first time home buyer needs advice in this market

M

myfirsthome_IHB

New member
<p>Hi everyone, I'm a long time Irvine resident and have been looking to buy my first home for over 6 months. The market has been going down steadily since july/august and with the prediction that the Fed won't reduce rates at the end of October, I've been seriously considering a new construction in Columbus Grove. The incentives are great, there was a significant price drop, and comparatively there are no condos in the MLS that give me more house for my buck. </p>

<p>My question is this: is the new construction market going to continue to get better (for buyers)? I know nobody has a crystal ball that can predict the market, but the opportunity that is currently presented to me is absolutely the best value I've seen in over 6 months of diligent searching. The interest rates are right, incentives are higher than I expected, I can easily afford the mortgage without the help of roommates (even though I will have two who will be renting from me), and as a single guy I desperately need the tax writeoff due to a new job. I know the home builders are hurting and want to bring up their figures before year-end so I feel like I have an advantage at this point.</p>

<p>Any advice you guys can give me here? I am trying not to be emotional about this property, but admittedly, I am more excited about this property than anything i've seen in 6 months. It has everything on my grocery list of must-haves for a condo. I only recently discovered this board so I haven't had a chance to read all the threads. It seems like everyone is saying to wait wait wait... but I know for a fact that this property will not be available in the next month because of the incentives they're offering. What would you do?</p>
 
<p><em>"I know for a fact that this property will not be available in the next month because of the incentives they're offering."</em></p>

<p>First, anything, including real estate, is available for the right price. </p>

<p>If you want it and can afford it, buy it. Unless the thought of losing all your equity in the next year or so bothers you.</p>

<p><em>"What would you do?" </em></p>

<p>I would do exactly what I am doing, which is waiting while prices keep falling. I can find a multitude of properties than I like alot and can afford, but I see no reason to spend a heck of alot more than I have to. </p>
 
<p>I COMPLETELY agree with awgee. We have found some "great" deals in our price range, but we are choosing to rent. You mentioned that you have seen prices steadily falling the last 6 months - wait another 6 months. All the data shows they will continue to fall. A better deal will come along in the future. In the meantime, check out this website more in detail. Start with this Discussion:</p>

<p><a href="http://forums.irvinehousingblog.com/discussion/380/please-be-nice-to-the-newbies/#Item_2">http://forums.irvinehousingblog.com/discussion/380/please-be-nice-to-the-newbies/#Item_2</a></p>

<p>There are some GREAT articles you should read before you decide to buy.</p>

<p>Good luck with whatever you decide to do.</p>
 
<p>I don't know how much you can save in tax write-offs, but I am sure the loss in property value will far exceed any savings you have in tax.</p>

<p>I'm in a similar situation and I think that I would want to kill myself 3 years from now if I could afford a 2,500 sq house with the same monthly payment of a 1,500 sq. ft. condo today. Wouldn't you?</p>
 
<p>Roo,</p>

<p>My estimated savings in Federal taxes will be over $12k per year. I haven't calculated the exact amount of savings in CA taxes, but I'm hoping the value won't depreciate far below my combined savings. Am I being too optimistic thinking this condo won't devalue at $12k a year or $120k over the course of 8-10 years? I am aware that in a worst case scenario, this can happen... but is it probable? My main goal is to avoid throwing my money away to the Fed, my current landlord, and to take advantage of friends who are willing to help me pay my mortgage rather than renting from a stranger.</p>

<p>Btw, I do agree that I would be upset if my mortgage payments could be buying me a single family home versus a condo in 3 years.</p>

<p>Thanks everyone for the advice. This is a big step in my life and it's nice to have input from people who have gone through the process before.</p>
 
<p>"Am I being to optimistic thinking this condo won't devalue at $12k a year or $120k over the course of 8-10 years? <strong><u>YES</u></strong></p>

<p>"I am aware that in a worst case scenario, this can happen... but is it probable?" <strong><u>YES</u></strong></p>
 
<p>thanks calgal. duly noted...</p>

<p>i will continue to watch the market and if this deal is still here in a few months, i will consider it again. here's another newbie question... with forclosures (and/or short-sales), do banks require most of the cash up-front?</p>
 
<p>In the meantime, please check out IrvineRenter's articles from the link I mentioned above. His articles will put everything in perspective for you. </p>

<p>Let us know what you decide to do. </p>
 
HEY, does anyone know what the acronym CHAMP stands for? I saw it regarding real estate purchasers, but I can not find it.
 
<p>I'm sure graphrix will chime in on this foreclosure question. He's very knowledgeable on this subject. Also, check out this discussion on foreclosures:</p>

<p><a href="http://forums.irvinehousingblog.com/discussion/346/5/foreclosure-and-distressed-property-topics/#Item_7">http://forums.irvinehousingblog.com/discussion/346/5/foreclosure-and-distressed-property-topics/#Item_7</a></p>

<p> </p>
 
<p>Hi myfirsthome:</p>

<p>My SO and I have been on the market for 1.5 yrs now. We were ready to pull the trigger 1 yr ago (at Portola Springs) and decided to get out of the market. We were ready to purchase at Decada and their smallest plan back then was in the high $600's. Anyhow, 18 months later, its now at high $500's. Based on all the research, including IR's amazing work and everyone else's comments on the Blog, there is no chance for you to see appreciation, and the chance of 10% drop in OC home in 2008 is very high.</p>

<p>If you have a good size downpayment already and don't want to wait anymore, you are more than welcome to buy. But like CalGal and Roo said, what's the point of buying if the depreciation will outpace your tax savings (by a big ratio). From the investment stand point, it probably doesn't hurt to wait for another 6-12 months, put your money in a good money market account, and see where the market is at.</p>
 
<p>Awgee Here is the definition for CHAMP <a href="http://acronyms.thefreedictionary.com/CHAMP">http://acronyms.thefreedictionary.com/CHAMP</a> Certified Home-Advanced Marketing Pro (National Association of Independent Real Estate Brokers) </p>

<p> </p>
 
<p>thanks vicstah. i will probably wait and see what happens. in the meantime i'll continue to save up and educate myself more. i'll be sure to read irvine renter's articles and continue to ask questions/read here. i'm really glad i found this message board! </p>

<p>now, anybody own a condo they want to lease to me? HAHA!</p>
 
<p>Here's a different way to look at the difference in purchasing power you will have 3-5 years from now:</p>

<p>Scenario 1 (small to medium drop): Price drops 30% over 3 years, then follow historical trend</p>

<ol>

The home prices are 70% of today

Your salary is 25% higher than today (assuming 7.5% increase)

You have enough money for a 20% downpayment (after all you saved $2,000 per month for renting over buying)

This adds up to you buying a home twice as expensive as today

</ol>

<p>Scenario 2 (big drop as predicted by most posters): Price drops 40% for 5 years, then follow historical trend</p>

<ol>

The home prices are 60% of today

Your salary is 45% higher than today (assuming 7.5% increase)

You have enough money for a 25% downpayment (after all you saved $2,000 per month for renting over buying)

This adds up to you buying a home three times as expensive as today

</ol>

<p>I'm hoping for scenario 2, scenario 1 would also make me happy...let's see the difference:</p>

<p>If you buy today: for $658,000: <a href="http://forums.irvinehousingblog.com/discussions/?PostBackAction=Download&AttachmentID=11">Clarendon - Residence 3.pdf</a> </p>

<p>Scenario 1: 3 years from now you would be able to afford this home: <a href="http://www.redfin.com/stingray/do/printable-listing?listing-id=1040238">http://www.redfin.com/stingray/do/printable-listing?listing-id=1040238</a></p>

<p>Scenario 3: 5 years from now you would be able to afford this home: <a href="http://www.redfin.com/stingray/do/printable-listing?listing-id=846678">http://www.redfin.com/stingray/do/printable-listing?listing-id=846678</a></p>

<p>Maybe I'm dreaming, but don't wake me up for the next few years!</p>
 
<p>Rent is dropping, in Irvine? It's not increasing, however. </p>

<p>I'm watching the rentals out there - finding a place for $1,000/month would be like WOAH!</p>
 
<p>Max out your 401k. You can also invest in tax-free municipal bonds. Just be careful that the funds aren't tied to the housing market. Fidelity has a good one. Oppenheimer has a good one too - although they are tied to the housing market (found that out the hard way) </p>

<p>(Disclaimer: I'm not a financial planner or a tax adviser)</p>
 
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