Rent vs Buy 2br Condo

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My wife and I have been looking at condo's all over South OC for the last 18 months. We've found a number of places we like in our price range (apx $250k) and have recently made several offers. We are getting virtually zero response from the Banks. I'm begining to wonder if that is actually a good thing and weather we should wait on the sidelines a bit longer. I was hoping to get into a place before the end of the year to take advantage of the tax benifits but that's looking less likely. We have the 20% to put down so our payments would be about the same as renting.



My fear's are I'm seeing less properties come onto the market in this price range.

Interest rates will jump over 7%



How does one by at auctions?

Should I just take the 1st acceptable offer the banks makes due to the slow responses?

Should I suck it up and burn another $10k in rent for 6 more months hoping 2br drop at least double that?



Any advise?
 
my advice would be to wait.



as for 'burning $10k in rent', how does that compare to 6 months of the after tax deduction cost of piti and hoa fees if you were to buy the condo? i suspect that it is a wash. so every bit that the price drops over the next 6 months is a net gain for your wallet.
 
[quote author="freedomCM" date=1224911198]my advice would be to wait.



as for 'burning $10k in rent', how does that compare to 6 months of the after tax deduction cost of piti and hoa fees if you were to buy the condo? i suspect that it is a wash. so every bit that the price drops over the next 6 months is a net gain for your wallet.</blockquote>


You pay more if you buy a condo in 6 months and the HOA is very expensive for condo.
 
Keep looking, and making low offers on places you like. Just make sure you factor in ALL the additional costs of home ownership including:



Payments

Taxes

HOA (some communities have more than one)

Mello Roos (if applicable)

maintenance

increased utilities (e.g. trash and water bills)



If you can still afford the places you like after factoring everything then consider the likely time horizon and ultimate disposition of the unit. Having recently sold a two bedroom after having a couple of kids, I can say that one very quickly realizes the limitations of this sized unit. If I had the cash to make a down payment on another place without selling, I would have gladly kept the condo. If you are planning on having kids in the near future, realize that you will most likely grow weary of the condo quickly. Then you have to determine whether you would need to sell in order to afford something bigger, or if you are interested in becoming a landlord (2/2s are great rental properties). If you think you would need the cash then some serious consideration must be given the potential market conditions, and that may pose a problem...



The housing market is a very large part global deleveraging process that is repricing all assets. This process will most likely continue for some time (perhaps another year or two in the case of housing). Coming out of this repricing we are going be forced to adapt with a post-modern economy that is far less reliance on leverage. Generally lower levels of leverage imply lower asset valuations. For housing this mean the "recovery" in prices will require a great deal of time. As a home owner buying today you take the risk of declining home values chaining you to your house, and potentially limiting your ability to move as your family grown (assumption here is that you are going to have kids at some point)
 
[quote author="BottomFisher" date=1224909581]My wife and I have been looking at condo's all over South OC for the last 18 months. We've found a number of places we like in our price range (apx $250k) and have recently made several offers. We are getting virtually zero response from the Banks. I'm begining to wonder if that is actually a good thing and weather we should wait on the sidelines a bit longer. I was hoping to get into a place before the end of the year to take advantage of the tax benefits but that's looking less likely. We have the 20% to put down so our payments would be about the same as renting.



My fear's are I'm seeing less properties come onto the market in this price range.

Interest rates will jump over 7%</blockquote>






[quote author="BottomFisher" date=1224909581]How does one buy at auctions?</blockquote>


See the <strong><a href="http://www.irvinehousingblog.com/forums/viewthread/346/#4586">foreclosure thread.</a></strong>



[quote author="BottomFisher" date=1224909581]Should I just take the 1st acceptable offer the banks makes due to the slow responses?</blockquote>


Maybe... but you have to give a good definition of "acceptable." The posts above give good info to consider in your total purchase costs. Also consider maintenance and improvements.



[quote author="BottomFisher" date=1224909581]Should I suck it up and burn another $10k in rent for 6 more months hoping 2br drop at least double that?</blockquote>


You will be trading the uncertainty of interest rates for the uncertainty of purchase prices. It is really ultimately up to you and your spouse to determine which is more tolerable.



Rates will go up. Prices will come down. When, and how much... ah, there's the rub.



<em>Life <strong>is </strong>pain, Your Highness. Anyone who tells you otherwise is selling something.

-Princess Bride</em>
 
Before you buy, please read the post <a href="http://www.irvinehousingblog.com/blog/comments/timing-does-matter/">Timing Does Matter</a>.
 
Actually rates are coming down, not going up. With the global recession, people are racing back into the dollar. Adn buying t-bills, this lowers interest rates.
 
[quote author="norcaljeff" date=1225591229]Actually rates are coming down, not going up. With the global recession, people are racing back into the dollar. Adn buying t-bills, this lowers interest rates.</blockquote>
From what I read it went up .5 point not down recently.
 
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