The Post Subprime Crisis Home Buying Thread

We are planning to buy our "dream home" in two years. It fits into our budget plans and I do not want to have to sit on our current house too many months. This is just a guess, but I think about two years from now prices will still be low, maybe lower than now, but I think sales will start coming back, so our current house should sell faster than if we did it today.

Originally Posted by Piobaire

Click to expand...

We are planning to buy our "dream home" in two years. It fits into our budget plans and I do not want to have to sit on our current house too many months. This is just a guess, but I think about two years from now prices will still be low, maybe lower than now, but I think sales will start coming back, so our current house should sell faster than if we did it today.

Good luck. My wife and I are planning on staying in the house we are buying now for about 7 years or so. I'm hoping that by then we've gotten past this period of instability and I'm at least hoping that we don't lose money on the house (though, I would be very surprised if housing prices aren't up 7 years from now from where they are today). It would probably be a good idea for us to continue to rent for another year or so, but I can't stand this ****. I can't stand the lady who runs the condo board, I can't stand not having enough storage, I can't stand not having a back yard. So, I'm buying now.

Originally Posted by odoreater

Click to expand...

Good luck. My wife and I are planning on staying in the house we are buying now for about 7 years or so. I'm hoping that by then we've gotten past this period of instability and I'm at least hoping that we don't lose money on the house (though, I would be very surprised if housing prices aren't up 7 years from now from where they are today). It would probably be a good idea for us to continue to rent for another year or so, but I can't stand this ****. I can't stand the lady who runs the condo board, I can't stand not having enough storage, I can't stand not having a back yard. So, I'm buying now.

Sentiments like these are why it is appropriate for some people to buy now. It is not always a dollars and cents issue. What we have learned in the last couple years is you shouldn't buy if you don't have the money, and you shouldn't but only because you have the money. However, if you have the money, and you have good reason to purchase a home, then almost anytime is a good time. My reasons are similar, although a bit different, but the fact remains, I am going to buy a house, whether or not this is the best possible market.

If you are buying property for the investment, then now is probably not the best time, but its a decent time... better than its been in a long time. If you are buying a property because rents are extremely high, there is nothing on the rental market that fits your wants or needs, and you want to be in a home for more than 5 years and be able to make changes to suit your needs, then I think now is a fine time to buy. Maybe it will get 5-10% better financially over the course of the next 2 years, but I'd be happy to throw that potential gain away in order to gain elsewhere. Some areas might have dropped as dramatically yet as others have, so these statements might not be true for another 6 months.

Originally Posted by iammatt

Click to expand...

Well, I don't give a **** if prices go up or down. I have a house and have had it for a relatively long time. My point is simply that you can't value a house using any method other than what houses sell for. They have no cash flows.

Look, I spend my days valuing things. You may be right, and you may be wrong, but that will only be borne out in the future. You aren't right or wrong based on any ability to value them. Were I to guess, I would say we have another 15% to go on the down side, but that is a guess based on the way markets correct, and has nothing to do with any intrinsic value for houses.

You are right in principle. But your model of valuing RE does not provide a realistic evaluation in US conditions.
The excess of paper money the ability to push all bad money into Feds lap or resell it to even dumber people on laughable-"securities"- market is what brakes the whole valuation model.

Originally Posted by dkzzzz

Click to expand...

You are right in principle. But your model of valuing RE does not provide a realistic evaluation in US conditions.
The excess of paper money the ability to push all bad money into Feds lap or resell it to even dumber people on laughable-"securities"- market is what brakes the whole valuation model.

This is hyperbole.

You should wait on buying new houses, IMO.

House prices should continue to fall from the current levels, IMO. We got a real estate bubble for the past couples of years and the only way for a bubble to burst is for the price to drop, significantly.

Right now all the banks still have some liquidity problem, one way or the other, thus you don't see mortgage rates dropping as fast.

One of the ways I think I will exploit the situation is to snail mail the home owners that bought houses during the past 3 years to see if they are willing to sell.

Or, if you are rich enough to qualify, call up your bankers to buy foreclosed houses in batches.

Originally Posted by gamelan

Click to expand...

this site has me freaked out though, http://www.housingbubblebust.com/

my background. i'm looking to purchase a home probably in the 1000-1500 sq ft range in either the Pasadena or Long Beach area. Silver Lake would also be nice but it's a little too pricey for what i want. the ideal home would be a pre-WWII era Craftsman.

-Jeff

First off, if you really want an RE site to freak out you, http://patrick.net/housing/crash.html is even better.

If I was you, I would rent in LA for the next two years, especially if you are thinking Silver Lake.

I lived there for 7 years and saw houses go from 125K to 980K in three years time. While it is nice, S'Lake's infrastructure (streets need repaving, the power always goes out with wind rain, etc) isn't up to snuff. Also, if you look closely, it's really dirty, the the LAUSD stinks and there is a rampant gang problem in S'Lake/Echo Park/Rampart district.

Also, historically speaking, the Eastside doesn't hold its value as well in a downturn. During the last boom/bust cycle, houses in Los Feliz lost 35-50% of their value and my idea of 1200 sq-ft in an 1920s house for 800K+ isn't a prudent investment.

Have you thought of Altadena, more room, cuter houses in the style you want and the prices have come down more in line with fundamentals.

To make keeping a budget even easier, Microsoft has designed a bunch of budget templates. I don't really need to keep a budget at this stage in my life, although I do try to put in numbers every week. Templates: http://office.microsoft.com/en-us/te...CT101172321033 http://office.microsoft.com/en-us/te...CT101172321033 Edit: the first one is geared towards coming up with annual numbers and the second one is more of a monthly template.

^^^I agree if everyone knew how to build a budget in excel we probably wouldn't be in this spot. I wrote a short macro in excel to merge non-recurring expenses (shoes, plane tickets, etc.) with recurring expenses (loans, food, gas) and build future cash flow projections. I update it everyday. If I had written it in college I'd be so much wealthier now.

I'd be happy to share with anyone who's not an excel guru but I'm sure there are plenty of other examples out there.

Originally Posted by farfisa23

Click to expand...

First off, if you really want an RE site to freak out you, http://patrick.net/housing/crash.html is even better.

If I was you, I would rent in LA for the next two years, especially if you are thinking Silver Lake.

I lived there for 7 years and saw houses go from 125K to 980K in three years time. While it is nice, S'Lake's infrastructure (streets need repaving, the power always goes out with wind rain, etc) isn't up to snuff. Also, if you look closely, it's really dirty, the the LAUSD stinks and there is a rampant gang problem in S'Lake/Echo Park/Rampart district.

Also, historically speaking, the Eastside doesn't hold its value as well in a downturn. During the last boom/bust cycle, houses in Los Feliz lost 35-50% of their value and my idea of 1200 sq-ft in an 1920s house for 800K+ isn't a prudent investment.

Have you thought of Altadena, more room, cuter houses in the style you want and the prices have come down more in line with fundamentals.

yeah, the $ per sq ft in Silver Lake are off the charts compared to where i'm living now (SoPas) which is a safer city with way better schools.

if they were closer to work, i'd expand my selection to include Altadena and Arcadia. although the snob in me has always thought of Altadena as Pasadena's little ghetto brother. but as you move toward the hills, the homes are really really nice and do come at a discount compared to similar homes in Pas.

-Jeff

The average price for a house in Pasadena has dropped significantly compared to this time last year or two

I read a couple weeks ago the average house in Pasadena is now around $550k, compared to 700k+ a year or two ago

What I cant believe is how many high end condos are being built in Pasadena that are selling for 1mil+....who's buying these???

Originally Posted by gamelan

Click to expand...

yeah, the $ per sq ft in Silver Lake are off the charts compared to where i'm living now (SoPas) which is a safer city with way better schools.

if they were closer to work, i'd expand my selection to include Altadena and Arcadia. although the snob in me has always thought of Altadena as Pasadena's little ghetto brother. but as you move toward the hills, the homes are really really nice and do come at a discount compared to similar homes in Pas.

-Jeff

Silver Lake, Highland Park, Echo Park and most of the Eastside is going to experience, in my opinion, a massive de-gentrification as prices drop. As an ex-Silver Laker, I can't even stand to go and visit now. Maybe I am just getting old.

Pasadena is nice, but I think the Altadena has a way cooler and more laidback vibe with cheaper homes. Arcadia is too far out there. Eagle Rock is getting a lot less expensive too.

I am waiting until the prices really come down - like early-2010 - and then I am going to buy in Laurel, Beechwood or Nichols Canyon.

I wish prices had come down in NYC anywhere near the percentages that you guys talk about. We've been looking for a place to buy for about a year now and it is crystal clear that, even after xxx-billion writedowns, rounds of layoffs, etc.., NYC prices are still going up on average, with some segments being relatively flat and very few neighborhoods softening a little. None of the really great apartments that we've seen recently has sold below asking price. None of them has sold for a price per sq.ft. lower than it was a year ago

I think those who think that prices will come down significantly may be a little US-centric and forget that, in Euro, Yen, SGD or CHF, property in the US has come down dramatically and offers good investment opportunities. We've seen first-hand several of the best properties we were looking at snatched by Europeans looking for a pied-a-terre or a rental income investment in NYC. For them, prices have come down massively.

NYC prices? Prices in a butt ugly jersey are not budging ...
I have no idea who buys those condos and THs for 500K+, but they are not bargain by any stretch of imagination.
Median incomes in jersey are nowhere near the levels to support these mortgages and that is even assuming that all of new buyers are putting down 20%.
Is everything in US pump-and-dump? I see eerie similarities between RE valuations and stock valuations.

Originally Posted by dkzzzz

Click to expand...

NYC prices? Prices in a butt ugly jersey are not budging ...
I have no idea who buys those condos and THs for 500K+, but they are not bargain by any stretch of imagination.
Median incomes in jersey are nowhere near the levels to support these mortgages and that is even assuming that all of new buyers are putting down 20%.
Is everything in US pump-and-dump? I see eerie similarities between RE valuations and stock valuations.

I dunno man - there are two sides of Jersey - there are the inner cities that bring down the median income, and the suburban towns that bring it up. For example, in the town where I am buying my house, the median home price is just under $500k, but the median household income is close to $80,000. A median income of $80,000 is enough to support a mortgage on a $500,000 house. That's why prices aren't budging.

Now, if you look at the inner cities, Newark has a median household income just above $25,000; Camden has a median household income of $18,000; Paterson and Trenton have median household incomes of $30,000, and so on...