Discouraged future first-time home owner, any advice?

D

desertgrl_IHB

New member
Hi Everyone--



I've been to the blog here a couple times but this is my first time posting. Sorry if this type of question gets asked a lot but it's really been consuming me lately and I didn't see another post with our specific situation.



We moved to Woodbury Square almost a year ago and we absolutely love it here! We would love to buy a house in Irvine (Preferablly Orchard Hills, Portola Springs, Woodbury, or Quail Hill that's about 750 to 800,000) but I'm not sure that is ever going to be possible. We really want to have a house by the time our daughter turns 5 (she's 2 right now), we're 29 right now, we make about 125,000 but we have some credit problems, 2 car payments, a couple credit cards and other payments plus crazy expensive daycare. Right now we are working on paying everything off and fixing our credit and plan to have everything paid off, decent credit and about 40,000 in savings in Fall of 2011. We should also be making more by then, probably closer to 145 or 150,000. That's also when our daughter would start Kindergarten so no more daycare, or really cheap daycare! If things go as planned we should be able to afford a 4500 mortgage.



We were thinking that since Orchard Hills is supposed to open at the same time that it would be perfect and we could buy a new house there. Then, I started doing some research and found that with what we make now, even if we had really good credit and no kind of debt that we would only be able to buy a 1 bedroom condo (if that!) in the aforementioned villages. I grew up in Victorville in a brand new tract home on 1/2 an acre which originally cost 65,000! The thought of paying 500,000 for a 1 bedroom condo just makes me want to barf! LOL



So really I'm just wondering, should I continue dreaming of buying a home in Irvine? Would that even be possible with a 150,000 income and 40,000 in savings? I don't see how all these people here do it! We're definitely going to continue with our plan I just feel so discouraged right now and am wondering if there's something else I should be doing besides working nights as a stripper? LOL
 
[quote author="desertgrl" date=1215954701]we make about 125,000 and I am wondering if there's something else I should be doing besides working nights as a stripper? </blockquote>


Maybe you could work more than 2 nights a week? Must be some work commute. :p



Be patient and stay focused. Your time will come. Housing bottom in 2011-2012...less time than it would take a recent high school graduate to get a college degree.
 
If you wait until your daughter's 5th birthday, you will be able to comfortably afford a nice home in Irvine. Probably not an SFR in Orchard Hills or Portola Springs, but somewhere.



Just keep reminding yourself how high the stakes are. Just in the last year a typical OC home has lost enough value to pay for your little girl's 4 years at Stanford. ;-) And there's a lot more to come.
 
<blockquote>Then, I started doing some research and found that with what we make now, even if we had really good credit and no kind of debt that we would only be able to buy a 1 bedroom condo (if that!) in the aforementioned villages</blockquote>


Exhibit A in "Why prices <strong>will</strong> come down". Everyone else is in the same boat you're in.
 
[quote author="effenheimer" date=1215985805]<blockquote>Then, I started doing some research and found that with what we make now, even if we had really good credit and no kind of debt that we would only be able to buy a 1 bedroom condo (if that!) in the aforementioned villages</blockquote>


Exhibit A in "Why prices <strong>will</strong> come down". Everyone else is in the same boat you're in.</blockquote>


Amen to that. What happens when everyone is "priced out forever"? Nothing sells, and prices come back down again.



I really relate to a lot of your story, and I'm just being patient. I already got rid of my debt (paid down car as quick as I could) and I'm still saving. Our time WILL come.
 
The prices will come down, so your condo won't be 500k, maybe 250-350k. The other issue is your annual income... it just isn't enough. My wife and I pull down close to 200k with another 180k in profits from investments per year(which I don't touch right now). I STILL can't afford the 700-800k house easily. With family needs, taxes, saving, retirement, education, etc. etc. etc., its just a little too much for me.



My first suggestion is find out how much you can afford (2-3x your annual income), then save up 10-20%. I know its not much, but you're looking at todays cost. Not the cost in 1-2 years (which might be as much as 50% less - use 30% for your calculations).



Not to worry, just clean up your credit, save some money and in 3 years you will be above ALOT of people.

good luck

-bix
 
<em>"Everyone else is in the same boat you're in"</em>



So true. I think I make great $$ but in doing the math, I <em>should</em> only be buying in the mid 300's. :shut: It will take me years to save up the proper downpayment.... :down:



Meanwhile, I rent and try not to think about it too much....



Take comfort in the fact that you are not alone.
 
[quote author="biscuitninja" date=1215994693]The prices will come down, so your condo won't be 500k, maybe 250-350k. The other issue is your annual income... it just isn't enough. My wife and I pull down close to 200k with another 180k in profits from investments (which I don't touch right now). I STILL can't afford the 700-800k house easily. With family needs, taxes, saving, retirement, education, etc. etc. etc., its just a little too much for me.



My first suggestion is find out how much you can afford (2-3x your annual income), then save up 10-20%. I know its not much, but you're looking at todays cost. Not the cost in 1-2 years (which might be as much as 50% less - use 30% for your calculations).



Not to worry, just clean up your credit, save some money and in 3 years you will be above ALOT of people.

good luck

-bix</blockquote>


Inspite of the credit and debt issues, i think you are already above alot of young couples i know. Resist the urge to buy, I know many kids who got married and the first thing on their long term buy list (long term being 1 year) was a home. To put it bluntly, they are f'd for at least 10 years. They can't move, they can't move up, and they can't afford a child, but of course they are going to have a kid anyways.
 
All these replies are great. You're doing well, just be patient. The more time it takes for housing to correct, the lower the prices go and the more debt you can pay off. Every year that goes by puts you farther and farther ahead of everyone else. You're probably in the 99 percentile of all wage earners in the US and even in the top 90 in Irvine so relax, save and don't lose sleep over this. Stripping won't do much for your marriage and doesn't set an example for your daughter. I know you were joking but you can't think like that. Just be thankful you have your health and you're not homeless. There are people much worse off than you. Geez, I'm starting to sound like a liberal :)
 
[quote author="jcaraway" date=1216006690][quote author="Trooper" date=1216006519]jc, Did you get up on the wrong side of the bed today? :-/</blockquote>


yeah</blockquote>


He may be grumpy but he's right.
 
[quote author="caycifish" date=1215993933][quote author="effenheimer" date=1215985805]<blockquote>Then, I started doing some research and found that with what we make now, even if we had really good credit and no kind of debt that we would only be able to buy a 1 bedroom condo (if that!) in the aforementioned villages</blockquote>


Exhibit A in "Why prices <strong>will</strong> come down". Everyone else is in the same boat you're in.</blockquote>


Amen to that. What happens when everyone is "priced out forever"? Nothing sells, and prices come back down again.



I really relate to a lot of your story, and I'm just being patient. I already got rid of my debt (paid down car as quick as I could) and I'm still saving. Our time WILL come.</blockquote>


I second this. Our time will come. Both myself and my buddy (in our late twenties) and his wife are waiting patiently, while saving our down-payments and paying off debt, for the time when housing once again becomes affordable. Nobody knows when it will come, but it will come.



The best thing you can do IMO is to keep educating yourself. Read read read, read online, the newspapers, text books, even wikipedia! The more you understand about this housing debacle, the more comfortable and confident you will feel about the market and the big purchase.
 
I can think of a million iron-clad retorts to your questions, but I'm spent. Instead I will simply suggest you go splurge on a good bottle of wine and spend the evening being thankful for the things you have.
 
I'm in the same boat as you. This forum helped me back away from a condo at VoC last year (20 days from closing escrow) and I've never looked back since. Occasionally me and the wife will have the itch to buy since we've been living in a 1 bedroom condo for 3 years now saving up as much as we can - there is just no place to entertain or host guests. Then I just read IHB and show it to my wife and we get back on track. Just keep on saving the prices will come down since it needs to readjust to reflect realistic pricing based on the median family income. Onwards to 2010!



Any educated guess on when the market will bottom out?
 
[quote author="arctichaze" date=1216032670]I'm in the same boat as you. This forum helped me back away from a condo at VoC last year (20 days from closing escrow) and I've never looked back since. Occasionally me and the wife will have the itch to buy since we've been living in a 1 bedroom condo for 3 years now saving up as much as we can - there is just no place to entertain or host guests. Then I just read IHB and show it to my wife and we get back on track. Just keep on saving the prices will come down since it needs to readjust to reflect realistic pricing based on the median family income. Onwards to 2010!



Any educated guess on when the market will bottom out?</blockquote>


If you're still posting that question, you haven't been reading this blog long enough.
 
[quote author="jcaraway" date=1216039855]



If you're still posting that question, you haven't been reading this blog long enough.</blockquote>


With this weekend's headlines Fannie, Freddy and Indy I'll be the 1st one to say 2012 might be a realistic time.
 
[quote author="arctichaze" date=1216084768]

With this weekend's headlines Fannie, Freddy and Indy I'll be the 1st one to say 2012 might be a realistic time.</blockquote>
Sorry, you're not the first. ;)
 
I don't know, everytime I turn around the bubble burst seems to drag on longer and be more invasive than everybody though....



Right now, just be happy, read IHB and get all the ducks in a row... then open up with BOTH barrels!



-bix
 
I can only assume that you haven't had the income for very long or had a major financial set back, otherwise there has been bad money management. When I was 29, I was a financial basket case with a lot of debt, late payments and just getting going in a new career that didn't start to pay well until I was 30. By 38 I had paid off all my debt and managed to accumulate over $90K in the house fund. Granted, I had several things on my side such as below market rent and riding the boom of the market from 2003-2007, but we made a number of sacrifices to accumulate the DP fund. 2006 wasn't a big money earning year for us either (much lower than the $125K).



Coming into the game so late, I knew I had to live differently than my income stream would normally warrant. Hence, roommates. My husband moved in with me when we got engaged and we still kept a roommate through May of '07. We really like food and wine, so going out to dinner was always expensive for us. We decided to just nix going out and on the weekend make gourmet style meals that had prep work we could do together that would substitute for entertainment. Some meals we spent a lot on, but less than going out and others, like home made raviolis, are quite inexpensive for how darn good they are. We got rid of cable, consolidated the cell phones into one shared plan, put a blanket on the water heater, etc... basically, we just cut back every where that we could do without. I LOVE shoes, but when I got serious about my house fund, it was so much easier to pass up those absolutely adorable peek a boos that are only slightly cuter than the ones I already have. Or, yeah, I'd really like a new CD, but I don't really NEED it now. I drove my car for 14 years and when I was finally overdue for a new one, bought an entry level vehicle, not something that someone in my income bracket typically buys.



In 2006, I gave up on buying anything in OC, but still kept at the house fund because we were going to own our own home some place. But really my point is that if you coming to the financial get ahead of game late, you can't expect to be in the same position as those who haven't. You need to start thinking that $125K isn't so much money that you should be able to have it all. Prioritize and get the financial house in order, as it sounds like you are, and in a few years you will see a whole different picture of the future.
 
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