Housing in Brea

R

rob._IHB

New member
<p>Hi everyone. I have been a long time lurker and finally have decided to register so I can post. First I would just like to say that I have found this site extremely helpful and valuable. In fact, I was planning to buy a few months back but decided to wait.</p>

<p>Anyways, as the topics suggests, I am looking to buy in brea or near brea (but will wait it out). Anyone have any thoughts to a nice area to specifically look at.. one that is safe and has lots of greenery? I want to start watching the prices in the area. I am only looking @ a budget of 300k-400k. A townhome would probably be preferable as my girlfriend and I start/finish grad school, about 2-3 years. Are there any condos/townhomes that have nice sized yards (for my dog)?</p>

<p>We are debating renting for the 2-3 years because we ultimately would like to purchase in Irvine or in CDM when we are done (brea area was just a midpoint for driving between my school and my girlfriends). I don't know if it would be better to rent for that time or to buy a place in the next couple of months and use it to trade up. I wouldn't be looking for a profit when it came time to sell, but breaking even is what I'm after. I would rather not want to spend about $61,000 (assuming 1700 a month for rent for 3 years). On the other hand, we could be saving up for a nice down payment. I don't know if paying a $2200 mortgage and selling in 3 years is a good choice or bad? Can anyone offer suggestions? For those of you who are number crunchers... care to do any cost analysis? I've tried, but I don't know if I am doing it correctly.</p>

<p>Last question. I know there are many foreclosures in the area... but how do I obtain more info? Do I need to subscribe to their services? Thank you all for your help.</p>
 
<p>Rent, and by the time you are done with school, the market should be bottoming out. Hopefully.</p>

<p> </p>
 
<p>Here's how I would cost it, using your numbers and some rough guesses:</p>

<p>Assume 90% LTV, $350k purchase price, 6.5% 30-yr fixed, sell after 3 years, 5% commission</p>

<p>Monthly payment, including taxes & PMI (est): $2500; Total payments: $90,000</p>

<p>Total net write-offs over 3 (calendar!) years (interest + taxes - std single deductions): $57k</p>

<p>Cash benefit of write-offs (assume 24% marginal state/fed tax rate): $13,700</p>

<p>Loan balance after 3 years: $303,714</p>

<p>Where does cost of owning equal cost of renting? Let X be the home sale price after 3 years.</p>

<p>(.95x - 303714) + 13700 - 90000 = -61000</p>

<p>X = 335800</p>

<p>If the property sells for less than $336k (4% drop) after 3 years you were better off renting. I had to increase monthly payment to account for prop taxes and PMI (may need to be even higher). I ignored gains on investing the money saved by renting, which would push the parity home value slightly higher, depending on rate of return. Also, there are hidden costs of owning--owners spend a lot more $$$ at Home Depot than renters. Rerun the calcs as you get better numbers.</p>
 
When I was in grad school right after college, the concept of buying a place to live never even crossed my mind. When you're a student, you're a renter. Period. I simply don't understand how this mentality shifted so significantly - makes me feel really old!
 
<em>"I simply don't understand how this mentality shifted so significantly"</em>





100% financing made it possible, and our "ownership society" made it an entitlement.
 
<p>@Daedalus: Thanks. We might consider living there longer than 3 years (5-7 to save for a down)... I am hoping that it won't sell for a loss. We'll see... I am still in the researching of all this phase.</p>

<p>@irvinesinglemom: I see your point. I was just looking at a different side of things. I figure I rent in Irvine, that outside of Irvine, I may be able to find a place with a comparable mortgage. Now if I can find a SFR (will def not be in brea), we'll live in it longer than 3 years. I think this mentality shift is also an Investment title. As IrvineRenter pointed out, I would like to own. Right now as a student, I run a small business online. It started with ebay and has just grown from there. I am seeing this more and more, where students make extra income from ebay. This wasn't a norm when you were in grad school (or was it?). Maybe you had something different students were doing?</p>

<p>It's like thinking, who would think a student is running a business online?


..or rather, who would think that student wants to purchase a home?</p>

<p>Hey, my thinking may be flawed but please do feel free to correct me. Thanks for everyones input so far!</p>
 
<p>Rob. I would wait, that way you can save more dough for the down payment (you'll be needing a big chunk of change !) Who knows how well your online business will be doing next year while you are still a full time student....and racking up more student loan debt. Unless you have a secure salary, do not invest in a home. My .02</p>

<p>Daedalus, did you figure in HOA fees too ? </p>
 
<p>I didn't consider HOA fees, but I think the monthly payment is the biggest WAG to begin with. As I said, rerun with better numbers. </p>

<p>I'm a grad student and a home owner. If I was looking for housing today there is no question I would rent.</p>
 
The problem with owning in your 20s in years past was that you didn't have the downpayment. You used to have to work for 5 years or more to save up a 20% downpayment on a starter home. Even when prices were only $200,000, that was $40,000 in savings, plus they made you have other cash reserves, so you needed to save more like $60,000. That took time, and a lot of sacrifice.
 
<p>hey rob,</p>

<p>as my name suggests I was in brea for almost 6 years. renting while in grad school. just moved to yorba linda, waiting to purchase in the next couple of years. my wife and looked all over (including irvine) and believe yorba linda is a great area. </p>

<p>what area in brea are you looking at?</p>
 
<p>Honestly, I am not sure. I wanted to get an idea of which neighborhoods to look at. I wanted somewhere nice with lots of green and safe to go out for a walk with our dog. Townhomes are preferable, renting or purchasing, but more towards renting as everyone says it would be wiser.</p>

<p>I was just asking to see if anyone knew of any good areas, and then I would go ahead and drive around to see it, then look to see what's available. Have any ideas?</p>
 
Way back when I lived in Fullerton, there was a new development going up in Brea (Placentia? not sure exactly) right next to a big park (can't recall the name) way out past the Brea Wal-Mart...up in the hills. Anybody know anything ab out this?
 
<p>irvinesinglemom,</p>

<p>I think you're thinking of Olinda Ranch, off of Lambert and Valencia. Newer houses, lot size smaller than a parking space. </p>

<p>rob,</p>

<p>Brea is generally safe. I'd stay east of Puente. West becomes closer to La Habra and a little more suspect. Only bad thing for Brea is that lot of the apartments are older (Brea's the fourth oldest city in OC).</p>
 
<p>rob,</p>

<p>i lived in placentia for 12 years before moving to irvine for school and now i currently reside in LA. i went to el dorado high and my wife went to brea olinda high. we are pretty familiar with the area. as far as we know, there aren't too many properties in the area for the price range you forementioned. ($300k-$400k) especially with nice size yards. but if you are looking, i would stay closer to the area bordering placentia and yorba linda. </p>
 
<p>"<em>The problem with owning in your 20s in years past was that you didn't have the downpayment. You used to have to <strong>work for 5 years or more to save up a 20% downpayment</strong> on a starter home. Even when prices were only $200,000, that was $40,000 in savings, plus they made you <strong>have other cash reserves</strong>, so you needed to save more like $60,000. <strong><u>That took time, and a lot of sacrifice</u></strong>.</em> " - IR</p>

<p>Right on IR. We're in our 20s and if we end up buying when we plan to (2010?) we'll have 20% down on a nice house with cash reserves after closing costs, furnishing, options etc. Unfortunately, most of our friends and family in our generation still don't quite understand this. We hear a lot of "<em>Oh we'll figure it out when we get there</em>" and "<em>things will work itself out</em>" when talking about buying a home. Even with a substantial % of our take home pay going into savings every month and a lot of discipline and sacrifice on our part, it's still going to take us 5+ years to save up enough cash to be able to buy a nice home in Irvine comfortably. </p>

<p>Anyways, I'm off on a tangent sorry. As for buying in Brea soon and hoping to trade up or break even when you and your gf graduate...probably not a good idea. Prices will most certainly be much lower in 2-3 years and you'll end up underwater. Rent for now, save and buy later. I'm too financially conservative to even imagine buying a house as a student. Goodluck :)</p>
 
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