Why would people buy now in this market?

NEW -> Contingent Buyer Assistance Program
there's definitely a lot of psychology and emotion involved in the decision. a suburban family of four renting as opposed to owning is clearly perceived as less than ideal , whether or not it makes more financial sense. on the flip side, there are many wealthy urbanites who will rent their entire lives no matter how much money they make. to them there is no financial, social, or emotional benefit to owning vs renting.
 
OCR - sounds like you've got a great situation going on...congrats on the new house. Wish I had a 55 percent downpayment!...slowly getting there
 
<p>skeptic - Owning a home is a lot more work (ie. yard work, repair work, etc.) than renting. If the wife is home with the kids, sleep deprived with babies in tow, she's not really going to enjoy having to do all the extra work (ie. it's now 5 hours of sleep a night instead of 6). When you have a baby, being able to do nothing in the yard and just go out and enjoy common maintained grounds is awesome. Having something go wrong in the wall and just being able to call the common fix it guy to fix it for free is awesome. When you finally finish all the dishes, diaper clean up, housework, laundry, etc. and have 10 minutes to relax on the patio, you really just want to sit in a chair and relax watching the kid putter around and have fun. You don't want to be picking up a rake and cleaning up some more...</p>
 
To those that would make a decision based on what others think......





About 10 years ago I was visiting a nearly retired professor in Montana. He took me fishing so that we could talk. During our discussions he told me something very profound..........





He said that during the first 1/3 of his life he spent a lot of time thinking about what others thought of him and what he did.


He said that during the second 1/3 of his life he decided that he was going to ignore what other thought of him.





and.....





During the last 1/3 of his life he realized that nobody ever really cared what he did in the first and second third of his life.





So, make decisions based on what makes you feel good and happy. If you want to purchase a home now, great. Be aware of the downside risk, and always have a plan b. If you feel good about renting, great. Remember though, that if you think anyone is judging you based on your choices, you are probably dilusional.
 
<p>earlier, awgee wrote <em>"trrenter - Somewhere recently I just read about a site that puts buyers and sellers together with no agent involved at all. Talk about a win-win for both parties</em>"</p>

<p>That site is <a href="http://www.realumbrella.com">www.realumbrella.com</a> They just went into business a week ago though, so give them some time to get up and running.</p>
 
I bought my first place (townhome) in 1996 because buying was cheaper than renting. Some agreed it was a good idea while others said that real estate sucks.





I bought my second place (SFR) in 2000. EVERYONE told me it was a bad time to buy because the stock market was crashing, we're heading into a recession and interest rates are too high (8%). Home prices had run up higher than the rent/buy, so its <strong>obviously </strong>not a good time. I spent 400k in Mission Viejo, because even in 2000 the only Irvine SFRs >2300 SF in that price range were brady bunch crap that backed to a busy street. A nice large (by year 2000 standards) home was over 500k, even back then.





Then in 2003-4 people I knew started selling their homes and renting because the market had "peaked" and anyone with half a brain would do the same thing. They were going to sit and watch the market crash while they laughed their way to the bank. Those people are still renting, and their wives are still angry.





I've never bought a home because I think that I need to live up to some expectation. Owning your home is very rewarding to me because I LIKE renovating to my style, I LIKE cleaning up the yard, and I love being able to do whatever I want, whenever I want to the house. I work long hours, have kids, and still love it.





I really hate to see these judgemental comments that people who buy now are "stupid sheeples trying to live up to OC lifestyle". In my mind, I've always been told that its a bad time to buy, so I've stopped listening. When a good upgrade home comes into my price range, then I'm going to buy again. For me, that time is coming soon. For others, it may take a while.





My $.02. Flame on.
 
<p>Just Looking,</p>

<p>No flaming from me, you timed the market well..my congratulations. I think who we rant about are those that bought when they had no business buying. They messed up the market and caused it to skyrocket out of control, making homeownership nearly impossible for the average buyer. It will take years to undo the chaos they caused, the economy will no doubt suffer as a result. You seem to have handled your finances well and kept control of your housing ATM. Most did not and are paying as a result.</p>

<p>FYI, three of the top five posters are homeowners.</p>
 
<p>I am considering buying part of a house. Maybe 20% of a house.</p>

<p>Yes, that may sound strange, but here is the basic situation. Awesome house that is in an area we like. It has been for sale for five monhs, had price reductions, and two escrows have fallen through. The owners have already relocated out of state to new jobs. They are renting in their new city and have a vacant house in CA. That vacant house is consuming about $3000 per month of cash expenses, and is losing market value at about $10,000 per month. </p>

<p>The owners want to buy something in their new city rather than continuing to rent there, but they need to sell the CA house to get some of the equity out of it. The asking price is about twice the outstanding loan balance. They have considered refinancing their home to a larger loan in order to use some of the larger loan as a downpayment for a new house (does this strike anyone else as odd?). </p>

<p>I might offer to buy a 20% share, and also rent it for around $3000 per month. They would get a big chunk of money and positive cash flow. We would live in a nice house and make some improvements. After the market tanks, we will be able to buy out the remaining 80% for much less than it would cost now. </p>

<p>This is a pretty informed group. I'm interested in what you think.</p>
 
<p>If, when you are renting, the original owners are getting a positive cash flow, why would they then sell to you when the house was worth less in years to come ? Wouldn't they just hold on to their investment and wait it out ? It seems like YOU would be trapped in that situation, having to rent it yourself, with them knowing they had you. The whole idea doesn't sound that great to me. In effect, aren't you becoming a 2nd trust deed holder with this 20% investment ? I wouldn't want to be in that position.... </p>

<p>Fractional ownerships are on the rise ("don't call them time shares") ! Just google it. The concept isn't new, but I haven't heard of yours yet. Perhaps Kazak should take a 20% ownership instead of 50% ? </p>
 
<em>"I bought my first place (townhome) in 1996 because buying was cheaper than renting. Some agreed it was a good idea while others said that real estate sucks. "</em>





At the time, people were saying real estate sucks because prices had just declined for 6 consecutive years. When owning is cheaper then buying, it is a great time to buy. The reactions you were hearing then were the same reactions you will be hearing in 3 to 5 years when the bubble has deflated. Then it will be a good time again.


<em>


"I bought my second place (SFR) in 2000. EVERYONE told me it was a bad time to buy because the stock market was crashing, we're heading into a recession and interest rates are too high (8%)."</em>





The people who were saying that might have been right had the FED not lowered interest rates to 1% over the next 3 years. The reasons these people were giving in 2000 were completely different than the ones in 1996. These reasons were rational, the ones given in 1996 were not.





<em>"Then in 2003-4 people I knew started selling their homes and renting because the market had "peaked" and anyone with half a brain would do the same thing. They were going to sit and watch the market crash while they laughed their way to the bank. Those people are still renting, and their wives are still angry."</em>





These people were very few in number, and they will yet be vindicated. They would have been correct on their timing if it were not for the widespread use of negative amortization loans.


<em>


"I really hate to see these judgemental comments that people who buy now are "stupid sheeples trying to live up to OC lifestyle". "</em>





Some people are, and some are not. If it does not apply to you, it should not be offensive.





<em>"When a good upgrade home comes into my price range, then I'm going to buy again. For me, that time is coming soon. For others, it may take a while."</em>





I agree. I think most people here would agree with that statement. I don't think everyone here is trying to time the market perfectly. Most just want an affordable home on terms that will not bankrupt them.






 
I have been renting in Irvine for the last couple of years and am looking to buy for the long-term, I have no intentions of flipping or making a fast buck, I just want somewhere I can call my own. Do you still suggest I wait all? TIA.
 
vhenley - It all depends on a number of factors, mostly personal. The biggest is how much do you mind owning a depreciating asset in which your equity is dissappearing? This is not a facetious question. It is an actual consideration. After that, all the other questions are the normal, do I want to buy questions.
 
I don't understand the <strong>urge </strong>to own a little condo or whatever for the sake of ownership at the expense of holding a huge debt. It seems that being a renter carries a stigma in this society and one is viewed as either too incompetent to get his/her act together or just not financially stable to afford it. If anything, in today's market the financially sound decision is to rent if one's living conditions allow for that. Day in and day out we are reminded that we should be owning, there are tax incentives that favor ownership and somehow a white picket fence should be in our dreams (with the dog and the 2.5 children). We are told that we are missing out on this huge investment yet the Case-Schiller contradicts this assertion when shown over the last few decades.





Embrace your living situation, kick back and get some worry-free sleep. You'll be saving a bunch of money that you can use as a down-payment when the market is more favorable.
 
<p>Rent from a home owner or rent from the bank. Unless you pay cash for your house, you are still renting - just a different landlord. If you have a downpayment, put it in a CD and pay your rent with the interest. </p>

<p>Life is good as a renter. Embrace it and enjoy a stress-free life. A better time will come to buy a home - and you'll be able to buy a bigger and/or better home for less money. Just give it a few years. You'll be rewarded for your patience.</p>
 
Vhenley-



i say you should buy a place if.... you can afford it (don't stretch and only use 30% of your income) and plan to live there 5-7 years miminum. don't listen to these people who looks at a house as an investment and they are trying to time the bottom. If they knew excatly what they are doing they would all be millionaires or billionaires by now and not be posting. my rule is buy when everybody is selling and sell when everybody is buying...



example... i bought my condo in 1999 for 180k and sold it in 2004 for 350k. Then i rented an apartment and save my money and now i am about to close on a brand new townhome in irvine and with all my money i saved.... my payment each month will be really low.... but people still tell me i am crazy for buying now.... but what can i say.... to each his own right?
 
<em>don't listen to these people who looks at a house as an investment and they are trying to time the bottom. If they knew excatly what they are doing they would all be millionaires or billionaires by now and not be posting.


</em>


Excuse me, but... do you know me? I didn't think so. So, why do you have a preconceived idea of who I am or who "these" people are? How do you know I am or not a millionaire? How do you know that "these" people are or are not millionaires or even billionaires? It might be better to read more of who I am and who "these" people are before you make such a judgment. You might learn something, and you might learn what it means to be humble.





And, you have it backwards. If you do not know how to time the bottom, then <em>you </em>don't know what <em>you</em> are doing.





"You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."





"Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us. That dismal fact is testimony to the insanity of valuations reached during The Great Bubble. Unfortunately, the hangover may prove to be proportional to the binge."





Both by Warren Buffett.
 
<p>I can fade a $5000 a month mortgage payment. And thats about what it'd cost to buy the SFR I rent.</p>

<p>Given I can rent the same property that would cost me $5K for under $2K, and that asset is depreciating, does it make any sense to burn up $36K a year to own this place?</p>

<p>Every situation is different. I'd say if you can make a conventional mortgage on 30% of your salary and want to buy a house, go for it. Nothing is stopping you, and nothing should. You can afford it.</p>

<p>But, I'd also advise you that you are breathing 'rare air' (top 10% of all wage earners in the county) and can be extremely choosy on what property you pick up and how much you pay for it. Most of these people already know what I just wrote, so I'd think business would be kind of bad.....</p>
 
<p><em>"If they knew excatly what they are doing they would all be millionaires or billionaires by now and not be posting. "</em></p>

<p>Why do you assume that millionaires do not post here?</p>
 
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