Need advice on timing a home purchase.

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HB Bear Too_IHB

New member
I've been running the numbers for my part of West HB lately, and I have come to the conclusion that at least for the subset of homes I am interested in, it is in many/most cases less expensive on a tax-adjusted basis (with 20% down) for me to buy a home than it is to rent it. Shocking but true. This is primarily due to the tsunami of comp killers to hit the area accompianied by modest to moderate increases in rents.



So, I'm looking for a bit of advice from IHBers. If you could buy a house you wanted, in an area you could to live in for 10-15 years, at price a couple of hundred thousand off the peak, below the price of recent comps and for a tax-adjusted payment at or less than rent: would you buy?



Mrs. HB Bear has been wanting to buy for years; so her votes is a strong yes! Our two little bears both want to find a "nice big house" like their friends; so we have two more yes votes there. Me, I have become, and I hate to admit this, but yes, I have become a fence-sitter and truly ambivalent about buying a home. Damn you NAR and your marketing campaigns!



One one hand, I want to pay as little as is possible for my home; telling me that I should wait until 2011 or so to buy. On the other hand, I can buy for less than I rent and live in a nice place as part of the deal, that tells me I can buy now if I want. On a third hand (starting to feel a bit like <a href="http://en.wikipedia.org/wiki/Vishnu">Vishnu </a>with all these hands) interest rates are low now and I've been told they could spike next year; so that's telling me buy before EOY and possibly enjoy a bit more in terms of systemic and seasonal price decline over the next few months.



So, I'm looking for some advice here: buy now, buy in November/December or wait until 2011 or so.



All comments are warmly welcomed.
 
Just wait a bit longer. If you have never owned a home and you seriously think renting is more expensive than buying, you are deluding yourself. The true costs of ownership are never really understood until after you own. When you do buy, you should try to buy the place you see yourself in for even longer than the 10-15 you have said. Please try to imagine all of the things you would like to do to the potential house and realize that most of them will never get done. Make sure that you are happy with the place as is (especially when you have children) because the chances of finding the money and the time to do the things you envision are unlikely. You will get a few things done, the rest you will give up for college educations and retirement (if you are smart), so make sure you REALLY like the place and DON'T underestimate the costs because of emotion.
 
[quote author="tmare" date=1219234402]Just wait a bit longer. If you have never owned a home and you seriously think renting is more expensive than buying, you are deluding yourself. The true costs of ownership are never really understood until after you own. When you do buy, you should try to buy the place you see yourself in for even longer than the 10-15 you have said. Please try to imagine all of the things you would like to do to the potential house and realize that most of them will never get done. Make sure that you are happy with the place as is (especially when you have children) because the chances of finding the money and the time to do the things you envision are unlikely. You will get a few things done, the rest you will give up for college educations and retirement (if you are smart), so make sure you REALLY like the place and DON'T underestimate the costs because of emotion.</blockquote>


Thanks. I've gotten similar advice from others, namely that is buy a house that you <strong>love</strong> and that is move-in ready. Definitely not interested in a fixer-upper or anything that requires too much work or investment.
 
Don't forget that rents will most likely be coming down some along with the house prices.....



But still, HB....you've been so patient, why jump now? NOW is the time the huge drops begin.....and let's not forget about that glut of homes that will be coming on the market in the next year or two. You'll have the pick of the litter then.....no "settling" for less for The Bears. ;)



Keep saving $$ and you'll have more to put down.
 
HB Bear,

Just ask yourself this. If you and Mrs Bear knew for sure, beyond any reasonable doubt, Vishnu-himself-comes-down-from-heaven-and-proclaims, that you will be able to pick up a comparable home in West HB for 20% (or more) less in two years than if you bought now, would you still buy? Because I get the feeling that a lot of people who say "I don't care if prices continue to decline because I will be in the home for many years" really mean "I don't think prices are going to decline much more." If you are one of these people you are dead wrong and need keep reading and to get yourself straightened out. If not, hey, you and Mrs. Bear get out there and have a great time shopping!



Oh and BTW, maybe the little bears are too young to realize this, but you can have a "nice big house" without buying.
 
[quote author="bigmoneysalsa" date=1219238559]HB Bear,

Just ask yourself this. If you and Mrs Bear knew for sure, beyond any reasonable doubt, Vishnu-himself-comes-down-from-heaven-and-proclaims, that you will be able to pick up a comparable home in West HB for 20% (or more) less in two years than if you bought now, would you still buy? Because I get the feeling that a lot of people who say "I don't care if prices continue to decline because I will be in the home for many years" really mean "I don't think prices are going to decline much more." If you are one of these people you are dead wrong and need keep reading and to get yourself straightened out. If not, hey, you and Mrs. Bear get out there and have a great time shopping!



Oh and BTW, maybe the little bears are too young to realize this, but you can have a "nice big house" without buying.</blockquote>


Well that's the rub exactly. The problem is that <strong>I do believe that prices are set to drop more</strong> maybe even more than 20%+ more in the fullness of time. If I didn't think that, there'd be no quandry and I'd just buy today. It would be simple.



I guess I am trying to balance the strong desire (read emotion) to buy a house against the obviously rational course of waiting for a better price. It's cognitive dissonance, plain and simple.
 
[quote author="HB Bear, Too" date=1219235094][quote author="tmare" date=1219234402]Just wait a bit longer. If you have never owned a home and you seriously think renting is more expensive than buying, you are deluding yourself. The true costs of ownership are never really understood until after you own. When you do buy, you should try to buy the place you see yourself in for even longer than the 10-15 you have said. Please try to imagine all of the things you would like to do to the potential house and realize that most of them will never get done. Make sure that you are happy with the place as is (especially when you have children) because the chances of finding the money and the time to do the things you envision are unlikely. You will get a few things done, the rest you will give up for college educations and retirement (if you are smart), so make sure you REALLY like the place and DON'T underestimate the costs because of emotion.</blockquote>


Thanks. I've gotten similar advice from others, namely that is buy a house that you <strong>love</strong> and that is move-in ready. Definitely not interested in a fixer-upper or anything that requires too much work or investment.</blockquote>


Last year around this time I struggled with the same problem. I was looking at loan amounts around $550K or so and rates then were probably around 6.5%. I thought interest rates were headed up and that maybe I should buy to lock in before 8% rates showed up. Today, I can get that same loan for 6.35% and prices have come down at least 10% if not further...



Even if a home you would want is near rental equivalency, it's likely that market conditions will push those prices below rental equivalency in your target ara as other areas in OC get down to that level. Hold out for at least another year to see what the increasing foreclosure volume does to prices. The REOs should continue to pressure comps and you will be able to buyer more or buy the same for cheaper.
 
[quote author="Trooper" date=1219237427]Don't forget that rents will most likely be coming down some along with the house prices.....



But still, HB....you've been so patient, why jump now? NOW is the time the huge drops begin.....and let's not forget about that glut of homes that will be coming on the market in the next year or two. You'll have the pick of the litter then.....no "settling" for less for The Bears. ;)



Keep saving $$ and you'll have more to put down.</blockquote>


You make a good point. It's not only true that the longer I wait, the cheaper the house I will be able to buy, but it's also true that I'll be able to buy a nicer house as well.



For example, I really like this house:



<img src="http://i-0.rfimg.us/photo/46/bigphoto/508/S540508_0.jpg" alt="" />



<a href="http://www.redfin.com/CA/Huntington-Beach/6931-Capstone-Dr-92647/home/3847417">Redfin Listing Here</a>



It's listed for $699,000. It's a few hundred square feet smaller than we want, but I tell you Trooper, if I could get this house for $600K, I'd buy it. Maybe by waiting a year we will get the a similar house, maybe a few hundred square feet bigger for that price.



Patience don't fail me now!
 
[quote author="ipoplaya" date=1219239872][quote author="HB Bear, Too" date=1219235094][quote author="tmare" date=1219234402]Just wait a bit longer. If you have never owned a home and you seriously think renting is more expensive than buying, you are deluding yourself. The true costs of ownership are never really understood until after you own. When you do buy, you should try to buy the place you see yourself in for even longer than the 10-15 you have said. Please try to imagine all of the things you would like to do to the potential house and realize that most of them will never get done. Make sure that you are happy with the place as is (especially when you have children) because the chances of finding the money and the time to do the things you envision are unlikely. You will get a few things done, the rest you will give up for college educations and retirement (if you are smart), so make sure you REALLY like the place and DON'T underestimate the costs because of emotion.</blockquote>


Thanks. I've gotten similar advice from others, namely that is buy a house that you <strong>love</strong> and that is move-in ready. Definitely not interested in a fixer-upper or anything that requires too much work or investment.</blockquote>


Last year around this time I struggled with the same problem. I was looking at loan amounts around $550K or so and rates then were probably around 6.5%. I thought interest rates were headed up and that maybe I should buy to lock in before 8% rates showed up. Today, I can get that same loan for 6.35% and prices have come down at least 10% if not further...



Even if a home you would want is near rental equivalency, it's likely that market conditions will push those prices below rental equivalency in your target ara as other areas in OC get down to that level. Hold out for at least another year to see what the increasing foreclosure volume does to prices. The REOs should continue to pressure comps and you will be able to buyer more or buy the same for cheaper.</blockquote>


I... I... I'm touched. Our little Ipo has really come along way. He was a stubborn one too. It seems like it was only a year ago when you would look up stubborn in the dictionary and there would be a picture of Ipo and I strangling each other. Now... it is us, but smiling and holding a bunch of cash in our hands. Man... I am so proud of our little Ipo. All that time he struggled with his IHB education shows the pain of it all was really worth it.



HB bear, too - Wait, as that is what I keep telling people. Just wait until the NODs and foreclosures slow down, and when they ask again I tell them they keep getting worse, so wait. Look at it this way, when according to DataQuick foreclosures/REOs account for 20% of the resales, roughly 500 or so per month, and 1300 foreclosures happened last month, 1100 the month before, 1000 the month before, and probably around 1800 this month, does that tell you they are not being absorbed fast enough or am I a nutter (Ipo, shhhhh we know, I am)?
 
[quote author="tmare" date=1219270547]Not that it matters much but I do believe Ipo is a woman.</blockquote>


I'm touched. I obviously exhibit my sensitive side here on the blog!



As Graph, Cayci, IR2, and artichaze will attest (those who have met me), if I am a woman, I might be the heaviest and ugliest one in Irvine...
 
Bear,



The price of home ownership = 2-1/2 x your current rent = a no maintenance newer home.



An older home will escalate to 3-1/2 x your current rent. Yard maintenance and water bill = $425 /mo.



Owning a home = many trips to Home depot = all your eating out lunch budget.
 
HB Bear Too - Honestly, I do not know what you should do.




My wife wants to own again in the worst way. I want to own again, but I kinda like leasing. And we will wait a couple more years. I do not fell like jumping on the train in the middle of the train wreck.
 
[quote author="awgee" date=1219275857]HB Bear Too - Honestly, I do not know what you should do.




My wife wants to own again in the worst way. I want to own again, but I kinda like leasing. And we will wait a couple more years. I do not fell like jumping on the train in the middle of the train wreck.</blockquote>


Awgee, I empathize regarding the wife. My wife, and I don't think this is hyperbole, <strong>desperately</strong> wants to own a home. She feels like we're going to wait in perpetuity (or at least a time frame that feels like eternity) to buy and she's sort of looking for closure I think. Add to that the fact that she's turning 40 next year--I think maybe she feels a bit like it's understandable that folks in their 20s or 30s don't own, but those in their 40s!?!? That's a another kettle of fish all together from her perspective, I reckon.



I'm considering discussing the idea of renting a bigger/nicer home (we really are very cramped) if we decide to wait. Maybe, that will keep her legitmately happy in the intervening period.
 
[quote author="bkshopr" date=1219275608]Bear,



The price of home ownership = 2-1/2 x your current rent = a no maintenance newer home.



An older home will escalate to 3-1/2 x your current rent. Yard maintenance and water bill = $425 /mo.



Owning a home = many trips to Home depot = all your eating out lunch budget.</blockquote>


Not sure I follow you here.
 
[quote author="HB Bear, Too" date=1219276850][quote author="awgee" date=1219275857]HB Bear Too - Honestly, I do not know what you should do.




My wife wants to own again in the worst way. I want to own again, but I kinda like leasing. And we will wait a couple more years. I do not fell like jumping on the train in the middle of the train wreck.</blockquote>


Awgee, I empathize regarding the wife. My wife, and I don't think this is hyperbole, <strong>desperately</strong> wants to own a home. She feels like we're going to wait in perpetuity (or at least a time frame that feels like eternity) to buy and she's sort of looking for closure I think. Add to that the fact that she's turning 40 next year--I think maybe she feels a bit like it's understandable that folks in their 20s or 30s don't own, but those in their 40s!?!? That's a another kettle of fish all together from her perspective, I reckon.



I'm considering discussing the idea of renting a bigger/nicer home (we really are very cramped) if we decide to wait. Maybe, that will keep her legitmately happy in the intervening period.</blockquote>


My wife is kinda the same way. I try to calm her down and tell her that we will, but i'm not willing to pay an extra 80-100k. If she would however like to add the extra cash.... That usually ends the talk right there. I think her "getting a better deal" side wins out on her "MUST have house side". :lol:



Good luck

-bix
 
[quote author="HB Bear, Too" date=1219276850][quote author="awgee" date=1219275857]HB Bear Too - Honestly, I do not know what you should do.




My wife wants to own again in the worst way. I want to own again, but I kinda like leasing. And we will wait a couple more years. I do not fell like jumping on the train in the middle of the train wreck.</blockquote>


Awgee, I empathize regarding the wife. My wife, and I don't think this is hyperbole, <strong>desperately</strong> wants to own a home. She feels like we're going to wait in perpetuity (or at least a time frame that feels like eternity) to buy and she's sort of looking for closure I think. Add to that the fact that she's turning 40 next year--I think maybe she feels a bit like it's understandable that folks in their 20s or 30s don't own, but those in their 40s!?!? That's a another kettle of fish all together from her perspective, I reckon.



I'm considering discussing the idea of renting a bigger/nicer home (we really are very cramped) if we decide to wait. Maybe, that will keep her legitmately happy in the intervening period.</blockquote>


Renting our long-term target sized home was the key to making Ms. IPO happy. She loves the extra 800sf and that has really helped cool her desire to own. Four months ago she refused to sell our 1622sf condo. Now, she is willing and fairly happy about the prospect of renting, provided we don't have to move again, for two years.
 
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