***UPDATE*** Closing on Jan 15, 2008 - Savannah

NEW -> Contingent Buyer Assistance Program
Daedalus- well i don't plan on selling it anytime soon but worse comes to worse if the economic goes south and me or my wife lose our job we can still swing the 1650 payment. that is why i opt for that.... i am hoping to be making alot more in 10 years.... i am only 31 right now. hope to make manager in 4 years.
 
<p>Trust me. . . as my moniker indicates, I know about commutes (I commuted from Irvine to LA and then Pasadena for 2 and a half years) so I know what you are talking about. If it is room that you are looking for, you can get bigger apartments elsewhere (i.e. Anaheim or Costa Mesa). The rent is a little higher but not by much. In fact, there are some 2-bd apartments in irvine that is about $1800-$2000. I know it seems like a lot more but you are getting double the place. </p>

<p>The whole equity thing is overblown since you are paying interest for the first ten years of any loan (I/O or traditional). If rent = mortgage payment+HOA+tax+maintenance - tax deduction, then buying is the same as renting. Additionally, you have just locked in your $100K into the house and now have to pay someone 7 percent interest just to use it. </p>

<p>My wife and I stuck it out in a one-bedroom apt in Irvine for a year and a half in order to save up for a house. We finally got fed up and moved to a 2 bd townhouse (about a year ago) that is about 1100 sq. We are paying about 1/3 more ($1500 v. 2300) but we have a garage and more space. We like where we are and would probably buy in a year or two. We will see. </p>

<p>We are in a slightly different situation that you. We make more money (about $150K or so) but have little savings and more debt (stupid law school loans). </p>

<p>In the end, buying in this market is not a great financial choice. However, if you are buying for non-economic reasons than more power to you. I have a co-worker who is buying but he has specific needs and likes the house he found. He plans to stay there for the rest of his life and is in great financial shape. </p>

<p> </p>
 
I don't know what whether you should walk or not; too personal. But, I do think you should threaten to walk and see if you can get more incentives or price knock-offs.
 
<p>I didn't realize it was Lennar. In Florida, Lennar built some really poorly built houses.</p>

<p>I personally watched them put up shoddy stuff. 'Course this was a while ago, and a country away, but since you mention shoddy too, I suppose the apple doesn't fall far from the tree.</p>

<p>Make them fix stuff before you buy; after you lose all your power. Or ask them to escrow a small amount to assure fix up. They will almost certainly say no to that, so make sure all fix up is done. By the way, your contract will almost certainly say that you must close even tho punch list is not finished. I say, so what? YOU have the power now, not the developer. </p>

<p>And Lennar deserves no mercy.</p>

<p>(Lennar is based in Miami, and I have been at their corporate headquarters a few times to do closings.)</p>
 
if renting and buying is the same wouldn't it be better to buy? been reading on this forum and the right time to buy when the two equal out right?



so far.... i have not heard any strong argument for me to walk away yet.... hopefully IR, awgee, or graphix will do an analysis showing me otherwise....
 
<p>Come to think of it you should close because otherwise your wife would kill you.</p>

<p>I would kill you if you didn't chose to get out of 500 square feet.</p>
 
"i would like to hear all the bears comments on why i should walk away from my 5k deposit."



Are you really considering walking? If so I would suggest you have a lot more research to do about where prices are headed. If not, congrats and good luck.
 
lawyerliz..... you nail it right in the bulls eye.... if it was up to me i would wait... but the wife is in love with the place. i only see dollar sign....
 
jbatz,


There are always protesters outside the new homes at The Riverbend at Orange (off Glassell near 91 freeway). They have a big "Beware Lennar" sign up. Come to think of it, I have seen this "Beware Lennar" sign a couple of times throughout the years at Lennar complexes.





You should consider going over there to ask them what is making them protest Lennar. I think they are there on the weekends for sure.
 
<i>"hopefully IR, awgee, or graphix will do an analysis showing me otherwise...."</i><p>


Not me, a decision to walk away is personal, but I will tell you my story. In 1990, I traded up with 20% down. Within two years, depreciation had eaten up my 20% equity. Within another three years, I was 25% upside down on my mortgage. I did not have any plans to move, but it hurt. It bothered me, alot, to know that I owed more on my house than it was worth.<p>


I constantly hear folks in here say that if you are planning on living in a house for the long term, why would it matter if your home depreciates. Well, maybe they are just emotionally stronger or better or something than me, but my personal experience is that it sucked. I disliked being upside down intensely.<p>


In 2000, we traded up again. We sold in the summer of 2005 with an amount of equity we found acceptable. We are leasing now. And the equity we pulled out has doubled due to investments, which I find much more satisfying than losing equity due to a declining market. And so far we have not experienced any downside to leasing vs. owning.<p>


I don't know if you should walk away. But it is working for us.
 
i am 100% sure the house price will go down. but interest will go up or the credit money will dry up and bank will demand 40% down payment or worse yet... they come up with another weird loan program like 60 years.... or maybe the feds will up the conforming loan to say 500K.... to many other questionables in play... right now i am getting a good rate of 5.5% and affordable payment. but on the other hand.... i am worry about the economic and jobs overall. after all this is my first home.



one thing i have notice is that alot of houses in westminster that falls under 417k will sell. been watching and hoping to get one when they dropped below 350k but they are all gone by then. So IMHO OC real estate isn't that bad. given that the house is liveable and it is in say westminster, irvine, HB. if you are talking about stanton and santa ana then that is another story...
 
It was my impression that the rent verses own equation was based on a 30 year fixed.



I would think that numbers should drive this decision. If you walk and wait 1 to 1.5 years to purchase verses moving forward with

this deal. If you can get a similar unit for 20% less next year what would that mean to your calculations? Are you sure you would want to stay in this unit for the next 10 years?
 
<p>Economically, renting is better if buying = renting if you have a down payment since the down payment can earn you extra money while it would get locked into a house. </p>

<p>IF you have nothing down, buying would be better than renting if all things are equal. </p>

<p>Also, buying locks you for 5-10 years. If you lose your job, you have no wiggle room.</p>
 
I too lived through the down market of 1990 and had a lot of friends that went deep under water with their homes. I lost a lot on the sale of a SFR. If you are willing to accept that your place may be worth $250,000 in 2011 than you should probably buy......otherwise you should walk from your down payment. I believe that you can very likely find an apartment in the Irvine/tustin area for $1600 that has two bedrooms. I would do that and wait a year or two to purchase.





If you are uncertain at all..........don't do it.





As for negotiating........if you decide you want to, I suggest that you formulate a good guy/bad guy strategy with your wife. One of you start to wig out in front of the salesman and wear him down with your fighting. Make the fighting last for a week or so...give them time to figure out what they are willing to give you. It can be the salesman and your spouse against you.........she can beg the salesman for concessions to get you to buy.
 
living in irvine in a brand new place with new appliances for ten years..... yes.

living in HB in 550sqft, with a 45min commute for 1year..... tough sell to the wife. even i would have to think twice bout that.



as for 20% less.... do you think it will drop 20% less in irvine? it has already dropped 20% from peak sold units. (highest sold unit was 535k). it is hard to imagine a brand new townhome for 348k in 12 months in irvine. but you might be right... who knows.... that is a tough pill to swallow.... but by then how easy would it be to borrow money??? and where would the interest rate be at???
 
250k by 2011? woow.... what would a townhome in westminster be worth? 100k? if you kept your place back in the 1990's would you say that it would have taken say 6-7 years to recover the loss? and say another 2 years to make some money? to be honest i would be happy if i can sell the place for 550k in tens years. if i get 475k in tens years then it will fit into my plan nicely.
 
<p>Awgee, did you not find some comfort knowing that you weren't paying rent? You were losing equity, but how much was the 25% paper loss compared to the rent you would have paid over 3 years? It never gets quantified for a financial analysis but it's hard to deny there's <em><strong>some</strong></em> value in owning a home vs. renting. My fiancee and I bought a cheap fixer after 5 years of renting. We were sick of sharing walls, ceilings, floors and garage space. We were outgrowing our place too. She always wanted a cat but was never allowed to have one at any point in her life, and now she has 2...or 3 if you count the neighborhood stray who figured out we're generous with the cat food and has since adopted us. I get my own garage to work in at any hour and to store my cars, parts and tools. We don't have to worry about being forced to move or how much the rent will go up each year. How much is all this worth to me? I'm not sure, but I know it's more than the difference between our former rent payments and our current house payments. In 2003 I was "sure" the market was topping and we would be underwater, but it just felt right, and I think we would have been happy with our choice even if the market did tank then.</p>

<p>You would pay over $100k in rent over the next 7 years to stay where you're at now, even more if you rent a larger place. As you noted, there's also some value to be captured in the decreased commuting expenses and time.</p>
 
<p>jbatz, </p>

<p>Let's say you get your $550K selling price. At six percent commission, you would get about $80K in your pocket. That mean you made $8K a year or about 1.8% appreciation per year. You will be about 1 to 2 percent below inflation. </p>

<p>If you sell at $475K, you will make about $15K in 10 years or about 0.3 percent yearly appreciation. </p>

<p>I am not telling you whether you should or should not buy. That is a decision for your wife and you. Buying a house is more than just money most of the time (NAR pin here I come) so you have to weigh things out yourself. Just make sure that you do the calculations ahead of time and not go into it with your eyes half closed. Once you are in, forget it about all the other stuff. Just enjoy your home.</p>

<p>Also, check your papers to make sure that you are not losing more than $5K (those sneaky lawyers).</p>
 
As you can see jbatz, there is no right answer. You must calculate intangibles such as "living in a new place with new appliances", making the wife happy, knowing you won't be forced to move from a rental if the owner sells, knowing you have cost certainty for x years. Then you also have to make sure you can ride it out if things do get bad, one of you loses a job, etc. Think about the worse case scenario and ask yourself if you would still be ok with your decision to buy.



I've been living in my Lennar home for a month now, and I love it. After renting for years, I get so much value from having my own garage, decorating the place the way I want, not sharing walls, peace and quiet, the extra room, etc etc. Some people don't value these things as much as I do, and won't be willing to pay a premium. Ask yourself how much you will value owning a new home vs renting.



Another thing, not everything was fixed after close of escrow, but you have 30 days to request fixes. I'm going have my 30 fix tomorrow to go over little things. Overall, I've been very satisfied with the level of service. I was wary of build quality as well, but I have no complaints so far.
 
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