Why didn't you buy in 2000-2002?

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momopi,





Did you luck out and make money like I did? Or did you see the bubble coming and took advantage of it in a measured way? Again, I am only asking because I'm curious as to if people on this blog saw it coming and if they did, how confident were they that it was really coming. This way it may help us have more faith in our future predictions.
 
Hi TRock,





Yes, when I sold the Placentia condo, it had already doubled in price from my original purchase. Had I sold in 2005 instead of 2006, I think I could've gotten another $50k. But that's not important anymore. What is important is that I got out of a place that gave me bad vibes and returned to the happy Elysian Fields of Irvine.





I had no doubt that the RE bubble would pop, just as the .com bubble did. When prices are high, it prevents me from purchasing additional RE that could be rented at with minimal negative cash-flow from start. But at the same time it also allows me to do profit taking (selling). So there's pluses and minuses, depending on how you look at it.





Most good things in life come at a price, we just don't always see the bill until much later.
 
<p>"although the uptrend and downtrend are easy to see, the actual tops and bottoms elude me"</p>

<p>You're not alone, if any of us could see that, we'd be billionaires by now...</p>

<p>I did buy in 2001, not because I thought the market was going to boom, but because I wanted to, and could finally afford to, buy a house. Blind luck really. But I cashed out in late '04, because I thought the market was unreasonably high. 110% appreciation & 1800% ROI later, I figured I'd rent until market reverted. I was thinking 2-3 years, now I have revised that to 3-4 years, or by late 2008, before I buy.</p>
 
<p>Didn't live here, plus i was only make around 45K in Arizona. I bought my home in 2000 in Tucson for 88k! HA! I sold it last year for 199k, not too bad for a 5k investment. Anyway, if I had thought about it I would have looked around and been a little more prudent as to how I invested my cash.</p>

<p>-bix</p>
 
irvine_native,





I know you couldn't buy in 2000, but were you thinking at the time that housing prices were going to increase significantly, and that you had to get money together before it was too late? Or did you not have any idea of the bubble (like me)?
 
I bought in 2000, at that time, I thought I was buying at peak but did not want to rent for another day, and was expecting a 20% correction. ... What do realtors know anyway!
 
<p>I actually relocated from Bay Area to OC in March 2001. I was also newly wed with my wife trying to get back to school and she ended up at cal state long beach. I actually found decent townhomes in Ladera Ranch in 2001 up for sale for $215K-$250K for 1,300-1,500 SF. I could have afforded it however I gave priority to my wife's education so she could be closer to school, so I ended up renting in Anaheim, midway from my job in Laguna Beach and Long Beach; Anaheim was also very affordable renting, I was paying $800 for 1000 SF decent apartment. At the time, there was no urgency in the market and I wanted to wait few years so my wife could finish school and my financial situation would be much better. Well, started looking in 2003-2004 and we know what happened. Now, my Income from 2001 has doubled, same townhomes actually trippled! WTF!!!!!!; I still get bashing from my wife and friends on why I didnt buy in 2003-2004, I still say that prices back then were too high, they just got even higher after 2004. No body would agree with me back then when I would constantly debate on falling house prices due to fuindamental reasons and how Irvinerenter explains. Now we are finally seeing it happening. I would buy for prices in 2001-2002, nothing more, we are coupld more years away from it. When prices can tripple, they can also get cut in half, and a lot quicker too.</p>

<p>I am in construction and do see slowdown in the whole industry, recession in 2008-2009 cannot be discounted. All the equity extraction of home owners between 2003-2005 got the economy going, now that has dried out. Its just a matter of time when you will start to see massive job loses. Construction and all its related industries make up 75% of US economy. Other industries are tied to it directly or indirectly.; Save what you can and while you can.</p>
 
I was still in college. By the time I had a stable and high enough income to think about buying, I couldn't afford to buy anything near as nice as what I could afford to rent. Thankfully the critical reasoning skills I picked up in school allowed me to discern the difference in quality of the arguments of those who thought this could continue forever and those who did not.
 
<p>IR,</p>

<p>YES. In 2000, I accepted the fear that that my purchased home could potentially drop 20% (that seemed to be the general consensus around me). We borrowed to the max, 50% DTI. Our interest rate was 8.5%. 30yr-fix.</p>

<p>Forward to 2007, my home has gone up 260% in value. Our incomes have increased accordingly-same rate. Interest rate now is at 6.75%. 30-yr fix. . Do I want to sell my house? - NO! Do I want to move-up and pay more for a house? YES! when I find something thing that I think will enhance our lives. </p>

<p>Home price is set between buyer and seller. It's meeting of the minds. </p>
 
<p>ochomehunter said "<em>Construction and all its related industries make up 75% of US economy</em>."</p>

<p>I'll look up the veracity of this statement later. But 75% sounds a bit much, just a bit.</p>
 
<p>Residential construction accounts for about 6% of GDP, and non-residential construction the same. There is private construction which account for about the same also. These are rough figures, but way off from "75% of the US economy". And I can't imagine related industries adding that much more. These were quick numbers that I pulled off, but since they were so different from 75% I stopped looking.</p>

<p>Perhaps you have it mixed up with consumer spending as 75% of the economy.</p>

<p> </p>
 
<p>I lived in a Chicago suburb. My husband and I bought a home in 2001 and then my husband got a job in OC. Sold our house in October 2005- perfect timing, but did not get the price appreciation that people in SoCal did. In Chicago I worked at an investment banking company as a sell-side analyst and I tracked many economic figures- so I knew that as a financial decision, buying was nonsensical. It was hard to accept that I needed to become a renter- but my fellow co-workers put some sense into me and I thank them everyday for that!</p>
 
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