buying dilemma

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financeguy_IHB

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I'm a young professional living and working in Irvine. I've been living with my parents for the past 2.5 years (after graduating college) in order to save for a down payment. Now that I have enough for a down payment, I'm definitely ready to move out and buy a place (500K or less).



Here is my dilemma:

I actually like to live in places that are more "alive" like the condos on Jamboree & Michelson or in neighborhoods where there are people talkingwalking at 10pm. However, I think those places (condos) are the exact places which will depreciate most in value, rather than boring 1970s SFRs in university park, walnut, and northwood which I can also afford. Also maybe several years down the line, I would have a family and prefer the "boring" SFRs in the older neighborhoods, but not now. I want to stay in Irvine and do not want to go further south (too far from LA).



Do you have any recommendations? Your advice will be greatly appreciated.
 
If you are concerned about depreciation in the next few years wouldn't it make sense to rent in the short term? You'll be purchasing the same thing for less money down the line. Plus, this has the added benefit of allowing your savings to grow in the interim.
 
<p>Buying now would be plain stupidity. This year and next will be the greatest YOY drops of the crash (followed by several years of smaller drops). </p>

<p>I want to jump off a cliff, should I wear a sweater or cardigan?</p>
 
The reason I think it would be better to buy now vs rent is because if I buy, my "rent" will be going toward the mortgage and I would be saving on taxes. And more importantly, although I think the value of condos (SFR less) will continue to depreciate over the next year, I think interest rates are actually going to go up (because of inflation and depreciating USD). Since I will be using 80% financing that might be a problem.
 
You should enjoy all the benefits of renting and save a pile of cash while your at it. You can smile as the market melts down and think about how much more you get for your dollar in the next 1-2 years. Oops...maybe Yuan or Euro might be better.



Btw, are there any neighborhoods in Irvine with people socializing after 10pm? City seems pretty sleepy to me after dark.
 
<p>Check out this <a href="http://forums.irvinehousingblog.com/discussion/1394/rent-vs-own/#Item_0">thread</a>. This topic has been discussed extensively in past threads.</p>

<p>Also, you can find some great discussions using the "search" tab at the top of this page. You'll learn a lot.</p>

<p>Good luck!</p>
 
<em>The reason I think it would be better to buy now vs rent is because if I buy, my "rent" will be going toward the mortgage and I would be saving on taxes.





</em>Is it worse to pay thousands more in taxes or likely lose tens of thousands in equity?
 
<p>Hello... move out of your parents' place already. Rent a place and find out what suits you. Then buy. Don't go from living with parents straight to buying. My recommendation is that you rent at that new complex on Alton and Jamboree. It's brand new so it'll feel like buying a new home. Also, the shopping center across the street is opening up this summer. </p>

<p>Seriously, I would recommend anyone with a good salary to rent at one of those newly built apartments - it's a great feeling to be the first person to live in a place. </p>

<p>Also, I live in Tustin right now. It's not a bad place, but when we're planning to buy in a few years, I definitely would choose to live in another city. Life is too short to commit yourself to a home you don't like. So rent before you buy.</p>

<p>Ideally, we would like to buy a home in Fountain Valley. I just hope we don't establish any roots in Tustin.</p>
 
<em>The reason I think it would be better to buy now vs rent is because if I buy, my "rent" will be going toward the mortgage and I would be saving on taxes. </em>



Your screen name is finance guy. Have you sat down and run the hard numbers, using market prices, comparable rents, appropriate IRR, HOA dues, property taxes, tax savings, amortization schedules, commissions, planned length of stay, etc? You should have at least 3 scenarios in your planning--best case, worst case, and expected case.



<em>And more importantly, although I think the value of condos (SFR less) will continue to depreciate over the next year, I think interest rates are actually going to go up (because of inflation and depreciating USD). Since I will be using 80% financing that might be a problem. </em>



The rules of economics will apply. In the long term affordability is relative. If interest rates rise faster than incomes, then prices will have to drop to compensate. The higher rates go, the more impact your downpayment will have, and the more it will "earn" in lieu of principal.
 
hs_t, just curious, what don't you like about Tustin? I live in Tustin Ranch (92782) and love it here. In general, the area is safe, clean, and close to everything. The schools are new/up-to-date and test scores are very respectable. Hiking (especially in Peters Canyon), shopping and dining are plentiful. My teenage kids and I really love it here. I have taken them all over the world and they kept telling me they don't want to live anywhere else. I also think that most of the older part of Tustin is pretty well kept.
 
<p>I admit, Tustin is a nice place. But I grew up in Fountain Valley and most of my family and friends are still on that side of town. </p>

<p>I guess the people in my life act as anchors to where I want to settle down.</p>

<p>I've noticed that in high school students too. People in Orange County are very territorial, and are loyal to their hometown.</p>

<p>The longer I live in Tustin, the less attached I feel to my family and friends - and that's something I don't like.</p>

<p>As much as we care about building career or financial equity in life, we should also retain equity in our relationships with others.</p>

<p>In all honesty, I would prefer to live in an older, less affluent neighborhood if it means I have more connections to the people around me.</p>
 
You've been out of school for 2 1/2 years, so you're 25ish? I would stay home for another year or two and save more money. If you get along with your parents and are disciplined enough to move out when it is time, why spend money on rent? My guess is that since you were disciplined enough to actually save while living at home, it will be a cinch to move out when it's time. Most aren't that disciplined, and is the reason why they don't move out.
 
<p>I echo the caution of making sure you don't lose your down payment to depreciation.</p>

<p>Also, looking back at what I would do if I were your age, I would encourage you to rent. Have some fun while you can. Once you buy a place, you take on a lot of responsibility. You have the rest of your life for that. It sounds like you aren't the kind of person that needs to learn to be responsible. It's hard to get the point across, but you're only young once, and for just a short while. You get to be old a long time.</p>
 
I tend to agree with gepetoh. Unless you have a good reason to move out of your parents' house, stay. I'd advocate paying them some rent over even renting another place. It'll cost less overall and you can help them with the expenses you create.
 
finance guy- live where you love, and love where you live. Rent, buy, its all the same in the end. My advice would be to travel, play hard, and love harder. Enjoy life you're young you have the rest of your life to be tied to a mortgage. Go out an explore the world. I bet you're hot too! ;) Best.
 
Wait one year and then reconsider buying.

As far as place that is busy, wont happen in OC. I was searching for the same thing with no luck.

My suggestion is to get a 3br + place with an attached garage in proximity to a place you like to hang out and where you can grow into, the units at marquee is something IMO you can outgrow rather quickly and is rather inconvenient.



I came to the realization that in OC you have to live in a boring place and hang out at the places you enjoy at your convenience.
 
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