OWP He has multiple options for housing available. So buying is not an absolute must. I talked him into the thought process of leasing. He's a smart guy and his wife is VERY sharp as well. They are savvy and watch the market closely. If they could buy and get a comprable mortgage payment to rent cost, which is getting closer now, they may buy anyways regardless of price. Seems foolish in a way, but, they value the stability of their housing with a newborn. They have family that owns homes in the area free and clear and have been offered a place for very low cost. We'll see how it shakes out. I think there is still a big drop to come in the next 12-18 months regardless of Fed action or home loan interest rates. Ben doesn't appear to really care if the housing sector deflates. Did I say I like Ben...
people want to be in and settled by august... they are the ones closing now.. update on my secy who tried to sell last year & has again put home on market. race season has started at Del Mar, so traffic is down. no offfers, they are holding open house soon. they expanded price to a range rather than $xxx,xxx. one thing traders know is that "when its time to go, get out." how many home moaners will track the market all the way down? next year, this year's prices will likely look like a windfall, but they are locked in on getting their price. depedning on what happens, there may be a nice combo of vulture price and low rate...
Can't believe the fool who would bought in at $750 at this time. These speculators are the ones who pushed prices up. Smart ones have bailed. Maybe $600K in a year or so. But not $750K now. I would buy at $550 18 months from now.
I agree in the long term the stability of home ownership cannot be beat. But one of your comments threw me...how is "a comparable mortgage payment getting closer to rent cost"??? It seems like it is getting further away. I know in the San Fernando Valley, a short distance away, the Wells Fargo Opportunity Index affordibility has sunk to the lowest ever recorded. Only 1.9% of residents can afford an average home! Absolutely shocking! People are pulling it off by Option A.R.M.'s, and even then they are stretching to 50-60% of their income! This sort of leverage is far beyond the .com days. This is more like option trading! Five years ago the opportunity index was over 50%. Since interest rates are sharply up from 12-18mos ago, and real estate valuations, while flat, are maintaining at a high level, the disparity between leasing is about 2 or 3 times less than buying.
Rents are pretty high in the areas of OC where they are looking. I'm not involved in what they are looking to rent, but, have heard some of the numbers. He was going on tax-effected levels. I told him get the cheapest place to rent and wait it out. We are patiently waitng where we live. Prices have dropped a bunch even though the quoted monthly median numbers don't reflect the change. It's obvious when everyone is advertising "reduced" adn trying to compare home that sold with pools/landscaping to a bare bones home. Quite funny.
Interesting approach. But consider that rents are rising and so are mortgage rates. Except for a recent quick run up in mortgages, I'm seeing the gap closing between rents and house payments. Before, I could not buy a place and rent it out for anywhere close to break even, but that gap is closing. So, I really wonder if it is good advice to wait, because the longer you wait, the higher the house payments are going to be. In my mind, what you pay for a house isn't the sales price. It is the dollar value of the monthly payment, times the number of months that it will take you to pay it off. If sales prices come down, but because of rising rates, the actual payment goes up anyway, what have you gained? (For you picky folks, this ignores the inflationary effects of paying it off faster, but most people will use "loan product X" to meet their needs, so the time value of money factor pretty much drops out of this analysis). I observed first-hand that when rates went down rapidly following 9/11, prices rose in response to the rate drop, but percentage wise, the price rose slower than the rate drop. So it seemed that house pricing lags interest rates changes, and in a falling rate environment, housing prices went down faster than the housing prices could rise. And, if the rates were falling, waiting to lock in to a rate for the long haul made sense. Isn't then the converse true? That as the rates rise, housing prices will drop, but they won't fall fast enough to compensate for the rate increase, so in a rising rate environment, monthly house payments will rise despite falling sales prices? And then does that imply locking in for the long-haul quickly is the play to win? If house payments continue to rise, then the longer you wait to purchase, the higher payment you'll have to make...and meanwhile, you'll be paying higher and higher rents. So are payments going up or down for fixed notes? As for me, my strategy of "buy more property before rates approach their old levels" is panning out. Rents, which are an alternative to making payments, are going up, because payments are going up. If you're going to hold it for a good long time (thats a big "if", buying now may be the wisest course). SM
I've never understood "price range marketing". So instead of saying "I want $500,000, make an offer" they are now saying "I want $475,000 to $525,000, and I won't even consider anythihng lower than $475,000"? I'll still offer whatever I think it's worth. If they won't even look at it then that's their problem.
We are allowed to raise rents every 6 months here in Alberta and we do in the current overheated market. Vacancy is 1%. The last house we bought last year for 190K was a foreclosure, so we put 20K into it and it's being rented out to 2 families (main floor & bsmt suite) for 1600$ total. Currently worth 320K. I wish the market would slow down, so that we can pick up some more diamonds like that.
In an uptrending market like the Southern California market the past 5 years, value range pricing can keep a seller from leaving money on the table. In a downtrending market like the present, value range pricing is a marketing strategy, nothing more. For example, if a seller has a property priced at say $719,000 and is seeking a possible sale at $689,000 but getting zero offers, he or she may adjust to a value price at something like $649,000-$699,000. This can create more showing activity on the property and in turn possibly lead to an offer/offers. It's a marketing ploy thats all. I'm not real impressed with it due to the fact if I am looking for a place to purchase and it's priced from 649-699, I would offer less than 649 in today's mkt. Sellers who need to sell are selling right now. Buyers want deals and are getting them. Sellers wanting last years prices are wasting everyone's time. People who have overly strong opinions that the market will collapse in the near future are like traders with too strong opinions on a stock. Anything can happen is a good start I suppose...
http://listings1.sandicor.com/Searc....asp?prp=mls&AgentId=123173&EmailKey=36101218 this is still insane imo