers have told me that they would never have bought their houses if their wives hadn't insisted upon it.

I think men tend to be a lot more objective and less emotional about house purchases than women. Maybe it's a nesting thing. So those who are married might have a more difficult time remaining a renter.

rootvg   Wed, 25 Apr 2012, 11:11am PDT   Share   Quote   Permalink   Like   Dislike     Comment 130

dodgerfanjohn says

Edvard, same thing happened on the Westside Meltdown blog for west Los angeles area. Posts shifted at one point to almost entirely the North of Montana area in Santa Monica. A very small portion of the Westside.

Housing bulls *cough realtor* *cough desperate homedebtors* look for the exception when they gasp for air. Already the LA market has begun crumbling anew(right as we enter the peak selling season no less). The bulls gotta grasp at their few remaining straws in the BA first.

Here again, the rules don't change. If the house is priced according to market and is in an area where schools are good and where people want to live (versus where people end up by default), the house WILL sell.

With regard to LA...yes, Santa Clarita is an outlying area but had we not moved north it is without question where I would have bought. Most of the middle to senior executives where I worked at the time live there. We sweated during fire season but other than that, things were good. We liked them and they liked us.

B.A.C.A.H.   Wed, 25 Apr 2012, 11:36am PDT   Share   Quote   Permalink   Like   Dislike     Comment 131

edvard2 says

How come like at least 75% of the posts here talk about the Peninsula? The Bay Area is a huge metro and the Peninsula only takes up a small chunk of it...

Because it is The (coveted) Fortress. Areas outside of The Fortress are Silicon Valley versions of the Manhattanites' B 'n T.

rootvg   Wed, 25 Apr 2012, 1:13pm PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 132

bmwman91 says

myob says

...and it's depressing just how little that much money gets you around here.

Yup. Is it any wonder that the rest of the nation considers CA, specifically the SF Bay Area, to be The Land of Fruits & Nuts?

That's because money has no value here. There's too much of it.

freak80   Thu, 26 Apr 2012, 12:15am PDT   Share   Quote   Permalink   Like   Dislike     Comment 133

bmwman91 says

I guess it is worth all that money to enjoy the lack of snow & humidity when walking between your office & car.

Hilarious. It's also worth it to work in a windowless cubicle in coastal California rather than work in a windowless cubicle in Buffalo, NY.

freak80   Thu, 26 Apr 2012, 12:20am PDT   Share   Quote   Permalink   Like   Dislike     Comment 134

rootvg says

That's because money has no value here. There's too much of it.

Inflation.

Newly printed money from Fed -> Wall Street -> Tech IPOs -> Silicon Valley real estate

bmwman91   Thu, 26 Apr 2012, 10:00am PDT   Share   Quote   Permalink   Like   Dislike     Comment 135

wthrfrk80 says

Inflation.

Newly printed money from Fed -> Wall Street -> Tech IPOs -> Silicon Valley real estate

LOL

Sir, are you suggesting that our esteemed web service companies are somehow being fueled by funny money?

freak80   Thu, 26 Apr 2012, 1:36pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 136

bmwman91 says

Sir, are you suggesting that our esteemed web service companies are somehow being fueled by funny money?

Of course not. ;)

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