If you knew this was the bottom!

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rickhunter_IHB

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Would you buy now? If you knew in 10 years, prices would be the same as it is now?

Why or Why not? Home not investment!



SFR

Peak 2005 = $1mil

Bottom 2008 = $800K

Future 2018 = $800K



Condo

Peak 2005 = $600K

Bottom 2008 = $420K

Future 2018 = $420K
 
[quote author="rickhunter" date=1228454288]Would you buy now? If you knew in 10 years, prices would be the same as it is now?

Why or Why not? Home not investment!



SFR

Peak 2005 = $1mil

Bottom 2008 = $800K

Future 2018 = $800K



Condo

Peak 2005 = $600K

Bottom 2008 = $420K

Future 2018 = $420K</blockquote>
I sincerely doubt that anyone out there would buy if prices stay the same in 10-year. In fact, one of many reasons why people decide to buy is because RE always go up, at least that is what they have been brainwashed to think so.



WHY: fix payment for 10 years



WHY NOT: 1)Your job might not last that long.

2)No mobility, what if you want to live a different place.
 
Doesn't this also depend on rental parity?



I my rent for a similar $800k house is less than my mortgage and expenses than why wouldn't I just save that difference for 10 years and buy then?



And if the price is the same in 2018, one of three things happened:



1. Prices dropped more and came back up (which would mean I should buy in between)

2. Prices rose and dropped back down (which would mean I should buy now and sell in between)

3. Prices remained flat



In any of those cases, if rent was cheaper... why not just rent?



(man... can't believe I just posted those things)
 
Some people like to own. Flat out even if you pay more than renting.

Without the depreciating home price factor, what are we left with to ponder before buying?



Your reasons come from an investment point of view. If I were single, I might have the same mentality.

Think about people that are married and want to start a family...the urge to buy is that much greater given...



[quote author="irvine_home_owner" date=1228455650]Doesn't this also depend on rental parity?



I my rent for a similar $800k house is less than my mortgage and expenses than why wouldn't I just save that difference for 10 years and buy then?



And if the price is the same in 2018, one of three things happened:



1. Prices dropped more and came back up (which would mean I should buy in between)

2. Prices rose and dropped back down (which would mean I should buy now and sell in between)

3. Prices remained flat



In any of those cases, if rent was cheaper... why not just rent?



(man... can't believe I just posted those things)</blockquote>
 
Most People like to own period! They just dont want to buy something that would depreciate in value.

As for appreciating, that's an extra bonus.



[quote author="WestparkRenter" date=1228454651][quote author="rickhunter" date=1228454288]Would you buy now? If you knew in 10 years, prices would be the same as it is now?

Why or Why not? Home not investment!



SFR

Peak 2005 = $1mil

Bottom 2008 = $800K

Future 2018 = $800K



Condo

Peak 2005 = $600K

Bottom 2008 = $420K

Future 2018 = $420K</blockquote>
I sincerely doubt that anyone out there would buy if prices stay the same in 10-year. In fact, one of many reasons why people decide to buy is because RE always go up, at least that is what they have been brainwashed to think so.



WHY: fix payment for 10 years



WHY NOT: 1)Your job might not last that long.

2)No mobility, what if you want to live a different place.</blockquote>
 
[quote author="rickhunter" date=1228462929]Some people like to own. Flat out even if you pay more than renting.

Without the depreciating home price factor, what are we left with to ponder before buying?

</blockquote>
The depreciating home factor is a big thing to ponder. With the economy crashing... that's going to be something very hard to eliminate.

<blockquote>

Your reasons come from an investment point of view. If I were single, I might have the same mentality.

Think about people that are married and want to start a family...the urge to buy is that much greater given...

</blockquote>
Hehe... bad assumption. I'm married and have young kids... my reasons came from that reality because:



a. If renting cost less, more money goes into college fund or future home ownership.

b. If rental parity is less, and you're not worried about paying the same amount, you can live in a bigger house for the same cost (more room for the kids to run around)

c. If prices appreciate, you can move up to a bigger house or pocket the equity when you sell at peak for item a, and then rebuy at the 10 year mark.



There's probably more... but this seems like a sound strategy regardless of your point of view.
 
I'd like to do a lot of things, but I'm not paying double the price of a rental for the privlidge to call a stucco box "mine".



So, no, I'd keep renting, and keep the difference for a decade.
 
If prices were going to remain static for 10 years, I would buy now. There is no way interest rates are going to remain this low for a decade and the tax breaks would make it worth it (for me) , assuming 20% down, blahblahblah.
 
How many of you are planning to stay in the house you buy for at least 10 years? I think this is the real question. Who is planning to buy a HOME, a place to live in and grow in and make a commitment? Or how many of you are stuck in the old mind set: move in then move up? The paradigm is changing. Let's change the way we think and maybe we can change the world. If your house isn't going up in value, maybe you should buy one that you are happy with just the way it is. Maybe you should think twice and move only where you plan to stay.
 
[quote author="tmare" date=1228488500]How many of you are planning to stay in the house you buy for at least 10 years? I think this is the real question. Who is planning to buy a HOME, a place to live in and grow in and make a commitment? Or how many of you are stuck in the old mind set: move in then move up? The paradigm is changing. Let's change the way we think and maybe we can change the world. If your house isn't going up in value, maybe you should buy one that you are happy with just the way it is. Maybe you should think twice and move only where you plan to stay.</blockquote>
And forego the status of an Irvine address? How will everyone else know how important I am if I don't live in the best house in the best neighborhood with the best schools? I suppose I have to give up the import cars too... maybe buy a *shudder* <i>American</i> car? What's next, community watches, PTA meetings and other social interaction with the plebes in my current neighborhood?



/sarcasm
 
You can buy the home you would want to stay in for 10 years and still move up.

Your earning power should increase by then.

Your wants and needs should have changed.



[quote author="tmare" date=1228488500]How many of you are planning to stay in the house you buy for at least 10 years? I think this is the real question. Who is planning to buy a HOME, a place to live in and grow in and make a commitment? Or how many of you are stuck in the old mind set: move in then move up? The paradigm is changing. Let's change the way we think and maybe we can change the world. If your house isn't going up in value, maybe you should buy one that you are happy with just the way it is. Maybe you should think twice and move only where you plan to stay.</blockquote>
 
By the way, what you're suggesting, at least for Irvine, is not likely.



If the peak price of an SFR is $1mil in 2005 (which puts you at about 2500-2900sft), then a fundamentally sound bottom price would not be $800k. You're probably looking at more like $600k... if the 40% prediction holds.



Now again, that depends on area and age of house... plus the FCBs may not let that go below $700k, but that's still pretty high.
 
If the home is a keeper for 10 years, it should be relatively new in a nice neighborhood, by IHB standards?

It's going to be commanding top dollar. As IPO has shown in his sale stats.

These homes have shown a range of 5%-20% decline from the peak?

The more these homes have dropped, I believe the less it has to go.

Time will show this. There will be no 40% reduction for these homes.



The 40% prediction will hold true for homes not meeting this criteria in the not so good areas of orange county.



I think you're going to see a bigger gap between the homes in the desirable places versus the homes in the not so desirable places. Just compare what you can rent a brand new home for in Irvine $3000? versus what you can rent an old one for in Westminster $2000? or Santa Ana $1800? I'm making up numbers here cause they can range depending on what you're looking for.



[quote author="irvine_home_owner" date=1228528539]By the way, what you're suggesting, at least for Irvine, is not likely.



If the peak price of an SFR is $1mil in 2005 (which puts you at about 2500-2900sft), then a fundamentally sound bottom price would not be $800k. You're probably looking at more like $600k... if the 40% prediction holds.



Now again, that depends on area and age of house... plus the FCBs may not let that go below $700k, but that's still pretty high.</blockquote>
 
[quote author="rickhunter" date=1228524834]You can buy the home you would want to stay in for 10 years and still move up.

Your earning power should increase by then.

Your wants and needs should have changed.



[quote author="tmare" date=1228488500]How many of you are planning to stay in the house you buy for at least 10 years? I think this is the real question. Who is planning to buy a HOME, a place to live in and grow in and make a commitment? Or how many of you are stuck in the old mind set: move in then move up? The paradigm is changing. Let's change the way we think and maybe we can change the world. If your house isn't going up in value, maybe you should buy one that you are happy with just the way it is. Maybe you should think twice and move only where you plan to stay.</blockquote></blockquote>




I'm saying that it is highly likely in this environment that not only will your house NOT go up in value but it's also possible that you won't earn more money and even if you do, the extra will be eaten up by inflation. Smart people will start thinking much more long term about the place they live. At the very least the old "5-7 year" advice will have to change.
 
Bottom 2008 = $800K

Future 2018 = $800K



So your $160k dp is sitting in your house for 10 years, and you are going to get it back when you sell, less 6% of 800k, or $48k, so you come out with $112k in 2018 dollars?



Or you could rent the same place at half the PITI, and come out with $320k 2018 dollars from the dp? Plus, of course, any of the difference between rent and PITI that you manage to save. Let's say you save only $1k/month x 120 months, plus interest..another $200k.



So assuming the same nominal dollar amounts (above), and you come up with buy, <strong>or rent the same place and end with another $500k.</strong>
 
So I should be asking you this question...



Would you like to own for 10 years and have all the benefits that come with it?

Or

Would you like to rent for 10 years and have all the benefits that come with it?





[quote author="freedomCM" date=1228537558]Bottom 2008 = $800K

Future 2018 = $800K



So your $160k dp is sitting in your house for 10 years, and you are going to get it back when you sell, less 6% of 800k, or $48k, so you come out with $112k in 2018 dollars?



Or you could rent the same place at half the PITI, and come out with $320k 2018 dollars from the dp? Plus, of course, any of the difference between rent and PITI that you manage to save. Let's say you save only $1k/month x 120 months, plus interest..another $200k.



So assuming the same nominal dollar amounts (above), and you come up with buy, <strong>or rent the same place and end with another $500k.</strong></blockquote>
 
I think you're talking about affordability. This should have been factored into buying the home already. Whether you stay in it for a year's time, you need to know that you can afford it for 10 years or more.



[quote author="tmare" date=1228532245][quote author="rickhunter" date=1228524834]You can buy the home you would want to stay in for 10 years and still move up.

Your earning power should increase by then.

Your wants and needs should have changed.



[quote author="tmare" date=1228488500]How many of you are planning to stay in the house you buy for at least 10 years? I think this is the real question. Who is planning to buy a HOME, a place to live in and grow in and make a commitment? Or how many of you are stuck in the old mind set: move in then move up? The paradigm is changing. Let's change the way we think and maybe we can change the world. If your house isn't going up in value, maybe you should buy one that you are happy with just the way it is. Maybe you should think twice and move only where you plan to stay.</blockquote></blockquote>




I'm saying that it is highly likely in this environment that not only will your house NOT go up in value but it's also possible that you won't earn more money and even if you do, the extra will be eaten up by inflation. Smart people will start thinking much more long term about the place they live. At the very least the old "5-7 year" advice will have to change.</blockquote>
 
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