patrick.net

JodyChunder says

bubblesburst says

I really don't care what price Zillow says it's worth (although it's not a bad feeling to show the property worth over $130,000 from what we paid). But honestly I don't care what Zillow shows it's worth.

With all due respect, there is no chance of this in San Diego. Sorry.

Huh??? I'm not sure if you read my post correctly. Indeed Zillow is showing a higher price than what I paid and it continues to go up on their website. Again I don't really care what price it shows but strange you're trying to imply I'm lying.

bubblesburst says

Huh??? I'm not sure if you read my post correctly. Indeed Zillow is showing a higher price than what I paid and it continues to go up on their website. Again I don't really care what price it shows but strange you're trying to imply I'm lying.

no sir. maybe just gullible. your house that you say you bought in 2011 did not appreciate by 130 thousand dollars. that is what i am saying. zillow is blowing smoke up your butt.

Yeah, I'm not saying it has appreciated by that much. To me I don't care what it shows it's worth. Like I said, I bought it for the long haul.

I CAN tell you that I wasn't impressed with the inventory when I was looking earlier this year. And All the homes that we seriously considered ALL sold. And this was in the $1 million range. There weren't many great houses that were move in ready in good zip codes in great school districts.

My main point is that some on this website act like house prices are going to fall another 30% and that just is NOT going to happen. I bought my house for 37% less than peak prices just a few short years ago and feel very comfortable buying now at these prices. I'm not saying prices can't fall a bit more because they certainly can. But I don't see them falling too much lower, at least where I live. I also take a good hard look at the rental market and it's very healthy here in San Diego and nice rentals are expensive here.

I'm not saying anyone needs to rush into buying as I think you'll have some good buying opportunities over the next year. However, if you see your dream house now...I reiterate it's a fine time to buy.

And to boot, to rent something for the same size, we'd be spending over $5,000 a month. I'm really happy with my decision to buy and love being a home owner. For us it definitely made sense buying now. I realize that isn't the case for everyone. But I agree with the OP when he says that probably he caught a lot of false crap last year for buying and people saying that he would regret it, prices would plummet, etc.

I've been VERY successful investing over the years. Like I said, the key thing is to realize you're NOT going to catch the absolute tops and absolute bottoms all the time.

bubblesburst says

I've been VERY successful investing over the years. Like I said, the key thing is to realize you're NOT going to catch the absolute tops and absolute bottoms all the time.

I hear what you are saying. I have to just say I disagree on one or two points of yours. For one I think house prices are still very very high. Now San Diego is a nice part of the country with a real nice climate but it was teh same deal a dozen years back as well when your gas and your food and your insurance bill and your health care and your electric and your sales tax were all several times cheaper than what they are now today. I was just looking at a receit I found in a book from 1997. I paid 93 cents for a gallon of gas for my lawn mower. I was recruiting for the National Guard in 1997 and we could not GET enough young men and women interested in enlisting. That is because employment was high, Clinton was in office and everyone was doing right pretty with $$$. Think on it. Interest rate does not explain it either so dont start.

now i say all this as a rich investor what owns 14 homes over three diff states.. six of them free and clear. what i mean by that is i am not arguing as a perma bear. i think there are some big cracks in the foundation and only a big old rug is whats been offered as a repair. and then another thinner rug so you dont feel the cracks so much. and then another rug and so on. in other words the foundation just keeps sinking but it feels like its less bad cause of that cushion. it is so thick under you feet that you could never belief that you got issues or that you hole house is fitting to cave in one day.

now let me say if you are happy then i can not argue happiness. happiness counts for something for damn sure. with women special. but words like happy and dream home got no place in the mind of a biz man like myself. i do not dream about houses but other things. that is where we are diff. For Example: if it were me and i really did think for one second that my house had gained even one half of 130 thousand I can tell you that baby would be on the block YESTERDAy no matter how happy I felt there!

Jody,

Sure you make some good points. Some I agree with. But I think therein lies the big difference. I'm also a businessman/investor. I own many properties in several different countries all paid for free and clear. But I think when you're buying a home to live in for the foreseeable future, you don't really look at it as doing business. At least I don't.

I've bought and sold many investment properties but when I made the decision to buy my home that I will raise my family in, "happy and dream home" definitely do factor into the equation.

Even if someone offered me $250,000 or more than what I paid for the house, I'd turn them down. Buying it wasn't a business decision....

I can agree with your points if it's an investment property. I do have several investment properties where I wasn't even listing it for sale and someone came along and made me an offer and it was too good to pass up.

Remember when you have young kids, school districts factor in on your decision to buy and you don't want to move every few years and uproot them from rental property to rental property, most people aren't going to move for small (or even significant profits).

When I buy investment/rental properties I buy with my head and keep my heart totally out of it. But when I'm buying a property where my kids will grow up. Definitely I'm buying with my head but definitely the heart as well. I think that is normal.

I agree there are still fundamental problems in the real estate market, the government has too much intervention and other things. However, from a pure ROI standpoint, investors are still cleaning up right now buying properties and turning around and renting them. I know many, many, many people that have purchased in the past year and making excellent ROI on the properties they purchased.

So even if values fall a bit more, they are making excellent cash flow on these rental properties. Other investments aren't paying anything and for those that don't want to go all in the stock market, buying cash flow properties now can make a lot of sense as others have pointed out on this and other threads.

I own many rental properties and I'm sure glad that I bought them. On some of them I paid a small fortune for but it doesn't matter to me. They are paid off and the income they are generating is much more than any safe investments out there now.

I totally agree with many that in previous years it didn't make sense. All I'm saying is now isn't a TERRIBLE time to buy as some say. Could it go down a bit more? Sure. But I'm still saying you're most likely not going to catch the absolute bottoms all the time.

bubblesburst says

I know many, many, many people that have purchased in the past year and making excellent ROI on the properties they purchased.

all good and fair points here. but this last one especially. the only thing what bothers a guy about this is the old HERD mentality thing. i know ten more property investors for every one i knew five year back. we will see how tha t plays out. but i am still buying properties across the South West. nothing outisde of the states tho as that is over my head. going by what you put down here i think you got a good head for investment bubblebust. you will cont to do well.

bubblesburst says

I really don't care what price Zillow says it's worth (although it's not a bad feeling to show the property worth over $130,000 from what we paid). But honestly I don't care what Zillow shows it's worth.

HA HA HA HA HA!!! Zillow. Oh, that's rich. Obviously you DO care, or you wouldn't have mentioned it. Har, I wouldn't bank on what Zillow says if I were you.

Congrats.

I am in the process of purchasing a house in Scottsdale right now. As bubblesburst had experienced during their home buying process, we also saw a lot of crap on the market. The homes that were nice, sold in less than a month. People here are buying up the good homes, the crap is hanging around. We looked for the better part of 7-8 months before finding something we loved at the right price.

It'll be a good feeling having it free and clear in 10 years though which is the option we went with for the mortgage.

gameisrigged says

bubblesburst says

I really don't care what price Zillow says it's worth (although it's not a bad feeling to show the property worth over $130,000 from what we paid). But honestly I don't care what Zillow shows it's worth.

HA HA HA HA HA!!! Zillow. Oh, that's rich. Obviously you DO care, or you wouldn't have mentioned it. Har, I wouldn't bank on what Zillow says if I were you.

Honestly I don't care what price Zillow shows. That's the God's honest truth. It can be ridiculous both on the upside and also the downside. But I would equate it to a situation where you don't really care what someone you don't know says about you. Most people would rather be called beautiful vs. being called ugly. Or someone walking up to you and saying "your kid is really beautiful" vs. "boy your kid is ugly". In the end it's just a stranger's opinion but most people still would have something positive vs. something negative said about them. LOL. I look at Zillow the same way. :)

JodyChunder says

bubblesburst says

I know many, many, many people that have purchased in the past year and making excellent ROI on the properties they purchased.

all good and fair points here. but this last one especially. the only thing what bothers a guy about this is the old HERD mentality thing. i know ten more property investors for every one i knew five year back. we will see how tha t plays out. but i am still buying properties across the South West. nothing outisde of the states tho as that is over my head. going by what you put down here i think you got a good head for investment bubblebust. you will cont to do well.

Jody, definitely I understand the Herd mentality thing. Absolutely there are many more investors vs. 5 years back. But that all stems from the fact that real estate in many areas (not all) is starting to make sense from an ROI standpoint. Which clearly wasn't the case 5 years ago. Also, you have to factor in the fact that banks/CD's are paying almost nothing right now and won't for at least the next 2 years. So more people are more motivated to look for alternative investments that will spin off healthy cash flow. Real estate is certainly one of those ways which it sounds like you clearly know. I'm sure you, just as I do, enjoy getting those rental checks each and every month.

Definitely I'm NOT saying all areas are great to buy properties or especially investment properties. I was only talking about buying a principle home where you plan to live for the foreseeable future and only buying what you can comfortably afford. As far as investment properties go, I still don't see it as a GREAT investment in many areas. San Diego where I live is one of them. While property values have fallen 35% or more from peak.... I'm not buying investment properties here yet.

Most of the investors I know are buying properties in lower end less desirable cities like Sacramento. I have one friend that is buying tons of properties including multi-unit buildings in Sacramento and making a fortune.

GUAB says

I am in the process of purchasing a house in Scottsdale right now. As bubblesburst had experienced during their home buying process, we also saw a lot of crap on the market. The homes that were nice, sold in less than a month. People here are buying up the good homes, the crap is hanging around. We looked for the better part of 7-8 months before finding something we loved at the right price.

It'll be a good feeling having it free and clear in 10 years though which is the option we went with for the mortgage.

Yeah GUAB we looked for a long time and it wasn't easy to find a great property that was move in ready in the areas we were looking in. Some of the crappy listings from when we looked are STILL on the market mostly because there are still some sellers out there that are still in denial. We actually saw some listings where people were asking more than peak level prices. It was quite comical to see that sort of thing.

But it was a real struggle to find an excellent house at the same we were looking at (5 bedrooms) in a great school district. Again, everything we looked is gone.

Once sellers start getting realistic on the prices, they move fairly quick. An example here:

http://www.redfin.com/CA/San-Diego/8282-Top-O-The-Morning-Way-92127/home/6481654

On the other end of the spectrum you have crazy sellers that are in denial.

http://www.zillow.com/homedetails/13483-Ginger-Glen-Rd-San-Diego-CA-92130/69020328_zpid/

Zillow doesn't count REOs or short sales. So there's a chance once we get back to a normal market the estimate prices will be closer to reality..

ptiemann says

True in case of 'spending', but if he buys an asset, then his net worth should not have changed much at all.

I realized later that this was written without enough thought. Absolutely, you have the asset. So it gets down to the value of the asset which is the point dodgerfanjohn had been making.

I appreciate your point about "spending" though. If you pay cash for land/house, it's part of your net worth and will probably stay above zero in value.

Fantom says

By which I mean a process in which the engine is actually lifted from the engine bay so that the spark plugs and consumables can be changed.

A friend recently bought an '89 Testarossa. When i recounted this story to a friend who collects Corvettes, he said that type of engine service for a Ferrari is a "$100k" endeavor.

Tha Maranello is cool though!

Katy Perry says

your not dumb enough to believe you"ll be actually paying the price you Realturd told you over 30 years. look at the bottom of your loan paper work. Thats the price you really agreed to pay.

This is a really important part of real estate sales. NOBODY tells me, 'Hey I bought a house for price + interest!" But that's EXACTLY what they did. They fixate on the "price."

So, years later when they sell the place they subtract "price" from the sales price and claim that's how much they "made."

This is crazy, people! It's a strategy set out by people with lots of money to loan to make them even more money!

I'm amazed at how even I don't allow myself to enjoy my rental the way some people enjoy their loaned homes. I've been enjoying my rental more and more.

FunTime says

Fantom says

By which I mean a process in which the engine is actually lifted from the engine bay so that the spark plugs and consumables can be changed.

A friend recently bought an '89 Testarossa. When i recounted this story to a friend who collects Corvettes, he said that type of engine service for a Ferrari is a "$100k" endeavor.

Tha Maranello is cool though!

Wow wait a minute, why are you asking a Corvette guy for Ferrari advice? They naturally disdain each other and they might as well live on different planets.
engine service for a Testarossa is expensive, but its no where near $100k, even if its done at the Ferrari Stealership.

http://www.automobilemag.com/features/collectible_classic/1003_1984_1991_ferrari_testarossa/viewall.html
The engine needs to be removed every 30,000 miles (or five years) to change the timing belts and adjust the valves. While the twelve-cylinder is out, Garcia replaces all the seals, bearings, and wear parts. The procedure costs up to $8000. And then halfway between each major service is a minor one, which costs about half that much. That's hardly "minor."

bubblesburst says

Honestly I don't care what price Zillow shows. That's the God's honest truth. It can be ridiculous both on the upside and also the downside. But I would equate it to a situation where you don't really care what someone you don't know says about you. Most people would rather be called beautiful vs. being called ugly. Or someone walking up to you and saying "your kid is really beautiful" vs. "boy your kid is ugly". In the end it's just a stranger's opinion but most people still would have something positive vs. something negative said about them. LOL. I look at Zillow the same way. :)

Zillow is just a guess. Case in point: In a small suburbia, it thinks my parent's house is worth more than the neighbors, but it fails to acknowledge their fully finished basement in the sq. ft measurements, nor does it want to acknowledge their land is twice the size of my parents.

Zillow is crap, but it IS important when going to buy/sell a house since other people care about it. It's going to be that much harder to buy a house if Zillow appraises it too high, and harder to sell if Zillow considers it worthless.

Serpentor says

Wow wait a minute, why are you asking a Corvette guy for Ferrari advice? They naturally disdain each other and they might as well live on different planets.

I realize I'm now dragging this thread way off topic, but the Corvette guy just likes Corvettes in particular. He likes cars generally was an original DeLorean owner and owned a National Champion Top Alcohol race car.

I have no idea what type of engine work he thought was a hundred grand. Your estimate does sound really inexpensive though, considering another story my friend with the Testarossa told. He had the car delivered to the Bay Area and, in route, the delivery company broke the front windshield. My friend told me the replacement windshield was $9000! That's from the horses mouth. So I'm surprised even the belts in your scenario are less than the windshield. I know next to nothing about these subjects, so can neither defend or support what I heard. Both people own their own houses, so they might be exaggerating.

no engine maintenance work is worth a hundred grand unless you are talking about military jet engines.

Did you read my link? its not "MY estimate", its from a Ferrari specialist, in San Francisco of all places. Replacement parts cost money, especially large fragile parts on limited production cars. I'm not surprised the windshield was $9k, that seems like a fair price actually...but you can completely rebuild 2 Ferrari engines with $100k, not regular engine service.

SubOink says

Unlike the patrick.net predictions, I am not underwater, my house is not worthless or worth less and I am not hating life but loving it. Best decision ever. It feels good not to pay rent to somebody and making their retirement plan come true. This summer we did so many updates and improvements, would have never done that in a rental

Bravado when strong hastens decay.

SubOink says

People were predicting a year ago how screwed up I would be financially and how much I would regret having bought a house and how my house will have lost 20% in value etc etc etc ...well, the main posters from back then (like klarek and co) are nowhere to be found now. - THAT's the purpose of the post.

I never said anything of the sort. I ridiculed the lack of rationale you used on the biggest purchase of your live, and the pie-in-the-sky view you had on real estate. I also mocked you for your conspicuous consumption based on propaganda that had been spoon-fed to you by the pathetic weasels in the RE industry. I recall you seeking assurances and reinforcement from others for your thoughtless gamble, but I am not recalling any specific predictions about where you would be in one year, so I'm going to guess that's an arbitrary point for your self-congratulations.

If you want to attribute quotes to me or others, go for it. I for one do not recall anybody telling you that you'd be underwater within a year, but your jubilation at this moment is reminiscent of folks I know who bought in 2005 and were patting themselves on the back throughout 2006.

klarek says

I recall you seeking assurances and reinforcement from others for your thoughtless gamble

Please. "Thoughtless gamble?" He bought a house he wanted. How very thoughtless. Shame on him.

klarek says

I never said anything of the sort. I ridiculed the lack of rationale you used on the biggest purchase of your live, and the pie-in-the-sky view you had on real estate

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.

But like you said, it was a ridiculous rational spoon fed by a realtor....ok, klarek. Glad to have you back in full swing - we'll be doing this until my house is paid off...lol

klarek says

If you want to attribute quotes to me or others, go for it. I for one do not recall anybody telling you that you'd be underwater within a year, but your jubilation at this moment is reminiscent of folks I know who bought in 2005 and were patting themselves on the back throughout 2006.

You're memory is very bad. And folks that bought in 2005 and 2006 did not have a mortgage that was cheaper than renting but a mortgage that was double the rent.

But here I go again with this ridiculous rational...:)

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

by the way - HAPPY NEW YEAR!

SubOink says

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

Here's one example:
bubblesitter says
Wait 12 more months and you will be underwater. You should have got another rental.
/?p=623908

tiny tina says

SubOink says

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

Here's one example:

bubblesitter says

Wait 12 more months and you will be underwater. You should have got another rental.

/?p=623908

Nice work tiny Tina!!!

Bubble sitter will never admit that he was wrong. Very wrong! If I had listened to his advice I would be paying more now for a shitty rental.

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).