Your first home...

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Gohabsgo_IHB

Gohabsgo_IHB

New member
<p>I've been on the market looking to buy my first home for about a year. Don't worry, I understand now is not a good time to buy a home, but I'd like to be ready when time comes so I visit homes and look at different models once in a while.</p>

<p>My initial thoughts would be to buy a 1500 sq ft (3 bedrooms) house for me and my wife and move to a bigger house 2,200 (4 bedrooms) when we start having kids. So I would live in a $500,000 home for 3-5 years then move to a $850,000. That sounds like a fun plan, but I would pay 5%-6% (or $25,000 - $30,000) in commission to sell the $500,000 in 3-5 years. </p>

<p>Would it make more sense to wait 3-5 years, save more money, don't waste $25k - $30k and buy the dream house right away?</p>

<p>Just looking for a word of advice from people who went thru their first few home purchases.</p>
 
You could rent that $500,000 home for 3-5 years then buy the $850,000 home when it is selling for $500,000 3-5 years from now. That is my plan.
 
Best to buy now and get the most expensive home you can get with the largest mortgage you can get. Don't worry if you can't pay when the initial rate adjusts, because by then home prices will have appreciated and the lender will not lend you more than you can afford.
 
<p>Roo: My wife and I bought our first home (condo) in 2005, and sold it in 2007. We had a new baby, saw the handwriting on the wall, and hit the eject button while it was still functional. Now we live with my wife's parents in order to save money to buy our bigger home. Things definitely didn't play out like awgee stated...lol!</p>

<p>Based on my experience, if you're only planning to live in your house for 3-5 years, it's better to rent as IR mentioned. I wished we did...however, we learned alot from the home ownership experience. It's quite an expensive exercise, much more than renting that's for sure, but we don't regret our ownership experience. It's taught me that your home is not an "investment" like 401k...it's a home first and foremost, and make sure you like it and have a way to afford it.</p>

<p>I wouldn't recommend saving for your "dream home" until you've lived in a place similar to your "dream home". You'll find out what was important in a house wasn't that important, and that you'll grow and have differing needs as your situations change (i.e., baby, taking care of in-laws, etc.). Go practice by renting a regular home, and start factoring in the extra costs of making that rental home to be more to your taste. That should give you a pretty good idea for your first real home.</p>

<p>RH</p>
 
<p>Roo,</p>

<p>I'm not sure how old you are, but based on the fact that you are a first-time buyer, I would imagine in the late 20's - early 30's? When I was in my 20's, I too had dreams of being a homeowner. I dreamed of buying a 2-3 bd condo or townhouse, 1200-1300 sf. Then when I had kids, I would buy a single family home. It never occurred to me just how big, but I imagine I would have looked for something in the 1600-1800sf range. I grew up, 5 in my family, in a 1350sf 3/2 SFR. I thought it was plenty big enough. Are you sure you NEED a 1500sf home now, and 2200sf home when you have a kid? </p>

<p>On a related note that has nothing to do with Roo, I recall a post where people were talking about the excess of automobile brands. To me, luxury is when excess of what is NECESSARY is purchased. Nothing wrong with luxury (I like nice cars too), but I wonder what the motivation is for people who bemoan the excess of those who purchase BMWs and Mercedes, and in the same breath talk about that 2700sf home that they would love but consider too expensive. Seems to me that house and car go hand-in-hand...</p>
 
I don't know if it's still the case today, but back in the early 90's when I lived in FL, RE agents could not own a foreign car. They would all drive Buicks and whatnot to avoid offending the Old Money.
 
As for home size, I do chuckle a bit when people "need" 2200sq ft to raise a family. Everything in my neighborhood was under 1500sq ft and there were plenty of two kid families around. Many of the same residents are still there after 30 years, including my parents.
 
<p>CalGal,</p>

<p>I have no problem with people driving luxury cars, more power to them. There's no shame in being able to afford a BMW or a 3000sf house. The only thing that makes me wonder are the ones who brush off those with luxury cars as conspicuous consumption, and then talk about how they are going to wait to buy that 3000 sf house when price goes down. I always figured those who own 3000 sf homes also drive a Mercedes. Heck, I wouldn't want to drive over to an open house for a 3000 sf in a 1985 Le Baron.</p>
 
I never understood this concept. Why the hell would I want to buy something off someone that makes money and shows it off. It's almost like a slap in the face. "Hi, I make lot's of money off of you, so let's go for a ride in my 80,000 BMW!" I think modesty is a much better approach. It makes people feel better about themselves, and that is important in sales.
 
<p>Reminds me of an episode of a RE show I saw a while back. It was about this real estate agent wannabe guy that was early to mid 20s at most. </p>

<p>He hadn't actually taken part in a transaction yet (the first one he was doing was on the show, and his "clients" were his parents). In fact, he lived with his parents too, because he apparently couldn't afford even to rent since he was "just getting his career off the ground." </p>

<p>But guess what kind of car he drove? Economy car? Nope - shiny new Jaguar. Laughable.</p>
 
<p>Keeping up in OC is definitly difficult. But you gotta do it. I was thrown into it when I decided to buy my first condo in Mission Viejo. </p>

<p>It was late 2000 and I was 23 out of college. I paid a whopping $128,000 for a 850 sq ft 2 bd/1 ba condo. </p>

<p>Got married, then sold it for $240,000 in 2002 (25) and bought in Ladera 3bd, 2 ba 1800 sqft home for $400,000. </p>

<p>Now sold that for $700,000 --in 4 days-- in 2007 (30) and bought the 3000 sq ft home for $899,000. (we have 1 baby now).</p>

<p>Who knows what my next move will be. I will tell you that in order to move into my new home, I had to give up the 07 Benz and the 06 Volvo suv and paid cash for a new Nissan and old BMW. They still look great, but NO PAYMENT! This allows me to use that $1000 car payment for my new home (and its deductable!). I really dont care what the valet thinks about my old BMW. But I will be honest in the back of my head, I am still yearning for the new Lexus.</p>

<p>Also, keep investment properties in mind too. I own 2 (used to have 3) in AZ. Bought those in 2003 for $150,000 ea and now they are both over $250,000. And I will pay them off in 13 years! </p>

<p>As far as I'm concerned, Real Estate is a <u>great</u> investment opportunity. <u>If youre in it for the long run</u>. </p>

<p>And to answer your question... I would rent for 1 more year MAX then buy the biggest home you can afford. Just make sure its the neighborhood you want to live in. Dont settle for a cheap neighborhood, because you will want to move in 6 months. Tell yourself youre doing it once, but you never know what the future will hold! i dont think that the prices will fall to 2004 levels.</p>

<p>Good luck!</p>
 
<p><em>"i dont think that the prices will fall to 2004 levels."</em></p>

<p>I think you might want to do some more reading on the blog here. Prices for several areas are already at 2004 price levels and Ladera being one of them. You add in inflation and that is a pretty hefty loss when you add in the fees if you bought in 2004. I am not kidding when I say there are about 3-5 homes a week scheduled for the foreclosure auction in Ladera. In fact there is one condo that is bank owned that slashed the price to be below what the builder sold it for in 2004. </p>

<p>I'm not trying to be rude but there is a lot of information here that backs up what I just wrote.</p>
 
<p>While a 2200sqft house could definitely be more comfortable for a family of 4 than say a 1500 sqft house, a home is really what you make of it. Regardless of square footage you can have wonderful Thanksgiving dinners, Christmas mornings and lazy Sunday afternoons with your family. </p>

<p>We will also be first time home buyers in several years. I am leaning towards waiting a bit longer to save more money for a larger downpayment so we could afford a home we can stay in for at least 10-15 years. I moved around a lot as a kid, so I hate moving. The original plan was to buy in Q3 2009, but has now been pushed back to summer/fall of 2010. Depending on market conditions, I'm willing to wait out even longer (2011-2012??).</p>

<p>I don't know if IR is right (i sure hope so!) about that $850k home becoming $500k in 3-5 yrs, but I do think prices will fall to/below 2004 levels. Regardless, we will be ready with a lump of cash for downpayment. Time is on your side so you could wait. Renting, even with kids, could be very comfortable (and less stressful on your wallet!). </p>
 
My point being, do not try to time the market, but rather have time IN the market. This is just how many many people got burned in the stock market. BUT I do agree that it would be wise to hold off for 1 more year. But in my opinion, no longer. And who knows once the democrats get in, how long the interest rates will remain low. If this guy buys the home of his dreams in 8-12 months, and he's happy there, who cares if it goes down in the next year after that, because he will be in the home for much much longer. And history has shown that any bear market will turn into a bull market at some point in time.
 
Only one year? Even if there's an 18 month Orange County inventory overhang this time next year, I should buy regardless because prices won't be going any lower? Now that we've cleared that up, I'm dying to hear your opinion on safe back-end DTI's.
 
<em>"Keeping up in OC is definitly difficult. But you gotta do it."</em>





Why?


<em>


</em><em>"As far as I'm concerned, Real Estate is a <u>great</u> investment opportunity. <u>If youre in it for the long run</u>. "</em>


<em>"i dont think that the prices will fall to 2004 levels."</em>





Let us know how you feel about that in about 3-5 years. Try reading this: <strong><a title="Permanent Link to Predictions for the Irvine Housing Market" rel="bookmark" href="http://www.irvinehousingblog.com/2007/03/11/predictions-for-irvine-housing-market/" linkindex="21" set="yes" style="color: brown;">Predictions for the Irvine Housing Market</a>.</strong>


<em>


"And who knows once the democrats get in, how long the interest rates will remain low."</em>





If you believe interest rates are going to go up, you don't want to be in real estate. Real estate values decline as interest rates increase because new buyers cannot finance as much. Try reading this: <a title="Permanent Link to Your Buyer?s Loan Terms" rel="bookmark" href="http://www.irvinehousingblog.com/2007/05/07/your-buyers-loan-terms/" linkindex="12">Your Buyer’s Loan Terms.</a>


<em>


"BUT I do agree that it would be wise to hold off for 1 more year. But in my opinion, no longer. And history has shown that any bear market will turn into a bull market at some point in time."</em>





History has shown bear markets to last for 5 to 7 years. Because this bubble is bigger, the decline may last longer. Look at the charts here: <a title="Permanent Link to What is Past is Prologue" rel="bookmark" linkindex="6" set="yes" href="http://www.irvinehousingblog.com/2007/03/06/what-is-past-is-prologue/">What is Past is Prologue</a>.





I don't mean to pick on you, but you are in need of a kool aid detox. I suggest you try our <a href="http://www.irvinehousingblog.com/analysis/">analysis </a>section for the complete treatment.
 
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