Stonegate for a Chinese

[Cklein]

I am a Chinese working in Irvine for a while, and looking to go back to China in two or three years. Seriously, I love to live in China better than here.

But I have been in the states for over 10 years now, not owning anything in US make me feel uncomfortable. I may visit US from time to time, and who knows, maybe I will come back to US to have my kids to go to school here, anyway, future is not quite certain.

Now, buying a real SFH in stone gate has only one choice, Maricopa. I moved here from Texas, really can't get used to the small backyard, but, what I can do! I am lazy, don't want to take care of the house, so a brand new one makes a lot sense.

But owning a home in Stonegate is not cheap. $900K house comes out a $4500/month cost of owning if I include everything. I am single, and throw away $4500 per month sounds stupid if I go back to China. So I am thinking to rent out the house if I really decide to go back to China. Do you guys think this is a good idea?

If I don't buy now, I am afraid 5 years later, I need to pay $100K more than what we pay now. How do you guys see the market now?

 

[The Motor Court Company]

I don't know the market rent for Maricopa because in reality there are probably not many for rent - however I see it somewhere the average monthly rent in Irvine is around $1.6 per square feet. You may find something comparable in the close by Woodbury.

5 years from now, my guess is RMB against the dollar would appreciate much faster than the house price in Irvine. So as long as most of your assets are RMB denominated, 5 years from now you should be ahead.

 

[cash92104]

What part of China?

if you are going to leave then I wouldnt recommend buying.  I think the market hit rock bottom earlier this year and you are seeing the effects of it right now.  with low prices and low interest rates investors have helped take everything off the market.  i think prices can only go up but who knows at what pace.

 

[rkp]

where do you live now and how much are you paying in rent?  as a single guy, i imagine your rent is at max $2000 so you are spending $2500 additional a month or $150,000 after 5 years.  unless you really want to buy for other reasons, spending $150K extra to not risk spending $100K more in 5 years doesnt make a lot of sense

 

[Cklein]

Thanks, Guys, the analysis makes a lot sense.

I am thinking to buy a house because it seems the trend, and I am old enough, live in the apartment too long, and I can afford it. Too many people question my decision of staying inside an one bedroom apartment, and think I am crazy to "throw money away" (You are right about my rent, $1700).

I didn't realize in 5 years, I would spend extra $150K if I have to stay in a big house. But I was thinking if the house appreciate at 3% per year going forward, that will offset the extra expense, and the same time, I enjoyed a 2500 SQFT home instead of a 800 SQFT apartment, even I am happy with where I live now.

So the decision point actually is: Will the market appreciate 15% in next 5 years for a million dollar home in Irvine area?  Since it's bottom now, it seems reasonable? 10 years 30%? Seems easy, right?

I know the tax would also help a little bit, but let's not talk about the TAX deduction part, that always misleads a lot people.

I am actually working here, so I make money here, not in China. So my money is in US$, not in RMB. Though I do have businesses in BJ and Shanghai, but they are losing money, and I don't see they will turn profitable any time soon. Going back to China is for the exciting "REAL" life style, not the money. Irvine is simply dead boring, may I say.

 

[traceimage]

I personally would not want the hassle of buying/owning/maintaining a home just to live in for a few years, when you already know you ultimately want to go back to China. And then after leaving, you'd have to deal with renting it out, finding tenants, etc...that just seems like such a bother from overseas, and not worth the trouble.

I found your reasons for wanting to buy a home interesting. Because it's the trend, you are old enough and can afford it, other people are questioning your decision to stay in your apartment, you are uncomfortable not owning anything in the US, because your home might appreciate--none of those seem like great reasons to buy...to ME. That's just my opinion, and you need to do what makes you happy and comfortable. But personally, I'd rather be free as a bird, rent, and then go back to China whenever I wanted, without having a house to worry about here.

 

[rkp]

irvine is absolutely boring but you cant compare living in a city with a suburb.  live in santa monica near 3rd street, pasadena near colorado,  or downtown near LA live and you will have a lot more fun

tough call on the 3% increase per year going forward...and i dont know if this is bottom as there is no inventory. 

but you have the money to support the bigger house and might as well enjoy it now vs waiting forever for that absolute bottom.  i agree and disagree with trace's point.  you cant guarantee you will leave in 5 years and if you did want to rent the same house, it would be close to $3000.  not sure if you calculated how much of the $4500 you would get back in deductions and how much of it would be principal over 5 years...i imagine they are close

have you considered a resale in woodbury?  they seem to be going for cheaper than stonegate and relatively new

we spoke with the listing agent on this house several times and i am pretty sure they will take any offer close to $900K.  keep in mind that price includes landscaping so you are definitely ahead of that stonegate house
http://www.redfin.com/CA/Irvine/23-Chimney-Rock-92620/home/5958718

 

[Cklein]

Free like a bird? I have been "free" too long. Sometimes I feel I am like a girl, I need a place called: "home". Right now, when people ask me: Where is your home? I am like, I don't know. I Have an apartment in Beijing, and another apartment in Irvine, all renting. Trust me, not very good feeling.

 

[Cklein]

Wow, this one seems easily beat Maricopa plan.

While I am debating whether I should buy a new house or not, which means I don't have the excitement of owning a house. Now I was thinking buying "NEW" may give me some excitement.

But I have to admit, this one is really attempting if it goes under $900k.

irvine is absolutely boring but you cant compare living in a city with a suburb.  live in santa monica near 3rd street, pasadena near colorado,  or downtown near LA live and you will have a lot more fun

tough call on the 3% increase per year going forward...and i dont know if this is bottom as there is no inventory. 

but you have the money to support the bigger house and might as well enjoy it now vs waiting forever for that absolute bottom.  i agree and disagree with trace's point.  you cant guarantee you will leave in 5 years and if you did want to rent the same house, it would be close to $3000.  not sure if you calculated how much of the $4500 you would get back in deductions and how much of it would be principal over 5 years...i imagine they are close

have you considered a resale in woodbury?  they seem to be going for cheaper than stonegate and relatively new

we spoke with the listing agent on this house several times and i am pretty sure they will take any offer close to $900K.  keep in mind that price includes landscaping so you are definitely ahead of that stonegate house
http://www.redfin.com/CA/Irvine/23-Chimney-Rock-92620/home/5958718

 

[velbon]

my view is
today the 30yr mortgage is extremely low, taking out a mortgage = short the 30yr fixed bond.

Buying now and rent out: you lock in the historically low rate, you probably can get break even if you can rent it out, downside for you is limited.

Buy 3 years later: Inflation will definitely be back and 30yr bond will sell off by 200 bps from now. You future cost of owning a house will be much higher, even if the housing price stay flat for the next 3 yrs.

So, If I were you, I would look at Quail hill/ LA area instead of SG: both are much closer to business and freeway, easier to find rental.

I have a friend has been looking for rental in LA already. He specifically said he likes the convenience.

enjoy ur single life in china and do not be fooled by those material young girls

 

[jamboreedude]

What part of China?

if you are going to leave then I wouldnt recommend buying.  I think the market hit rock bottom earlier this year and you are seeing the effects of it right now.  with low prices and low interest rates investors have helped take everything off the market.  i think prices can only go up but who knows at what pace.

Interest rates are held down artificially by the Feds. Wait when market forces and the bond vigilantes finally wakes up, interest rates will skyrocket and home prices will drop because it would be more expensive to borrow so there will be less buyers for homes.  What do you guys think?

 

[Cklein]

Vellon and you got me thinking.

Interest rates are held down artificially by the Feds. Wait when market forces and the bond vigilantes finally wakes up, interest rates will skyrocket and home prices will drop because it would be more expensive to borrow so there will be less buyers for homes.  What do you guys think?

 

[usctrojancpa]

my view is
today the 30yr mortgage is extremely low, taking out a mortgage = short the 30yr fixed bond.

Buying now and rent out: you lock in the historically low rate, you probably can get break even if you can rent it out, downside for you is limited.

Buy 3 years later: Inflation will definitely be back and 30yr bond will sell off by 200 bps from now. You future cost of owning a house will be much higher, even if the housing price stay flat for the next 3 yrs.

So, If I were you, I would look at Quail hill/ LA area instead of SG: both are much closer to business and freeway, easier to find rental.

I have a friend has been looking for rental in LA already. He specifically said he likes the convenience.

enjoy ur single life in china and do not be fooled by those material young girls

I'll play devil's adocate here....or interest rates could stay the same or even go a little lower as the US goes through it's own Lost Decade like Japan is still going through.  Their Debt-to-GDP is higher than our's but their 10-year bond rate is around .80-.85%.  We still have a lot of defaults to work through on the REO side and that will keep employment, growth, and inflation in check for the near term.

 

[qwerty]

In theory rates going up would punish home prices, however I am now a convert and believe rates are going to stay low for at least the next 3-5 years. Also, rising interest rates would do a heck of a number on the interest payments on the country's ballooning debt and could brIng the US to its knees and the rest of the world with it

 

[Cklein]

If this is the case, I am in no hurry to buy a house then.

In theory rates going up would punish home prices, however I am now a convert and believe rates are going to stay low for at least the next 3-5 years. Also, rising interest rates would do a heck of a number on the interest payments on the country's ballooning debt and could brIng the US to its knees and the rest of the world with it

 

[usctrojancpa]

If this is the case, I am in no hurry to buy a house then.

In theory rates going up would punish home prices, however I am now a convert and believe rates are going to stay low for at least the next 3-5 years. Also, rising interest rates would do a heck of a number on the interest payments on the country's ballooning debt and could brIng the US to its knees and the rest of the world with it

I think you have plenty of time to buy and it's tough out there night now with the lack of inventory.

 

[Cklein]

I keep examine myself regarding why I want a house. Still not clear yet, but maybe the feeling of a "REAL" life? Or complete some kindof task?

House buying experience is not fun,so maybe I will just keep looking and waiting for my dream house, which I will know that I can stay in there for 20 years, and won't look other way. It's the same thing as finding a wife. If you are not sure you can stuck with this woman for next 20 years, don't get married.

 

[usctrojancpa]

I keep examine myself regarding why I want a house. Still not clear yet, but maybe the feeling of a "REAL" life? Or complete some kindof task?

House buying experience is not fun,so maybe I will just keep looking and waiting for my dream house, which I will know that I can stay in there for 20 years, and won't look other way. It's the same thing as finding a wife. If you are not sure you can stuck with this woman for next 20 years, don't get married.

Yup, definitely don't settle or force it because you'll end up regretting it.  Remember, the transaction costs in buying and selling real estate are not low.

 

[velbon]

I do not agree. This time around all central banks are competing with each other to pring money. Japan is a special case, most debt owned by their own banks and global inflation was going down at the time and other central banks are very hawkish on inflation.

I was at ICI annual conference last month, the bigger fear most big asset management firms have is inflation in 2-3 years.

just go to pimco website and read the his monthly IOs.

my view is
today the 30yr mortgage is extremely low, taking out a mortgage = short the 30yr fixed bond.

Buying now and rent out: you lock in the historically low rate, you probably can get break even if you can rent it out, downside for you is limited.

Buy 3 years later: Inflation will definitely be back and 30yr bond will sell off by 200 bps from now. You future cost of owning a house will be much higher, even if the housing price stay flat for the next 3 yrs.

So, If I were you, I would look at Quail hill/ LA area instead of SG: both are much closer to business and freeway, easier to find rental.

I have a friend has been looking for rental in LA already. He specifically said he likes the convenience.

enjoy ur single life in china and do not be fooled by those material young girls

I'll play devil's adocate here....or interest rates could stay the same or even go a little lower as the US goes through it's own Lost Decade like Japan is still going through.  Their Debt-to-GDP is higher than our's but their 10-year bond rate is around .80-.85%.  We still have a lot of defaults to work through on the REO side and that will keep employment, growth, and inflation in check for the near term.

 

[usctrojancpa]

I do not agree. This time around all central banks are competing with each other to pring money. Japan is a special case, most debt owned by their own banks and global inflation was going down at the time and other central banks are very hawkish on inflation.

I was at ICI annual conference last month, the bigger fear most big asset management firms have is inflation in 2-3 years.

just go to pimco website and read the his monthly IOs.

my view is
today the 30yr mortgage is extremely low, taking out a mortgage = short the 30yr fixed bond.

Buying now and rent out: you lock in the historically low rate, you probably can get break even if you can rent it out, downside for you is limited.

Buy 3 years later: Inflation will definitely be back and 30yr bond will sell off by 200 bps from now. You future cost of owning a house will be much higher, even if the housing price stay flat for the next 3 yrs.

So, If I were you, I would look at Quail hill/ LA area instead of SG: both are much closer to business and freeway, easier to find rental.

I have a friend has been looking for rental in LA already. He specifically said he likes the convenience.

enjoy ur single life in china and do not be fooled by those material young girls

I'll play devil's adocate here....or interest rates could stay the same or even go a little lower as the US goes through it's own Lost Decade like Japan is still going through.  Their Debt-to-GDP is higher than our's but their 10-year bond rate is around .80-.85%.  We still have a lot of defaults to work through on the REO side and that will keep employment, growth, and inflation in check for the near term.

I do agree that other central banks around the world are more hawkish than the FED, but even the most stubborn one (ECB) will probably be lowering interest rates in the next few months due to the turmoil in Europe.  Brazil has been lowering rates, Australia, England announced more easing, etc so that tells me that global growth is slowing down.  I believe that the excess debt takes a long time to work off (i.e. going through all the defaults including over in Europe).  A lot of those asset management firms are sheep in my opinion even though they may be some of the smartest folks out there.  A buy-and-hold investment strategy in today's world is a risky proposition, to make money you have to go in and out and be quick and nimble.  In my mind, there's a decent chance that our 10-year bond goes to 1% and 30-year fixed rates go to 3%.