Rent? Buy? Move to Kalamazoo?

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cherry14_IHB

cherry14_IHB

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I've seen a lot on these forums about how some people won't buy in Irvine until it reaches the point where it is less expensive to buy than it is to rent. My question is this: how do we know this will EVER happen? Isn't it possible that it will always be cheaper to rent? If so, will those people just rent in Irvine forever, or give up and look elsewhere? Any opinions would be helpful. Thanks!
 
Does Kalamazoo have 3-car garages?



I think if renting is always cheaper in Irvine... those who care about rental parity will rent forever. If they really want to own a home, they'll buy somewhere else that has gone below rental parity, rent it out and retire there in 30 years.



Personally, I would rent forever based on rental parity... but the boss wants to own so if it gets to a point where it's close enough (aka The IPO Effect)... we'll probably go back to being true IHOs.
 
It all depends on the person. Some people have no problem renting forever; Some do want to buy, you need to figure out what is important to you. I would say in general couples with kids may place greater value in owning, because of its stability and you don't have to move subject to a landlord's wish. However this also depends on the parent. (some parents have no problem giving their kids soda to drink, some don't at all)



Also, in general, I would say to treat buying a Primary residence the same as buying a stock may not be the best for you. A stock has only one attribute: price. You want to buy it low, low, low. One share of GM stock, for example, is no different from another share of GM stock. A house, however, even the ones on the same street, are widely different: some face the sun, some have better conditions and upgrade, some are closer to the park, some are next to a busy street. Even if you can determine the exact bottom, how do you know for sure that the right house will be there for you? Many people have the experience that it takes months to have a house with a desired floor plan to come to market.



So my advice is that if you want to buy a house, approach it using a criteria of 50% price and 50% desirability. This means you keep looking for one that fits in terms of location, floor plan, desired upgrade, yard size, etc, then also consider price, but do not focus 100% on finding the bottom. I would say if a house has features that you really like, it may even be worth paying extra. It's your life, your house, and you got to live in it, what's wrong with paying a little extra? We all pay extra for nice things such as an iphone. Yet when it comes to a house, who says we can not?
 
There's definitely non-financial benefits of owning your own home (no landlord, you can modify it however you want (as long as you can get permits for it)), not to mention the emotional aspect.



I think another factor is how permanent you situation is. If you are in a job or job field where you think you could remain in the same house for thirty years, owning starts to make a lot more sense-after 30 years, you no longer have a monthly payment-free rent (ignoring insurance, repairs, taxes, and HOA fees).
 
[quote author="cl1" date=1242950293]It all depends on the person. Some people have no problem renting forever; Some do want to buy, you need to figure out what is important to you. I would say in general couples with kids may place greater value in owning, because of its stability and you don't have to move subject to a landlord's wish. However this also depends on the parent. (some parents have no problem giving their kids soda to drink, some don't at all)



Also, in general, I would say to treat buying a Primary residence the same as buying a stock may not be the best for you. A stock has only one attribute: price. You want to buy it low, low, low. One share of GM stock, for example, is no different from another share of GM stock. A house, however, even the ones on the same street, are widely different: some face the sun, some have better conditions and upgrade, some are closer to the park, some are next to a busy street. Even if you can determine the exact bottom, how do you know for sure that the right house will be there for you? Many people have the experience that it takes months to have a house with a desired floor plan to come to market.



So my advice is that if you want to buy a house, approach it using a criteria of 50% price and 50% desirability. This means you keep looking for one that fits in terms of location, floor plan, desired upgrade, yard size, etc, then also consider price, but do not focus 100% on finding the bottom. I would say if a house has features that you really like, it may even be worth paying extra. It's your life, your house, and you got to live in it, what's wrong with paying a little extra? We all pay extra for nice things such as an iphone. Yet when it comes to a house, who says we can not?</blockquote>
The lender says so because your DTI is out of wack. Again, it's one thing to want someone and it's a whole other thing if you can really afford it. The reason people overpay for homes probably mainly due to emotions and impulse more than anything else.
 
What about the other half of her question?



Would you consider looking elsewhere besides Irvine where price to rent may be close to price to own? And if so..... where?
 
HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again
 
[quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


It has already in the IE, for example.
 
[quote author="Geotpf" date=1242954190][quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


It has already in the IE, for example.</blockquote>
And just a matter of time before it comes to most parts of the OC.
 
[quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


Did you mean in the late 90's it was cheaper to own than rent - a typo maybe?



I read an article earlier in OC Register about the ARM resets coming in 2010 and 2011, making a recovery delayed until 2012. The author used the same bar graphs found in this blog. What was even more interesting was the dispute the author got into with one read in the comments section. It went back and forth forever - the reader arguing that the loans were not negatively amortized, and the author arguing they were. Those on the sidelines were just confused one way or the other. I would post the link, but now for the life of me I cannot find the article anywhere on the OC Register websit. Either I am bad at looking, or it was taken down.
 
[quote author="Geotpf" date=1242954190][quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


It has already in the IE, for example.</blockquote>


What is the "IE"? Is it internal elevations, what exactly?
 
[quote author="gypsyuma" date=1242962885][quote author="Geotpf" date=1242954190][quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


It has already in the IE, for example.</blockquote>


What is the "IE"? Is it internal elevations, what exactly?</blockquote>


IE = Inland Empire
 
[quote author="gypsyuma" date=1242962823][quote author="24inIrvine" date=1242953185]HB, Tustin Ranch, Foothill Ranch, Mission Viejo, parts of many other cities....Awgee made a nice list the other day.





And to answer the OP, its not like owning has never been below rents. Even as recent as the late 90's it was cheaper to rent than own. The cycle will come around again</blockquote>


Did you mean in the late 90's it was cheaper to own than rent - a typo maybe?



I read an article earlier in OC Register about the ARM resets coming in 2010 and 2011, making a recovery delayed until 2012. The author used the same bar graphs found in this blog. What was even more interesting was the dispute the author got into with one read in the comments section. It went back and forth forever - the reader arguing that the loans were not negatively amortized, and the author arguing they were. Those on the sidelines were just confused one way or the other. I would post the link, but now for the life of me I cannot find the article anywhere on the OC Register websit. Either I am bad at looking, or it was taken down.</blockquote>


yeah sorry, it was a typo.



And yes, IR has also said recently that he does not expect a bottom til 2012. And really even if was interest only and not a Neg-AM loan it will be still not be good. The balance is still 100% LTV at the time of the loan (or minus whatever the minor downpayment was) and is for sure a much higher LTV now with decreased home values and will still have a major payment shock when the reset and/or recasts come.
 
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