patrick.net

E

Hubby and I got out of the BA in 2005. Here's where we moved:

http://www.csmonitor.com/Business/2011/0505/Top-5-cities-with-the-fewest-foreclosures/College-Station-Bryan-Texas-1.0

We bought a house for $130k. It hasn't gone up much (maybe worth $150k now), but it hasn't gone down...

edvard2 says

Panic and buy a house- any house- to “get in” before you’re priced out

Sure, why not. If we can get 0% down shitty loans like we had before, I'll buy a nice place for nothing down, and either (a) sell before the top, or (b) stop paying the mortgage at some point, and live there for years before foreclosure, just like some of these deadbeats we read about. It's in my family's economic interest. :)

I always had one question which bothered me a lot while doing house hunting. The current price in bay area for OKish neighborhood is $650 upwards for 3 bedroom house. If you plan to live in this house for next 5 year then considering 7% closing cost, the house should appreciate at least $690k (assuming you bought it for $650k) to break even. To make profit it should go above $690k. I don't see it happening in next 5-7 years. The dot com bubble pushed real estate prices really high and I do not see any strong stimulus in near future which can take prices to another level.

The 2000-2007 bubble won't happen again in our lifetime (or at least another 25 years)
We swallowed a heavy pill and there are new regulatory laws in place to prevent that accelerated speculation and appreciation. If Japan is any indication, Japan's RE declined for over 25 years after their 80's bubble burst.

It is very, very difficult to get a loan and buy a house.
I make over 160 and have about 80K to put down, a FICO of 850, and 28@ debt ratio. Three major banks will only give me $250K.

Getting the no-doc, 3% down, and toxic loans are pretty much a thing of the past.

I've made about 6 offers already and have learn some new things:
Appraisals. Banks will not loan you money if it doesn't appraise. New laws in place forces bank to get out-of-town appraisers.

Let say a house list for 300. You make an offer for 290. The bank appraises for 270, you will need to come up with an extra 20K on top of your 20% down. This makes it very difficult for people to buy now; further depressing the price.

How many people can come up with an extra $$ on top of their down payment if they bought a house for $400K but the bank appraises it for only $320. That means, they need to come up with the extra 80K.

It all started back last Fall.

People now are over-bidding on some property so they can get their offers in. Back in January, the sellers (banks) would have to lower their prices to meet the appraisal based on the contract contingencies.

Banks are now wise to this. Too many people were over-bidding over sales price to get their offers accepted. Banks now have no appraisal contingencies. I've had 3 houses like this. If it doesn't meet appraisal, the buyer either loses their deposit to back out or they make up the difference. That is why you see houses list, remove from market, and get re-listed again.

Cash buyers are also warmed up not to this. The market is very volatile. We have a large shadow inventory (told to me by over a dozen Real Estate agents/brokers/banks). We have another 7 years before the RE market will get healthy again.

Very interesting comments EB dude. We've not at all been looking at houses but you're not the only person I've heard with such a story. That said- several houses in my neighborhood went pending recently. None were cheap- as in 550k-600kish range. I would assume the people buying these things are just absolutely loaded or something due to the difficulty of getting loans?

Near zero down is still here.

FHA will allow the seller to pay 3% of closing cost which take the DP from 3.5% to .5%

I just looked at brand new condos the builder offered to buy the rate down to 4.7 AND pay 3% of DP which would mean I could move in for $1600 (much less than first+sec deposit to rent an aparment)

However its true you have to have a job/income now or no loan.

The real wildcard is what will the feds do? They hold all the cards, they control all the outcomes. Right now they are dragging out the crash (fun isnt it? 5 years of price declines and no end in sight)

true about the FHA loan but the fact is, most sellers pick in this order:

1) Cash buyers, 2) 20% Conventional loans, 3) FHA.

FHA buyers are at the bottom of the totem pole in terms of getting offers accepted.

hey edvard,

based on your responses to other threads, i think this is clearly something that's nagging you. if i remember your situation right (good jobs, enjoy what you do, minimal commute) i'd stay put, and just rent. i think the only people who should consider buying are people who know they'll stay put until it's paid off, [and by this i mean homes in semi-desirable neighborhoods] as prices have not gone back to normal whatsoever.

While we're not in a bubble technically, i would say in the desirable neighborhoods [sorry in advance for all those living in el sobrante or whatever..., i mean low crime, minimal commute to major work centers, decent schools, etc] it's maybe gotten 10-15% cheaper than the peak.

That's still pretty bubblicious to me.

Yeah ih8alameda,
It bugs me. I don't know why. Its just annoying that its still so damned expensive here. Its grating to me and on top of that, there still seems to be this huge quantity of people here who would just love to blow a huge chunk of money on a house- any house. As such I get a bad feeling that its always going to be painfully expensive to the point where buying anything will always mean this ridiculous financial commitment. I can't quite put my finger on it. Maybe because after you've been here awhile it becomes difficult to leave since its hard to start all over again. Yet living here for us is pretty impractical- since our entire family lives across the country and all.

Sorry for the rant.

edvard2 says

Would you:
A: Say “Screw it!” and pack your bags and leave because you’ve had it with bubbles and astronomical prices?

Your employers may well say.. Screw it ... im expanding up north or in the southwest where its cheaper to hirer.

After all, your not the paying for the home, its your salary from the employer. And that hits everyone concerned... buyer, owner, renter, etc.

I would wait and invest then buy in cheaper city and state. Find a way to get transferred with company to another area while keep same salary. Then buy nice home for cheap!

option E: not care

if an asset is overpriced, do not buy it. no reason to move, just don't buy the asset.

D: Continue just as you’re doing now.

I will wait until the right opportunity arises for me to comfortably buy the right home at the right price for me (as I am doing now). I do admit I go to several open houses and spend a huge part of my weekend walking in and out of homes that are exorbitantly priced and it is frustrating for me as I prefer to get things done than just waiting and watching, but I consider what I am doing as "good research".

bgamall4 says

Fed wants another bubble

Pretty much, otherwise where are they going to get their bubblicious pensions and all the spending programs?

I think with the oil price and food price the way it goes, and I believe they will shoot up in the long term, Vegas will just disappear.

In 100 years, we can have Vegas as a tourist spot to see the ruins of a civilization built on unsustainable presumptions. Sorry to be harsh, but Vegas should not have existed in the first place. I won't even live there if you pay me $120K, because pretty soon you will need to spend at least $1K on aircon a month, and 4-5x the current price on food and water shipped in.

Rent and save. The cost to buy a home outweighs the benefits.

Downpayment can be used to pay rental and living costs in bay area for several years! There is no more job security, it makes ZERO sense to buy now.

Just the thought of living in Vegas is depressing as hell!

I don't think we can expect another bubble nor big crash in the near future. Demand is there. People make good money in Bay Area and they have the desires to own. The current will stay for "God knows how long"... Up/down in 10-15% range. That's my assessment. However, RE is a very local thing, if you look hard and be patient and good timing + act fast, you may be able to get a deal.

well well well... the game is afoot. Perhaps repatriation of funds, confiscation/liquidation of property ?

Chinese officials stole $120 billion, fled mainly to US.

The stolen funds were covered up by disguising them as business transactions by establishing private companies to receive the money transfers.

woggs1 says

If the bubble returns to the Bay Area... what will you do?

The bubble has not even burst yet, Bay Area is still in bubble territory, so this question is an Oxymoron!!