[quote author="WillWork4Home" date=1255832959]SoCal -- I think I am soliciting thoughts as to the general quality of this property (location, size, features) such that it will retain its value as much as possible over time, and whether, coming into the purchase as a long-term homeowner in light of the current economy and future risk of inflation, it would be a sound financial decision to place the savings I have accumulated thus far into this place? I realize there are intangibles that go into any purchase (how badly we want to buy a house, settle down, have a place of our own, etc.), which matter. But I have been a longtime lurker on these boards and have found that the people here have good heads on their shoulders and seem very knowledgeable. So, when it comes down to it, I'd like to know if people think I am making a completely bonehead move or not!
The one thing I haven't seen factored into the various models of future home prices is how inflation should be taken into account.
What additional information would people find helpful in offering their thoughts?
We are taking another look at the place this weekend to try and make a final decision.</blockquote>
Here's my opinion:
In general, most of us think prices are gliding downward with the angle being dictated by the shenanigans going on in Washington; currently they are doing their best to ease the rate of descent, with some success. However, that success has come at a great cost and no one thinks it's something that can be maintained. So if you are convinced that prices are going down, whether it be quickly or slowly, you have to look at any purchase as certain to lose value in the short term. The people who bought this house back in 1995 did so in a market that had been slithering along the bottom for years. Clearly, having stayed for 14 years, they are ready to downsize and are expecting to double their "investment". I have no info on how much equity they sitting on or how much they blew on statuary, but they certainly do not appear that they *need* to sell.
Which prompts me to ask this question: are you going to be staying in Y.L. long enough to weather the loss in value (if it occurs) and make a home there or are you hoping to buy low, live there for a 5 or 6 years, and then sell on the next RE upswing? If you are looking to get the most bang for your buck, waiting another year will probably deliver that for you. If you are worried that inflation will eat away your buying power, consider that this would be occurring in a depressed RE market; it seems unlikely that home prices would be rising in that environment, but interest rates certainly would. If you are looking to buy a home for your family for the next 15 to 20 years, the only question you really need to answer for yourself is "Am I willing and <em>can I afford</em> to pay $800k to make this place 'home'?"
As for the property: it has a pool, a nice street, backs to a green belt with an elementary school beyond that, mature landscaping, a large lot with plenty of parking, and it even lends itself to being remodeled/refreshed/refurbished without too much expense. If I had 2-3 crumb munchers, <em>and I could afford it</em>, I would seriously consider this place. If I was just looking for an investment, I'd be moving on.
