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just any guy says

Well, my family and I are considering leaving San Diego area and moving to Phoenix. We've never owned a home and I have always felt CA is just way too expensive to buy even though I make an executive salary. Now that I'm considering a job in Phoenix making even more money than in San Diego, we're looking at finally buying a big, fine-ass house with a pool for around $800K with 20% down.

$800K in Phoenix would get you one helluva property compared to a decent house in a decent neighborhood in San Diego.
It's a big move for a first time buyer.
Your electricity bills will be like a second mortgage for a big house in Phoenix.
Phoenix, a desert will never match the long term appreciation rates of San Diego, a highly desirable County.
Whatever you do, I wish you all the best.

just any guy says

Should I rent instead? Seems like Phoenix house prices haven't come close to recovering from the 2006 peak.

There's this landlord named Rob...

Never mind.

Strategist says

Your electricity bills will be like a second mortgage for a big house in Phoenix.

I was thinking of just doing solar on my roof.

Onvacation says

There's this landlord named Rob...

aaaahhhaaahhaha

just any guy says

Strategist says

Your electricity bills will be like a second mortgage for a big house in Phoenix.

I was thinking of just doing solar on my roof.

... which is the same as prepaying for your next 6 or 7 years of electricity bills.

Q: stupid for buying due to possible recession?
A: only investors/flippers would have to worry about that. don't get an ARM and just slowly build asset wealth over time. in fact, rates are low enough to only put down 15% and use Schedule A to deduct the interest. you'll need cash on hand to furnish and maintain a big house.

Q: should i rent instead?
A: maybe, because it's a good idea to get a feel for the zip codes first before committing to a house as an outsider.

Q: what lender?
A: you want to get the best rate and the best service. go through a good broker who knows what the fuck they're doing. a big bank will most likely end up buying the mortgage anyway after closing.

Q: use buyer agent?
A: yes, they have to avoid dual-agency and usually are certified negotiation experts to help get the price down and deal with other terms / inspection stuff. they will know the all important "absorption rate" for any given micro-market.

Q: other tips?
A: underwriting can be a pain in the ass because of the last recession and the double-checking of risk. just roll with it and be thorough. as stated earlier, nice big houses require nice big stuff inside and outside. pools are a huge expense in water and electric and maintenance.

landtof says

Q: stupid for buying due to possible recession?

A: only investors/flippers would have to worry about that. don't get an ARM and just slowly build asset wealth over time. in fact, rates are low enough to only put down 15% and use Schedule A to deduct the interest. you'll need cash on hand to furnish and maintain a big house.

Q: should i rent instead?

A: maybe, because it's a good idea to get a feel for the zip codes first before committing to a house as an outsider.

Q: what lender?

A: you want to get the best rate and the best service. go through a good broker who knows what the fuck they're doing. a big bank will most likely end up buying the mortgage anyway after closing.

Q: use buyer agent?

A: yes, they have to avoid dual-agency and usually are certified negotiation experts to help get the price down and deal with other terms / inspection stuff. they will know the all important "absorption rate" for any given micro-market.

Q: other tips?...

Awesome post. Thank you.

I'd consider buying less of a house. Contrary to popular belief, buying the biggest nicest house can be alienating, instead of ingratiating to friends and coworkers. Keeping things simple sends a signal to others that no matter your exalted position, you're still a regular guy who isn't full of himself. Buying a huge mini mansion just screams douchebag.

But I get why that seems like a great idea. After so many years of renting, you want to really step up.
I may have over bought a year ago, at least with respect to the people we know. I think the house inspires jealousy instead of bonhomie in people we invite over. Definitely that's the case with coworkers. But this is such a competitive market that even a nice basic house with a few amenities qualifies as a mini mansion.

Don't try to time the market. If it doesn't look like a bubble, it's fine to buy.

Do you want to live in a place before buying? It takes time to know the neighborhood. Because you can change everything about your house, except for the neighbors.

landtof says

pools are a huge expense in water and electric and maintenance.

I disagree, to some extent. Don't know the cost in the southwest. Midwest with no heater and I'm about $350-$450 every year. All in. Chemicals, cover, winterizing (here at least) electric, equipment, etc). ~30'x18' inground. Best source for pool info and making it cheap is right here: TroubleFreePool.com

Pools only get expensive when you let someone else take care of it. I do about 20 minutes a week of maintenance. Some sort of auto vacuum or robot is necessary for this of course for cleaning. But my costs above include that equipment spread out over 5 years. Learn about your pool and you won't have a problem.

Where are you looking in the Phoenix region? Not from the area, but have family there and visit about once every 2 years. $800k will get you a lot in most areas, but others might be tough (not many areas like this as far as high price, but they exist). I'd personally go for the cheapest place you can get that you feel is acceptable. Don't keep up with the Jones'. If you do that, even though it's Phoenix, you'll get in over your head quickly. There are some rather wealthy folks that love that region. Got family that has a very nice mid 7 figure home there.

I would get a RE attorney to handle your contract title and everything else bypass your buyer agent altogether.
They will have your best interest better than the RE Agent will and you'll need a title company anyway.
For more money than you would pay the title company, you get a full service Lawyer for less than the buyer agent will charge you get someone to submit the contract to the seller's agent.

All good advice. It's easy to get caught up in buying a mini mansion just because I can and everything seems so cheap in Phoenix compared to San Diego. For someone who asked, I'm looking at the Desert Ridge neighborhood on the North side.

just any guy says

It's easy to get caught up in buying a mini mansion

it's definitely worth it, just nice to know the baggage that comes along.

don't live down, life is too short. enjoy.

landtof says

A: yes, they have to avoid dual-agency and usually are certified negotiation experts to help get the price down and deal with other terms / inspection stuff. they will know the all important "absorption rate" for any given micro-market.

Bwahahahaha

Brush up on your chemical synthesis skills as a backup plan.

ThreeBays says

SpecialSnowflake says

I was thinking of just doing solar on my roof.

... which is the same as prepaying for your next 6 or 7 years of electricity bills.

One of the best investments of our time.

... if you stay in the house longer than the time you prepaid for.

Can't you buy an entire subdivision in Arizona for 800k, and roll around in all the rent tribute your serfs and vassals bestow upon you?

Where is good old Roberto?

ThreeBays says

SpecialSnowflake says

I was thinking of just doing solar on my roof.

... which is the same as prepaying for your next 6 or 7 years of electricity bills.

One of the best investments of our time.

Are you being sarcastic? I can't tell

just any guy says

ThreeBays says

SpecialSnowflake says

I was thinking of just doing solar on my roof.

... which is the same as prepaying for your next 6 or 7 years of electricity bills.

One of the best investments of our time.

Are you being sarcastic? I can't tell

Ask for several solar quotes and decide for yourself. (Ownership, not solar lease or PPA).

SpecialSnowflake says

Ask for several solar quotes and decide for yourself. (Ownership, not solar lease or PPA).

I have been getting quotes for a solar system. San Diego has some of the most rip off electricity prices in the nation. I am literally saving 75%.
Phoenix electricity may not be as expensive, therefore savings with solar may not be very high.

WookieMan says

I disagree, to some extent. Don't know the cost in the southwest.

hot sun evaporates the water fairly quickly and then you need to refill it often.

BayArea says

Bwahahahaha

why?

Strategist says

SpecialSnowflake says

Ask for several solar quotes and decide for yourself. (Ownership, not solar lease or PPA).

I have been getting quotes for a solar system. San Diego has some of the most rip off electricity prices in the nation. I am literally saving 75%.

Phoenix electricity may not be as expensive, therefore savings with solar may not be very high.

You're not saving anything unless you stay long enough to reach break-even point. Which is currently between 6 and 7 years for a typical 90-110% system. (In SFBA which is probably on par or even more expensive than SD).

just any guy says

It's easy to get caught up in buying a mini mansion

Why not buy half of what you can afford? It would still be very nice, I'm sure.

landtof says

hot sun evaporates the water fairly quickly and then you need to refill it often.

Yeah, I know that's an issue out there. Just wasn't sure how pricey water is there. I assume high, desert and all. Where I'm at in the midwest I figure I have to top off about 2 feet of water a year, maybe about 5-7k gallons max. Water bill only jumps about $30-40 during the summer for me, if even that much. Have a lot of garden to water as well, so hard to tell what % is pool.

Pool cover would help too with evaporation. Contrary to popular belief, pool covers just maintain the temperature. If you remove the cover at night, it will help to cool the water and you won't lose water to evaporation (as much) like you would during the day. Obviously a pain, but at $800k you might find a house that has a auto pool cover and you can get a timer for it. And if water is expensive, a cover like that might pay for itself rather quickly.

Sorry OP, this has been totally off topic. Pools are expensive of course, but there are definitely ways to make the maintenance cheaper. You didn't say this (or anyone in this post), but it seems like a lot of people are afraid of homes with pools due to the cost. Obviously there are other safety concerns, especially with kids, but pools are rather fun with kids at a certain age if you make it safe and set rules.

Thanks everyone. My wife is nervous about the weather, but I told her that most places in the US outside of CA have several months where you're just indoors. I'm just sick of the taxes here and the cost of buying a house. I feel like I should be living a better lifestyle given where I'm at in my career, but CA just squashes that.

ThreeBays says

my understanding is solar adds good re-sale value to your house.

Not a fact.

just any guy says

- Any other tips for a first-time homebuyer?

Sit down and seriously look at the rental to price ratio. Actually crunch the numbers. Hotpads is a great tool for this. If rents are really undervalued say 120 months+ then consider renting if you aren't all hung up on having "a home" vs a big wooden box you live in. Invest the difference between renting and buying (which includes banking what you would have paid in property taxes and insurance) along with investing the down payment. This is a very active hands on strategy that requires a lot of time and discipline. There are markets out there where for your 160k down payment you can buy 2 good rental houses in good areas netting over 9% after paying a management company. No appreciation, but very nice cash flow.

If you decide buying is for you then as people have said already, rent for at least 6 months preferably a year first. It's a pain in the ass to move twice in a year,but living a year somewhere gives you a whole different perspective on where you want to live in an area. You don't really know the in's and out's until you have your feet on the ground. I've regretted buying directly into an area the 3 times I've done it. Go month to month after the first year and you can shop at your leisure, preferably in the slow selling season, giving you a lot of leverage on the sellers.. I have had much, much better house buying experience when I did it that way. Everything is on your terms and the pressure is all on the seller.

I personally would (and always have) find a somewhat less expensive house and go for a 10 or 15 year mortgage. I have a 10 year 2.75% and the equity builds fast. The difference in what you pay the bank in interest vs a 30 year is astounding

Don't get all hung up on what the market will do. If you are living in it long term then it doesn't matter what the market does short term.

When I was in the UAE they had refrigerated pools in the resorts. Very odd feeling getting into a refrigerated pool. Had a salt water pool in my house in Oz . Much better than a chlorinated pool. I'm not sure why salt water pools are so rare in the US.

@bob - thanks for the tips. My wife and I have 2 kids (5th and 6th grades), so she's afraid of renting and then moving again if we're not at the same school. I agree that renting first would make the most sense, but moving twice does suck. On the price of home, we've noticed that to get the kitchen and backyard we want, you gotta pay $700-$800K minimum. I suppose we could go cheaper and then do the landscaping ourselves.

just any guy says

she's afraid of renting and then moving again if we're not at the same school.

Consider trying to get a long-term lease, like 5 years. Landlords like stability too.

That would give you some breathing room, and the lease could simply have a payment option to break it, like paying an extra month.

ThreeBays says

SpecialSnowflake says

ThreeBays says

my understanding is solar adds good re-sale value to your house.

Not a fact.

I've seen plenty of studies claiming the contrary. Can you point to any data to back your claim?

You first. With "plenty of studies" it should be easy to link 3 or 4...

Why not buy half of what you can afford? It would still be very nice, I'm sure.

My wife and I have 2 kids (5th and 6th grades), so she's afraid of renting and then moving again if we're not at the same school. I agree that renting first would make the most sense, but moving twice does suck. On the price of home, we've noticed that to get the kitchen and backyard we want, you gotta pay $700-$800K minimum. I suppose we could go cheaper and then do the landscaping ourselves.

just any guy says

@bob - thanks for the tips. My wife and I have 2 kids (5th and 6th grades), so she's afraid of renting and then moving again if we're not at the same school. I agree that renting first would make the most sense, but moving twice does suck. On the price of home, we've noticed that to get the kitchen and backyard we want, you gotta pay $700-$800K minimum. I suppose we could go cheaper and then do the landscaping ourselves.

Dude - if you are willing to plunk down $800K, can't you find something reasonable in San Diego County? Nice houses with 2,500 square feet are still going for that in my neighborhood in Carlsbad.

I totally get how you can be frustrated with the retards in government that are running California into the ground and wanting to get into something stable with a good school district, but there are still some pockets of sanity here and there - especially in San Diego, Carlsbad being one of them. I think prices are going to soften significantly in the coming year.

I am so happy we bought in Carlsbad in 2011 when the market bottomed out. We got a totally affordable 30 year fixed mortgage at low interest rate, have great public schools, ocean views and cool ocean breezes. I'm never leaving.

Then again, I was born in Chicago and lived a big chunk of my life in the Midwest, so I know how shitty the weather is for 6 months of the year. Life is too short to suffer indoors all the time.

socal2 says

I was born in Chicago and lived a big chunk of my life in the Midwest, so I know how shitty the weather is for 6 months of the year. Life is too short to suffer indoors all the time.

Amen, me too.

socal2 says

Life is too short to suffer indoors all the time.

There is an amazing new invention out there that solves this problem. It's called a coat.

bob2356 says

socal2 says

Life is too short to suffer indoors all the time.

There is an amazing new invention out there that solves this problem. It's called a coat.

Some of us prefer living with shorts, t-shirts, and sandals all year round.

Strategist says

Some of us prefer living with shorts, t-shirts, and sandals all year round.

And surf.

There is no surf in Chicago.