patrick.net

Simple! I was unemployed and didn't have the cash, nor the income to buy anything. I hunkered down and now I have a great job and no hope to buy anything for at least a few years until the next bloodbath. FML

LuckyMethod says

Simple! I was unemployed and didn't have the cash, nor the income to buy anything. I hunkered down and now I have a great job and no hope to buy anything for at least a few years until the next bloodbath. FML

No regrets for you. you didn't have a choice.

I honestly regret not getting a stupid loan right before the slaughter, I would be still living rent free now. Being "smart" sometimes really doesn't pay.

LuckyMethod says

I honestly regret not getting a stupid loan right before the slaughter, I would be still living rent free now. Being "smart" sometimes really doesn't pay.

Sometimes stupid people just get lucky but that does not mean they will not get slaughtered on their next stupid mistake. I insist you keep being sane and think that it was one time bad luck for all the sane people.

Bought our second place, a small foreclosure, in 2010, as a vacation home.

The next door neighbors just sold. I thought their asking price was absurd and that the house would sit empty. It sold in a month at 98 percent asking price.

That price was 50 percent higher than what we paid for our foreclosure. Our place is 10 percent larger, many years newer construction, and generally a nicer layout and curb appeal.

I am not complaining, but if we wanted to buy a larger place in the area as a primary home, we are looking at major bucks, I preferred the 2010 market.

Prices in Monterey don't seem to be that much higher than when I bought in 2011 and I'm pretty sure they're lower than they were in 2009/2010. I guess it all depends where you are.

jaldi1 says

To this day i can't believe what was the reasoning behind that statement.

The title of this thread should read Recency Bias.

It depends on the area, of course, but there are many metrics and trendlines one can analyze, starting with price histories. Yes, 2009 was a bargain for anyone who had been looking in 2004, sure; but that's a poor comparison. Compare 2009 to a healthy, pre-housing/credit bubble year like 1998 or 1999, and you can easily see 2009 was no big bargain. It just looks good compared to insanity, and insanity junior (disclaimer: I bought two venture SFHs in Adelanto in 2009).

The buying public is both an impatient and highly suggestible bunch. The mechanisms deployed by both the Fed and the Treasury immediately after the bust not only successfully manipulated RRE prices from ever normalizing, but also successfully manipulated public perception, and that's what I find most interesting today.

More so 2010.

JodyChunder says

The title of this thread should read Recency Bias.

It depends on the area, of course, but there are many metrics and trendlines one can analyze, starting with price histories. Yes, 2009 was a bargain for anyone who had been looking in 2004, sure; but that's a poor comparison. Compare 2009 to a healthy, pre-housing/credit bubble year like 1998 or 1999, and you can easily see 2009 was no big bargain. It just looks good compared to insanity, and insanity junior (disclaimer: I bought two venture SFHs in Adelanto in 2009).

The buying public is both an impatient and highly suggestible bunch. The mechanisms deployed by both the Fed and the Treasury immediately after the bust not only successfully manipulated RRE prices from ever normalizing, but also successfully manipulated public perception, and that's what I find most interesting today.

I agree 1999 was better, but for somebody who didn't have the opportunity to buy before the 2000 , 2009/10 presented excellent opportunity based on price to rent ratio. don't you think so ?

Depends on the location. My location was still overpriced in 2008-2011. Now it is more so (Boston's area fortress). I'll happily continue to rent our smaller place for about 1/3 of what I'd be paying in mortgage/property tax for a property I'd be willing to buy, and don't worry about renovating 100+ years old house. Being hit with AMT also means homedebtorship is less attractive (no property tax deduction unless I divorce my wife).

It took years for prices in the Bay Area to recede somewhat, so buying during the crash could have meant paying at or close to what the prices were at the peak. We bought last year, which might have been the bottom of the market here, a full 200,000 less than what the house was worth at the peak.

Its all about what works best for the individual. Nobody should make a decision because they read something somewhere that "suggests" a future outcome. In our case it was simply about dollars and cents. We rented the same house- for cheap- for 10 years. As of last year the interest rated got so low that money became cheap. As a result our mortgage is $100 more than our previous rent. In other words- close enough.

Would we buy now? Probably not. The market is crazy, competition is fierce, and prices have risen, erasing some of the advantages of lower interest rates.

unclemat says

Depends on the location. My location was still overpriced in 2008-2011. Now it is more so (Boston's area fortress). I'll happily continue to rent our smaller place for about 1/3 of what I'd be paying in mortgage/property tax for a property I'd be willing to buy, and don't worry about renovating 100+ years old house. Being hit with AMT also means homedebtorship is less attractive (no property tax deduction unless I divorce my wife).

I'm in almost the same boat. AMT sucks almost as much as overpriced 100+ year old houses.

JodyChunder says

It depends on the area, of course, but there are many metrics and trendlines
one can analyze, starting with price histories. Yes, 2009 was a bargain for
anyone who had been looking in 2004, sure; but that's a poor comparison. Compare
2009 to a healthy, pre-housing/credit bubble year like 1998 or 1999, and you can
easily see 2009 was no big bargain. It just looks good compared to insanity, and
insanity junior (disclaimer: I bought two venture SFHs in Adelanto in 2009).

The buying public is both an impatient and highly suggestible bunch. The
mechanisms deployed by both the Fed and the Treasury immediately after the bust
not only successfully manipulated RRE prices from ever normalizing, but also
successfully manipulated public perception, and that's what I find most
interesting today.

The mortgage rates today are insanely low compared to 1998, 1999 and I just bought a house in my area with price on the 1998, 1999 level. Was it a good deal? Maybe. Is it a healthy market? Probably not.

Jody, interesting thread...

Circumstance is probably the 1st dictator that kept people from buying, then emotion. Emotion will probably be the 1st dictator to peoples motive to buy in this market. For most in my diverse experience the #'s are something the majority do not simply understand or have skill set of any kind.

How many times do you hear something in regards to "I am waiting to see if I can get the loan"....lol or the potential buyer waiting for the lender to inform them what is affordable for them. Great one for lender who jacks the D/I and LTV ratios loading them up with leverage and leaving them with unhealthy margins.

If you are a serious buyer or thinking about it in most places you will be buying with the support of price confirmation (lower risk). I will let others judge rent/own ratios and their usefulness.

Mobi says

The mortgage rates today are insanely low compared to 1998, 1999 and I just bought a house in my area with price on the 1998, 1999 level. Was it a good deal? Maybe. Is it a healthy market? Probably not.

I think your golden, anyway that's what my thesis and #'s say.

I didn't buy until late 2012. I started looking in earnest in late 2011 because I had recently moved to Denver, had uncertainty with my job / long term plans, and didn't really have the down payment money to spare given my other priorities.

I missed the boat in some ways, but was fortunate enough to find something that ticked most of our boxes and was pretty inexpensive. I'm waist deep in plaster dust and swimming in cabinets, but it will be a good thing when we are done. We bought 3 months ago and have kept a close eye on the market -- we couldn't come close to repeating our purchase. Denver is on fire. We missed the boat, but got lucky anyway.

jaldi1 says

I seriously would like to hear from people who didn't buy during the crash.

I didn't buy in 2009 because in south Florida, prices then were still twice the pre-bubble levels. The bubble peaked at 3.5 to 4 times pre-bubble prices. I don't regret not paying twice as much for a house as they last guy a few years earlier since my money got a return in the stock market.

I haven't bought yet, because most of what I've seen out there have been overpriced by 50% to 100%. Yes, that's better than in 2009, but it's still too high. If I have to pay $300k for a house, I expect a house worth $300k, not one built in the 1970s for $70k and last sold in 2000 for $200k. I work way too hard for my money to throw it away due to impatience.

Worst case scenario, I rent and my money works for me, then I retire to someplace way the hell cheaper than south Florida and live like a king. I don't have to buy, ever. I'd like to, but I don't have to.

Right now, the only buyers in south Florida are overseas investors who are probably catching a falling knife.

However, everything I said is about south Florida. It may or may not apply where you live. I think that the bubble has been corrected in most of the country, but in the epicenters, prices are still adjusting.

Just remember government, while I'm renting, I'm not stimulating the economy. I'm building up cash rather than spending it on vacations, furniture, restaurants, electronics, and all the other things that make up our economy. If the government wants the economy to recover, it should let the price of housing, health care, and college degrees fall. These three things are strangling the life out of the rest of the economy.

Atlanta here. I bought twice during the crash.

1) I bought a condo in 2009 and got burned as the crash was just getting started. I still own it but I've been renting it out with no problems. If I can recoup 75% what I paid for it, I'll break even on my condo (relative to what I would have paid if I rented). So maybe I won't get burned when all is said and done. The longer I rent it out, the lower the sale price I need to break even. So I'm content to wait.

2) I bought a house in 2012 and on that deal I think I did pretty well - prices have steadily climbed in our neighborhood and over the past few months, there's even been a frenzy - investors swooped in to buy everything left on the market, make some fixes, and relist at $100K more or rent out. Maybe it's the rise in prices, maybe it's the nice weather, but it seems every other neighbor has been doing major renovations to improve their property - three of them built new or expanded their driveways, two are replacing their siding, one replaced a deck, and my neighbor across from me used a bulldozer for 48 hours to completely clear and level his backyard. I've been focusing on my landscaping, as with countless other neighbors. The neighborhood looks pretty.

Mostly circumstance here, and some emotion driven by my naivety about RE since I finished college in 2007 and only really started paying attention to RE in ~2010. The bears' arguments were compelling, and I couldn't accept that the Fed, all levels of government, and ~64% of America were so totally invested in maintaining bubble prices that they would actually succeed at getting back to them so rapidly. Well, lesson learned. My wife (GF/fiancee at the time) and I might have been able to scrape together a 20% down payment on a house that we liked back in 2011, but we would have been stretching the hell out of ourselves and "quality of life" is priority #1...I don't sleep well if I am financially stretched.

So here we are with a LOT more cash in the bank and we are looking. If we can get an offer accepted, cool. If not, cool. In the end, I see our quality of life with a house being identical as it is now with our apartment. My "commute" from my apartment is a 6 minute bike ride and the houses we can afford are more like a 30-35 minute bike ride (it would take as long or longer to drive). We can also walk to downtown Mountain View in 20 minutes now, and there isn't anything like that where we are looking. The upsides of a house are that I can do my woodworking and car projects in my own garage instead of going to my parents' house to do it, and I won't have shared walls anymore so I can actually put the speakers I have built to proper use! But on average, it is all a series of trade-offs and I don't see any net gain in lifestyle or quality of life from buying a house, mostly because I will have to spend ~1 hour a day commuting in order to reap the other benefits of a house, and TIME is the most scarce resource of all. It doesn't sound like a lot, but if you have ever been fortunate enough to not have to commute at all, you know exactly where I am coming from.

For my husband and I, we had to wait until this year to begin looking as we are getting ready to retire and could not do it any earlier (during the crash); it was frustrating as we had to wait financially to move forward on a property. Now prices are slowly rising and we are seeing the same thing; homes purchased by investors or contractors at i.e. $135k; fix it up and ask $235k. Now mind you, this is an area of CA that the homes average selling price was in Feb $130k.

So it is frustrating to say the least. The unemployment in the area hovers around 11%. The area is remote and most are vacation homes which you cannot get a tax break. We still feel what many are asking are overpriced for this area. It seems the Investors/Flippers and the SFBA crowd see them as opportunities or perhaps bargains. We believe it will change but have no choice as we need to begin looking now for retirement. Just frustrating....

bmwman91 says

"quality of life"

A lot of wisdom in what you say.

Who didn't buy during the crash?

Idiots, terrorists, communists, and the piss poor lazy bums that hate freedom. Jackasses

I wish I had...

Was getting married and thought I couldn't handle planning/paying for a wedding and buying a place. Ended up looking at a few that really made sense and never pulled the trigger.

Now I'm looking again, and we have a baby on the way. Can't shake the feeling that I missed out on a good opportunity, as prices seem higher now then just 1 year ago.

Funny how getting ready to have a kid makes me want to buy much more and be a bit more emotional in my decision making process.

Dan8267 says

I haven't bought yet, because most of what I've seen out there have been
overpriced by 50% to 100%. Yes, that's better than in 2009, but it's still too
high. If I have to pay $300k for a house, I expect a house worth $300k, not one
built in the 1970s for $70k and last sold in 2000 for $200k. I work way too hard
for my money to throw it away due to impatience.

I lived in South Florida (Pompano) from 2002-2008, then Jacksonville 2008-2010.

The only thing I am thankful for about living there was the bubble was so painfully obvious there during the 2004/05/06 years that it prevented me from buying. Had I lived in Cleveland or Columbus instead I probably would have bought a house - because it simply was not as "frothy." I told everyone I worked with at the time that prices we going to fall in half...

Anyway, according to C-S (and your example above) prices are ~50% above where they were in 2000 right now (up about 10% from the recent trough in 2010/11). They are off the high by about 45% at this point.

My last rental condo there in 2008 (on the beach), I rented for $1300 in a building where units were selling for 300k. With interest rates at 6% back then, 20% down, $400/mo condo fees, and taxes (about 2.5% of value if I remember at the time) and insurance, to buy the condo in my building would have cost me around twice what I was paying in rent.

That was an easy decision for me, rent obviously.

Now if prices are off 45%, and interest rates down 2.5%, and assuming rents have increased 2% per year for the past 5 years, I think buying probably makes sense.

I might be way off here from what its like in reality, but if rent is $1450 now, and condo fees increases at same rate (say $450), tax rates unchanged. I get roughly a wash, cash out the door, monthly rent vs. buy. Factor in tax benefits and locking in your effective "rent" for 30 years and buying is the better choice now.

Just food for thought...

I love where I live. I have an incredible life working a mile and a quarter from the office. I get more time with kids and, generally, get a lot more time with my family as a result of living so close to the office.

To buy a three bedroom house in this amazing neighborhood with new toddler parks right across the street will cost a million dollars or more. Maybe it got down to $850k-950k during the crash. I rent a small, sort of three bedroom, with a large(for San Francisco) yard, an absent neighbor on one side where the house is set back so that, unusually, the houses don't touch and amazing neighbors on the side where the houses touch all for an annual rent significantly less than 5% of a purchase. My landlord is a multimillionaire and has not raised the rent in six years.(/wood knocking)

My net worth goes up every year, as not buying a house has left a lot of budget for saving. To put together a down payment would mean selling most or all of the stock I've bought outside of retirement/similar accounts. So buying a house feels like going "all in" and I just don't know why I would do that. It makes no sense.

Graybox says

errc says

Who didn't buy during the crash?

Idiots, terrorists, communists, and the piss poor lazy bums that hate freedom. Jackasses

Kind of exposed your low IQ and the lack of any respect.

/owned by irony! Errc just owned this thread and you got caught by collateral damage.

I think that errc was making a joke. I mean, technically a ton of Communist foreign nationals HAVE been scooping up RE all over the USA...

Since you mention it I'm sure thats the case and if so I do apologize... His pic. certainly doesn't match the comment.

In my defense, I have heard crazy's that would make a similar statement and mean it.

Dan8267 says

However, everything I said is about south Florida. It may or may not apply where you live.

You see that Roberto. Honesty. Try it sometime.

It depends. During the crash years, I was a nomad, travelling from different projects across the country. So had no incentive to buy. But now back in CA and what do you have -boom number 2.

Just the difference in prices is really astounding though. I mean double other places-fine-but triple, four times?? In some places I am seeing 50% gains. In a lot of places with sustained housing booms, the economy is doing great-for example China, India , Hong Kong and even Australia-though it has cooled somewhat. But we are in a lousy state and our job situation is shifitng to people with less benefits and temp nature. I just fail to see the fundamentals behind it . But I guess if you look at housing like a commodity , it makes sense. Just look at the gyrations of the Euro/USD or the Japanese yen. Perhaps hosuing will start acting like that?

So how is that 'close enough' when you add taxes, insurance, home maintenance? That 100 is more like 500....

edvard2 says

As a result our mortgage is $100 more than our previous rent. In other words- close enough.

I sold just a few months before things got bad. Made some money! :-) I've been renting ever since.

I forgot to include in my description that I'm quite serious about being financially independent. That goal has me thinking very differently about spending ten times my annual income on one thing.

Bigsby says

Prices in Monterey don't seem to be that much higher than when I bought in 2011 and I'm pretty sure they're lower than they were in 2009/2010. I guess it all depends where you are.

Median price per square foot in Monterey is currently not much higher than it was in 2011. However, the days on the market are 1/2 of what they were (41ish compared to 93) and the inventory is significantly lower.

I would think the prices didn't come down all that much in that area because it's desirable.

lostand confused says

I was a nomad, travelling from different projects across the country.

Sounds like an interesting gig...long haul trucking?

FunTime says

all for an annual rent significantly less than 5% of a purchase

Okay FunTime, you sound a lot like Patrick. So how much do you pay in rent compared to what you would pay in Principal, Interest, Taxes, Insurance and Maintenance ? Give us more specific details to make a quantitative judgement.

I'd rather not share exact numbers since I'm already sharing more personal information than I want. How about you take the three purchase numbers I gave, the 5% number and figure it out? The additional complication is that if I really bought a house I wanted, it would probably be at least $1.5 million. Totally beyond reach.

Truth-be-told, the couple of times I really looked at taking a loan to buy a house, I was really taken aback by how little I could afford. I know there are a number of finanically independent people in San Francisco who have bought houses and a number who inherited houses but I've concluded there are a good number of people who are just more willing than me to go "all in" on a house.

How about this? When I did the calculation, my annual rent was 4.65% of purchase price. Just work with that for all three(or four, now) purchase numbers.

FunTime says

Truth-be-told, the couple of times I really looked at taking a loan to buy a house, I was really taken aback by how little I could afford. I know there are a number of finanically independent people in San Francisco who have bought houses and a number who inherited houses but I've concluded there are a good number of people who are just more willing than me to go "all in" on a house.

True FunTime, there are other factors like the annual appreciation or depreciation of the home. I ran the numbers on the NY Times rent vs purchase calculator for $135,000 condo (buy at 4% fixed mortgage, 30 years vs rent at $600 per month based on the 5% example) using various scenarios that rent gong up 1% per year, etc. Need also to take into account tax benefits like writing off interest and property taxes