patrick.net

Carolyn C says

In three months.

If you'd listened to me, you would have bought investment properties in Victor Valley that you'd be up 24% on today -- and your sad, taxed Californy dollars go a helluva lot further out here where I am.

I know. I should have acted sooner. Trust me, I keep kicking myself every time I go on Redfin.

Hmm, it looks more and more like a bubble.

lostand confused says

Hmm, it looks more and more like a bubble.

In some areas (SF Bay Area) it definitely is, but the question is always can the bubble outlast you, or will you outlast the bubble?

JFP says

lostand confused says

Hmm, it looks more and more like a bubble.

In some areas (SF Bay Area) it definitely is, but the question is always can the bubble outlast you, or will you outlast the bubble?

Unlike stocks , we can always move!!

Funny, the only thing I drink once in a great while is wine coolers. I never graduated to wine, and hate the taste of beer. As a matter of fact, I have a low tolerance to any chemicals. Way to call them Mark D. Is that D for Dum........?

YOY prices have been up for 13 months. I think it's safe to say at this point you missed the bottom. If you want to buy a house, then buy one. What's done is done. No sense beating yourself up over it.

I was going to buy in 2011 borrowing from retirement and put 3% down was afraid of the risk. A family member died in 2012 and I was not paying attention for a while. Bad timing.... Thank you all for your advice. In my mid 40s .... Will save and rent.

This concludes the meeting of the mutual masturbation society. Drive safely.

scott777 says

I was going to buy in 2011 borrowing from retirement and put 3% down was afraid of the risk

Probably just as well, then. That doesn't sound like it was really a great plan.

RentingForHalfTheCost says

Your problem is you are holding cash, which is a dying commodity. If you held quality stocks then it wouldn't matter over that same period then it wouldn't matter. Your 20% downpayment would actually get you more home.

This makes no sense. Let's say you were going to buy a house for $1 million and had a 20% down payment of $200,000. If the house went up 10% over the last year it now costs $1.1 million. If you held quality stocks that went up 10% your down payment is now $220,000. Your new loan increased by $80,000. If my math is correct you would have needed to earn a 50% stock market return on your down payment just to break even and have the same loan amount.

Homeboy says

YOY prices have been up for 13 months. I think it's safe to say at this point you missed the bottom. If you want to buy a house, then buy one. What's done is done. No sense beating yourself up over it.

This reminds me of the saying...."the bottom is always in the rearview mirror."

Homeboy says

scott777 says

I was going to buy in 2011 borrowing from retirement and put 3% down was afraid of the risk

Probably just as well, then. That doesn't sound like it was really a great plan.

I agree with this Scott. Man, you're not saving fast enough. Maybe it's time to marry up if you're single. You know, blink, blink.

E-man says

This reminds me of the saying...."the bottom is always in the rearview mirror."

Well, not really. I think he could have figured out prices were going up sooner, but like he said, there was a death in the family so he wasn't really focused on it. I'm just saying there's no reason to beat yourself up about it. There will be other opportunities.

Lets go with, housing follows inflation. People spend the same amount per month on housing, offers change and how much they can afford due to rates changes, but it all comes down to monthly payments.

Right now, we're probably getting back on track to following inflation. Housing isn't really a killer deal any more, but it's also still towards the bottom of the cycle. We're basically in year 1 of the boom, so you could easily buy still and know you're getting in at a price that won't be seen again (due to inflation).

There are good times to buy, better times to buy and not so great times to buy. We're still in the good times. It's not a "deal" anymore, but it's also not over priced.

My answer is "never buy and never retire, because the bottom is not in your rear view mirror. The young people who the baby boom is counting on funding their retirement have no leverage at all by which to eliminate their debt or cost of living."

Mandy Lifeboats says

scott777 says

We waited now home prices are up 30%....what now?

In Las Vegas, prices are skyrocketing and the rent is too damn high. In Vegas, you can't win ;-)

I bought in Vegas in Jan 13. The same home as mine a block away just sold for 100k more and that backs onto a highway. Vegas is an absolute paradise and after owning in the UK,Florida, Texas and SoCal this is by far the best area I have ever lived in and even if I won the Lottery wild horses would not drag me back to California.

There's a definite "buy now or be priced out forever" thing going on here. It's particularly bad in SoCal where inventory is barely there and buyers must compete with investors, foreigners with cash who want an anchor house, and other buyers. I'd say that unless you have a ton of cash or an insider connection, you won't even win a bid on a house here.

If the value is acceptable to you based on rent/buy comparison, then buy. If not, continue renting. No one can time the market perfectly, and no one on this blog or anywhere has timed anything perfectly.

This could be a bull run that won't slow down for years to come, or it could be a big head fake before the next down turn. There are valid reasons for going either way.

In the long run, real estate IMO is a great hedge. Even guys who bought in 2006, if they can hang on long enough, they will eventually come above water.

I don't live in OC, but out here in LA it all depends on the neighborhood you live in. We live in the valley, prices are at the 1990's levels out here. Our place is worth about 30 grand more than we paid for it back in the early 90's. In the heart of the city I hear prices are through the roof high. I'm sure it's similar to OC, just find a neighborhood you want to live in that you can afford comfortably. There are plenty around Southern California. Northern I hear is much more expensive.

FortWayne, it's the same here. Depends on the neighborhood. Places in Santa Ana, Stanton, or East Garden Grove are not all that much higher than there 2002-2003 prices.

South County OC though, from Irvine all the way down to San Clemente has gone through a mini-boom.

JodyChunder says

and your sad, taxed Californy dollars go a helluva lot further out here where I am.

for a reason :)

I drove a lot around Torrance, CA yesterday. For those of you that aren't aware, Torrance is a desirable suburb of Los Angeles. It's located in the South Bay area...not far from very nice beaches(10-20 minute drive depending where you live), features excellent schools, and is located near the engineering related companies in El Segundo and Manhatten Beach.

Torrance once was a middle class neighborhood, and still looks like it. But housing prices...generally starting in the $500-550K range for small 2bd/1ba houses.....and generally $450K+ for townhomes or condos plus HOA(there are a few lower priced, but with $500+ HOA's)..dictate that the incomes are largely upper middle class to lower high income. While I have no data to support this, prices seem to indicate that households mortgaging homes now, and in the past five years, have had incomes of at least $100K, and more likely $150-250K.

Now for the odd part(at least to me)...a number of these high income households have houses that are either uncared for, dilapidated, or otherwise look bad and are in shambles....neglected roofing, painting, no landscaping(weeds and brown in the yards). Some of these houses are basically falling apart. This extends even to the wealthy areas where homes are selling at $1million plus.

What it tells me...and obv I cannot totally substantiate this with data....but it seems clear...is that these households have stretched to get into the place they are living. And based on where incomes likely are, and what prices are at...there just isn't room for much more increase in prices. And I've noticed the cosmetic fixers sitting for a bit...not selling the first day with multiple offers. This does seem to fit in with what many...bulls and bears alike...here on Pat.net are saying...which is that housing prices are likely to level off at some point.

IE, theres never a "buy now or be priced out scenario" except in limited markets. For instance if you ONLY target a specific neighborhood and price range, depending on demand for that area, you CAN in fact get priced out if your income does not rise to the same level as others moving into that area.

For anyone else, its exactly as Goran says...buy if it makes sense to you to do so.

Quigley says

There's a definite "buy now or be priced out forever" thing going on here.

You're getting confused here. No one is saying buy now or get priced out, everyone is saying buy now, because it's not going to be coming back to this price, since it's below inflation.

You will be able to afford to buy for many more years, the buy now or be priced out will happen in about 3-4 years when people start panicing and the market takes off again. That's when that mantra starts up. The mantra today is buying now is a good deal that won't happen again. Far different from "everything is over priced, but only going to get higher!"

At this point, the best thing you can do is look purchase price vs annual rents ratio for properties in the same tier. If the ratio is under 15 annual rents, buying wins hands down, if it's in the 15-20 range, buying may very likely work out, if it's over 20, renting is likely to be better. Regarding prices rising rapidly in recent months, I heard the same scenario from my friend who is looking to buy in S.F. but the whole greed/fear thing that is associated with price movements is usually best tuned out, the truth and hence an appropriate decision is likely to be found in annual rents ratio. If you look at buying vs renting from lifetime housing costs angle first you are likely to make a much better choice vs looking at it from investment standpoint first. The latter will follow the former if the former is properly accounted for.

SubOink says

JodyChunder says

and your sad, taxed Californy dollars go a helluva lot further out here where I am.

for a reason :)

Well...yeah...

dodgerfanjohn says

Now for the odd part(at least to me)...a number of these high income households have houses that are either uncared for, dilapidated, or otherwise look bad and are in shambles....neglected roofing, painting, no landscaping(weeds and brown in the yards). Some of these houses are basically falling apart. This extends even to the wealthy areas where homes are selling at $1million plus.

You see this in Palo Alto also, but it usually is just elderly people who bought their houses decades ago, and haven't moved. The recent buyers tend to have plenty of money.

JFP says

dodgerfanjohn says

Now for the odd part(at least to me)...a number of these high income households have houses that are either uncared for, dilapidated, or otherwise look bad and are in shambles....neglected roofing, painting, no landscaping(weeds and brown in the yards). Some of these houses are basically falling apart. This extends even to the wealthy areas where homes are selling at $1million plus.

You see this in Palo Alto also, but it usually is just elderly people who bought their houses decades ago, and haven't moved. The recent buyers tend to have plenty of money.

Or mortgage holders that have already hit the max on their Home Depot credit card. Recent buyers have plenty of borrowed money, that is about all they got. 30 years of 8am-8pm working in the tech cube. All for a crab shack walking distance from a $5000 futon shop, $100 sushi meal, $25 burger, and a $8 latte. Steal!

JFP says

dodgerfanjohn
says

Now for the odd part(at least to me)...a number of these high income
households have houses that are either uncared for, dilapidated, or otherwise
look bad and are in shambles....neglected roofing, painting, no
landscaping(weeds and brown in the yards). Some of these houses are basically
falling apart. This extends even to the wealthy areas where homes are selling at
$1million plus.

You see this in Palo Alto also, but it usually is just elderly people who
bought their houses decades ago, and haven't moved. The recent buyers tend to
have plenty of money.

$800k house just sold on my street in April, and it's 6 people, multi-generational style, in a 3 bedroom house. I can't imagine what the arrangement is, but the '90s Target furniture I saw coming out of the moving van and bedsheet window treatments still up after a month don't scream nouveau riche to me.

I know, I know, only a single data point.

Philistine says

I know, I know, only a single data point.

I'm not arguing with you. I know nothing about where you live. I was just relating my experience in Palo Alto, and I would never claim Palo Alto is typical.

I'd be po'ed if I lived in an upscale neighborhood and multiple families moved in next door and let their house go to crap or remained in a crappy state.

If it was an older person who couldn't take care of things, it would be one thing. At minimum I'd take out their trash and cut and water my neighbors lawn under those circumstances. Probably paint the house and lightly landscape too. Unless they had turdburglar lazy kids who were capable of doing so but wouldn't.

But someone moving in three family members per room? At the least I'd toss my dogs crap into their yard.

Just this morning I sort of summed it up for myself in reaction to a much younger coworker who purchased a home in downtown Los Gatos years ago. I said, "If I had played my cards right, I could own a great house in a really great town, but back then I wasn't even playing cards." So there. I don't feel so bad anymore.

Oh my goodness! I feel like I'm back in second grade!

rufita11 says

Just this morning I sort of summed it up for myself in reaction to a much younger coworker who purchased a home in downtown Los Gatos years ago. I said, "If I had played my cards right, I could own a great house in a really great town, but back then I wasn't even playing cards." So there. I don't feel so bad anymore.

I bought mine in LG back in early 90s for 1/8 of todays cost. Some forget how much home prices were before the mania began. But trying to explain such prices to a New Yorker or Bostonian gets lost with their ego. They are not paying for Palo Alto or Los Gatos home.. they are paying for their idea of a Cambridge-Boston on the West Coast. It would have been better had they just moved to Hollywood if they have such egos.

lovelafayette says

RentingForHalfTheCost says

Your problem is you are holding cash, which is a dying commodity. If you held quality stocks then it wouldn't matter over that same period then it wouldn't matter. Your 20% downpayment would actually get you more home.

This makes no sense. Let's say you were going to buy a house for $1 million and had a 20% down payment of $200,000. If the house went up 10% over the last year it now costs $1.1 million. If you held quality stocks that went up 10% your down payment is now $220,000. Your new loan increased by $80,000. If my math is correct you would have needed to earn a 50% stock market return on your down payment just to break even and have the same loan amount.

Math is not RFHTC's strong point

dodgerfanjohn says

But someone moving in three family members per room? At the least I'd toss my dogs crap into their yard.

Very American of you.

thomaswong.1986 says

I bought mine in LG back in early 90s for 1/8 of todays cost. Some forget how much home prices were before the mania began.

Thomas -- people are much less averse to leverage these days. Debt is no longer a four letter word.

Philistine says

800k house just sold on my street in April, and it's 6 people, multi-generational style, in a 3 bedroom house.

Are you kidding me? 2 people per room is nothing. My parents raise 5 kids in a 3/2 1,100 square ft. house in a formerly great school district. We always had lots of friends over too (no wonder my dad converted half the garage into his office). It never seemed that small to little ones.

rufita11 says

Philistine says

800k house just sold on my street in April, and it's 6 people, multi-generational style, in a 3 bedroom house.

Are you kidding me? 2 people per room is nothing. My parents raise 5 kids in a 3/2 1,100 square ft. house in a formerly great school district. We always had lots of friends over too (no wonder my dad converted half the garage into his office). It never seemed that small to little ones.

We wound up a family of six, in what began as a 2/1 semi detatched,,,,make use of the space you have. What began as a large closet was made into a 3rd br, and eventually, my parents finished the attic and moved up there. I still don't get what peoples affliction is to thinking they need so much gotdam sq footage

thomaswong.1986 says

rufita11 says

Just this morning I sort of summed it up for myself in reaction to a much younger coworker who purchased a home in downtown Los Gatos years ago. I said, "If I had played my cards right, I could own a great house in a really great town, but back then I wasn't even playing cards." So there. I don't feel so bad anymore.

I bought mine in LG back in early 90s for 1/8 of todays cost. Some forget how much home prices were before the mania began. But trying to explain such prices to a New Yorker or Bostonian gets lost with their ego. They are not paying for Palo Alto or Los Gatos home.. they are paying for their idea of a Cambridge-Boston on the West Coast. It would have been better had they just moved to Hollywood if they have such egos.

Sounds like you've made a killing! This particular house must have appreciated more than average, since the norm in Santa Clara Co since early 90s is about 4x, not 8x. So since houses are so overpriced now, why not sell and rent? Especially if we are in bubble 2.0 or 3.0?