What would you do if you could buy a house now at below current market value

[TravelingGal]

Well, I just got an email from the owner with an amount that is over our preapproved loan amount (although they are saying it is negotiable). I sent them a really nice reply back saying that I think their home will sell for that amount, if not more, but at this time, we are not able to buy the house.

However, check out the response that I got from TGuy''s colleague at the bank.



"I apologize for the delay. We do have extended loan limits for conforming loans but it requires additional underwriting from Freddie Mac. Once a home is located and an offer is accepted we can find out if the loan would be eligible. We need the address as the conditions are different for every city and state.

Current mortgage rates are 4.875% conforming (417k and below) and 5.25% (Jumbo)

Employee rate would be 3.75% conforming and 4.125% jumbo.

Please let me know if you have any questions or concerns.

Thank you. "



Boy, rates have gone down a lot since I spoke to him in November. Of course, low rates means artificially high home prices, but still - these look pretty good so far, no? (I admit, I haven''t shopped full steam ahead for loans yet.)

 

[TravelingGal]

Date: 3/23/2009 3:24:26 PM
Author: fleur-de-lis

Date: 3/23/2009 2:55:20 PM
Author: TravelingGal

Date: 3/23/2009 2:53:04 PM

Author: fleur-de-lis

Date: 3/23/2009 2:42:32 PM

Author: TravelingGal


18 more months in this apartment...bah bah bah.



Thanks everyone for your two cents......................

No, seriously... I know it''s sometimes easier to stay with what you know, but since I know you''re an info hound about the RE Bubble as well, why not take advantage of the current scenario and rent a nice place (without flea infestations

) that would only be a couple of hundred bucks more a month (but still less than a 30 year fixed mortgage''s monthly payment + PITI), not to mention wait out the bottom without stress, remorse, or unhappiness?

That''s the thing FDL, my rent is dirt cheap (see post above) for the area because we have been here for so dang long. We would be adding at least 1500 to our monthly by renting, when we could be saving that by staying put in flealand for two more years.

I totally understand. My now-FI was in *exactly* your scenario-- he signed a lease when fresh out of college, so a decade later it was too cheap to leave. It was small, it was poorly insulated, and instead of fleas, one day each spring he''d come home to.... flying termites!

(It was also a little absurd that in the intervening years, he had had some great career success and had become the youngest VP in his company''s history... yet his ''home'' looked like he was a grad student living off of student loans.) In 2007, he was determined to buy, but since I was a number-crunching, bubble-blog-reading hound like you, financial wisdom prevailed. We moved into a pricy place a little over a year ago and he definitely had reservations, but in the time we''ve been here we''ve seen the nearby condos drop over $300,000 in list price (and STILL not selling). In essence, the craziness of the hot, noisy, small, and intermittently bug-infested but ''really cheap'' apartment was giving him tunnel-vision. He wanted OUT, he wanted to live like an adult, and wanted it so badly that he had stopped looking at the situation from a calm, happy place. He had stopped seeing the numbers and stopped evaluating all the alternatives. Now that we''re here in a nice place, and he''s seen the numbers play out in real life, he''s realizes that it wasn''t a bad decision at all.

Perhaps numbers-analysis would help you in your situation. Let''s say you can''t find a place for $1000/mo more, but $1500 is accurate. 1500x12= $18,000.

Do you expect the home prices of your target home to decline an additional $18,000 this year? Do you think LA prices are going to continue to fall? Do you think the Alt-A resets are going to drive prices even lower next year, by $50,000 or even $100,000?

If so, the investment in liking where you live in the interim paid for itself. Ergo, Plan C becomes very appealing (and *certainly* worth consideration), don''t you think?

FDL, I am NOT a numbers person, so help me out if my logic is bad here....

Yes, I expect the homes to decline more than 18K. Possibly 40Kish on a 650K home in one year. So say I move to a place that is 2500 a month and costs me 18K a year so I only save 7K instead of the 25K I normally save. In one year, I would have only 47K worth of extra buying power (with the assumption that interest rates stay low) vs 65K of buying power. Wouldn''t that 18K be worth a few flea bombs? I''m asking rhetorically of course...that''s a decision I would have to weigh out. We''re hopeful they won''t return this year, but who knows.

 

[Steel]

I would add that the FSBO was cheeky to be fishing for trade at an open house. Whatever the if''s and but''s are; that is not cool IMHO.

Which leads me to smell fish. Yes the reasons listed for the sale are plausible but DH and I lied when we sold our house (we hated the house and hated the neighbourhood). If the FSBO was happy to skim viewers from the open house I would have my guard up as to his character. It also bothers me (in light of the viewer skimming) that he has nice figures all lined up to cover the roof repair and such...very convenient. You might think in this market he would do the repair and have a quick sale. This might suggest that the house may have hidden ''gems''; not in a good way.

Not that this matters, you seem to have written off this house...non? Just thought I would hear myself type

 

[fleur-de-lis]

Yep, those employee-rates in particular are spectacular. Rates across the board are lower than they were a few months ago.

Of course, the converse of your observation about low rates inflating home prices would be that if (um, when) interest rates go up, home prices (and approved loan limits based on income and monthly payment limits) will go down. If rates go up, not only do purchase prices come down to match it, but those who have cash --or at least a better downpayment than their competitors-- have a double benefit and can buy much more house for a significantly lower purchase price.

 

[TravelingGal]

Date: 3/23/2009 3:39:04 PM
Author: Steel

I would add that the FSBO was cheeky to be fishing for trade at an open house. Whatever the if''s and but''s are; that is not cool IMHO.

Which leads me to smell fish. Yes the reasons listed for the sale are plausible but DH and I lied when we sold our house (we hated the house and hated the neighbourhood). If the FSBO was happy to skim viewers from the open house I would have my guard up as to his character. It also bothers me (in light of the viewer skimming) that he has nice figures all lined up to cover the roof repair and such...very convenient. You might think in this market he would do the repair and have a quick sale. This might suggest that the house may have hidden ''gems''; not in a good way.

Not that this matters, you seem to have written off this house...non? Just thought I would hear myself type

Steel, not really, although he may try that tactic going forward.

He was playing ball with his kid in the street (I saw him when before I went in) and it was a Broker''s open house on a weekday. He apparently asked a realtor who came out how much the house was going for, and she told him the price and said he should check it out for fun and just tell the realtor inside that she represented him. There were only realtors in the house when I was there.

I was dressed in business attire since I was at a business meeting earlier. I was outside the backyard of the house when he asked me again how much the house was offered at. I told him and he asked, "what do you think? Is it priced right?" I said no, but I wasn''t a realtor and was just a schmoe looking to buy. He said, "Oh, I see. Yeah, I''m looking to sell my house and am about to figure out how to price it." So I asked him about the neighborhood and within that conversation, he said, well, if you are more than welcome to look at my house if you want.

He said he is not putting anything else into the house. Anything uncovered would be discussed but he was telling us everything he knew. He said the roof does not leak but it has been there forever so he was going to replace it. It seems that this move is kind of sudden...they got a job offer on a military base and they want to take the offer plus the free housing there.

So while I am sure he was happy to get a potential buyer off this other open house, it didn''t seem like he was intentionally fishing for one at the time when I met him.

FDL, that''s my thinking too.

 

[Steel]

Date: 3/23/2009 3:48:55 PM
Author: TravelingGal
Steel, not really, although he may try that tactic going forward.

He was playing ball with his kid in the street (I saw him when before I went in) and it was a Broker's open house on a weekday. He apparently asked a realtor who came out how much the house was going for, and she told him the price and said he should check it out for fun and just tell the realtor inside that she represented him. There were only realtors in the house when I was there.

I was dressed in business attire since I was at a business meeting earlier. I was outside the backyard of the house when he asked me again how much the house was offered at. I told him and he asked, 'what do you think? Is it priced right?' I said no, but I wasn't a realtor and was just a schmoe looking to buy. He said, 'Oh, I see. Yeah, I'm looking to sell my house and am about to figure out how to price it.' So I asked him about the neighborhood and within that conversation, he said, well, if you are more than welcome to look at my house if you want.

He said he is not putting anything else into the house. Anything uncovered would be discussed but he was telling us everything he knew. He said the roof does not leak but it has been there forever so he was going to replace it. It seems that this move is kind of sudden...they got a job offer on a military base and they want to take the offer plus the free housing there.

So while I am sure he was happy to get a potential buyer off this other open house, it didn't seem like he was intentionally fishing for one at the time when I met him.

FDL, that's my thinking too.

I see TGal. I will step my spidy sense down from red to amber alert

.

But if I may add another nit-pick....

If he is offered free housing then there really is no urgency to sell. He could keep up the payments and move anyway?

Either way I know I am kinda off topic so thanks for bearing with me. To answer the first question, yes if I were you I think I would look to buy (market value:smarket value). All you have to do is find the perfect house at a price you are prepared to pay. This one does not sound perfect so keep hunting. But when you do find the 'one' buy it.

 

[TravelingGal]

Date: 3/23/2009 3:58:26 PM
Author: Steel

Date: 3/23/2009 3:48:55 PM
Author: TravelingGal
Steel, not really, although he may try that tactic going forward.

He was playing ball with his kid in the street (I saw him when before I went in) and it was a Broker''s open house on a weekday. He apparently asked a realtor who came out how much the house was going for, and she told him the price and said he should check it out for fun and just tell the realtor inside that she represented him. There were only realtors in the house when I was there.

I was dressed in business attire since I was at a business meeting earlier. I was outside the backyard of the house when he asked me again how much the house was offered at. I told him and he asked, ''what do you think? Is it priced right?'' I said no, but I wasn''t a realtor and was just a schmoe looking to buy. He said, ''Oh, I see. Yeah, I''m looking to sell my house and am about to figure out how to price it.'' So I asked him about the neighborhood and within that conversation, he said, well, if you are more than welcome to look at my house if you want.

He said he is not putting anything else into the house. Anything uncovered would be discussed but he was telling us everything he knew. He said the roof does not leak but it has been there forever so he was going to replace it. It seems that this move is kind of sudden...they got a job offer on a military base and they want to take the offer plus the free housing there.

So while I am sure he was happy to get a potential buyer off this other open house, it didn''t seem like he was intentionally fishing for one at the time when I met him.

FDL, that''s my thinking too.

I see TGal. I will step my spidy sense down from red to amber alert

.

But if I may add another nit-pick....

If he is offered free housing then there really is no urgency to sell. He could keep up the payments and move anyway?

Either way I know I am kinda off topic so thanks for bearing with me. To answer the first question, yes if I were you I think I would look to buy (market value:smarket value). All you have to do is find the perfect house at a price you are prepared to pay. This one does not sound perfect so keep hunting. But when you do find the ''one'' buy it.

He stated he bought at close at the top of the market. I checked into it online and indeed he did. He also said hindsight is 20/20 and he should have sold 3 years ago when it probably would have sold at 800K. If he sells now, he can still pay back the loan (and can sell at over what he bought it for easily, although not much more). If he waits, he does run the risk if totally being underwater. Which of course is our problem...if we buy it now at market value, we WILL be underwater.

He''s also on a variable rate loan, which probably is a factor.

I think everyone is right. We''ll keep looking. What do you all think constitutes a lowball offer? 10% below initial offer price?

 

[Gypsy]

Well, okay. I like that there is room to expand. And from personal experience, having been forced to get rid of clutter when we moved from NJ to CA a couple/few (who remembers) years ago was a really good thing. We lived in a 760 square foot apartment (down from a 3 bedroom house) for over a year . We''re now in a 2 bedroom with 1100 square feet and two bathrooms (and 4 cats) and it feels HUGE. I think it is very mental.

To Deco''s point, there are a lot of weird things that happen (we had a bat visit in NJ two. Expensive little monsters and we won''t even talk about the chipmunks) when you own a home. And with the possbility of home prices continuing to plummet, I''m thinking you did the right thing by declining the offer.

As for fleas and T-tot. I''m with Deco on the Frontline. Works well for the cats.

 

[Italiahaircolor]

As a multiple property owner, before buying anything these are things I always consider...

1. Owning property isn't short terms, I am not a flipper and don't look at my property that way. So I know that there is a fair chance over the course my relationship with the home, or office, or apartment changes will occur in the market. Some in my favor, some not.

For instance, I own an office building in a suburb of IL. It's a 3 suite medical building on a main street that connects several different towns so it's actually in a fantastic area. 2 years ago, when I was renewing leases I had it appraised...it came in well over a million....however, in the current economic climate, it's below that million dollar mark right now. My father tells me all the time I should have sold it when I could since property management isn't my business or my dream...but, I am rented out until 2012 at over $32 per sq. foot. I understand that I could have struck when the iron was hot and made a bunch of money...but I have plans for this property, and someday I'll see them unfold. I now know I might have to hold onto this property until after 2012 or even 2020...but it's still mine and it's still an investment.

2. Focus in on the things you cannot change when you buy a home...and let the rest fade away. It's important to remember you can always add on or up, you can change tile or counters or bathrooms...but you cannot change the location, the noise, the traffic, and the desirability. Those are the key things that need to meet your needs and will allow you to grow. A peice of property is an investment, if you buy a home in an established neighborhood for above or even fair market value, you will sit for a great while before seeing a profit...however, if you buy in a "hot" area for below market value, you've already made money. And, the longer you stay the more you make!

So...yes, spending close to 500k is a lot on 1100 sqft...but y0u need to consider what it would take, honestly, for you to get into that area in any other home to really gauge if this is a good deal. You cannot go on what you think makes sense...market value is king. If comparables are selling at over 600k then you'd get an amazing deal...and the moment you sign on the line, you already have established equity.

And as far as the market goes...yes, its scary...but unless you're looking to flip this home, I assume you're planning on living there for a while. Chances are, if and when you decide to move again, this crisis will have softened a lot and you'll see a return on your money without feeling "sorry" you did. Besides, you're renting right now...which is worse than maybe buying high...right now you're throwing money away monthy, IMO that's way worse!

 

[fleur-de-lis]

Date: 3/23/2009 3:38:22 PM
Author: TravelingGal

Date: 3/23/2009 3:24:26 PM

Author: fleur-de-lis

Date: 3/23/2009 2:55:20 PM

Author: TravelingGal

Date: 3/23/2009 2:53:04 PM


Author: fleur-de-lis

Date: 3/23/2009 2:42:32 PM


Author: TravelingGal



18 more months in this apartment...bah bah bah.




Thanks everyone for your two cents......................

No, seriously... I know it''s sometimes easier to stay with what you know, but since I know you''re an info hound about the RE Bubble as well, why not take advantage of the current scenario and rent a nice place (without flea infestations

) that would only be a couple of hundred bucks more a month (but still less than a 30 year fixed mortgage''s monthly payment + PITI), not to mention wait out the bottom without stress, remorse, or unhappiness?

That''s the thing FDL, my rent is dirt cheap (see post above) for the area because we have been here for so dang long. We would be adding at least 1500 to our monthly by renting, when we could be saving that by staying put in flealand for two more years.

I totally understand. My now-FI was in *exactly* your scenario-- he signed a lease when fresh out of college, so a decade later it was too cheap to leave. It was small, it was poorly insulated, and instead of fleas, one day each spring he''d come home to.... flying termites!

(It was also a little absurd that in the intervening years, he had had some great career success and had become the youngest VP in his company''s history... yet his ''home'' looked like he was a grad student living off of student loans.) In 2007, he was determined to buy, but since I was a number-crunching, bubble-blog-reading hound like you, financial wisdom prevailed. We moved into a pricy place a little over a year ago and he definitely had reservations, but in the time we''ve been here we''ve seen the nearby condos drop over $300,000 in list price (and STILL not selling). In essence, the craziness of the hot, noisy, small, and intermittently bug-infested but ''really cheap'' apartment was giving him tunnel-vision. He wanted OUT, he wanted to live like an adult, and wanted it so badly that he had stopped looking at the situation from a calm, happy place. He had stopped seeing the numbers and stopped evaluating all the alternatives. Now that we''re here in a nice place, and he''s seen the numbers play out in real life, he''s realizes that it wasn''t a bad decision at all.


Perhaps numbers-analysis would help you in your situation. Let''s say you can''t find a place for $1000/mo more, but $1500 is accurate. 1500x12= $18,000.


Do you expect the home prices of your target home to decline an additional $18,000 this year? Do you think LA prices are going to continue to fall? Do you think the Alt-A resets are going to drive prices even lower next year, by $50,000 or even $100,000?


If so, the investment in liking where you live in the interim paid for itself. Ergo, Plan C becomes very appealing (and *certainly* worth consideration), don''t you think?

FDL, I am NOT a numbers person, so help me out if my logic is bad here....


Yes, I expect the homes to decline more than 18K. Possibly 40Kish on a 650K home in one year. So say I move to a place that is 2500 a month and costs me 18K a year so I only save 7K instead of the 25K I normally save. In one year, I would have only 47K worth of extra buying power (with the assumption that interest rates stay low) vs 65K of buying power. Wouldn''t that 18K be worth a few flea bombs? I''m asking rhetorically of course...that''s a decision I would have to weigh out. We''re hopeful they won''t return this year, but who knows.

Yes, of course spending less allows you to save more. HOWEVER, if spending less is causing you to live in a flea-infested place that smells like smoke that makes you crazy which in turn has you going to open houses perchance to dream which in turn entices you to suspend that which you know about the LA housing market future and buying a too-small house with not enough storage space, well...

Plan A makes you crazy. Plan B is not only risky, but it''s not honoring what you know to be true about the LA housing market right now. In the big scheme of things, if home prices in LA go down before you buy, any step you do to put off the temptation winds up being a money saver. You want to buy a place because it would be bigger, has a future, you wouldn''t have to deal with your neighbor Smokey Smokester, and you wouldn''t have to feel like a bad mother when you see your baby''s legs crusted with flea bites come springtime.

--Plan A you bank lots of money but you''re miserable.
--Plan B you lose lots of real money and paper money so you''re miserable.
--Plan C you still bank some money now, you no longer feel compelled to make financially bad decisions out of desperation to get away from the infested hovel, you get all the day-to-day benefits that you''re dreaming this home would give you NOW, and get to do so without the financial risks and burdens inherent in a house.




If home prices were going to remain flat, a little higher, or a lot higher, I''d be encouraging you to bite the bullet and buy the house. But I think you and I are in league in our opinions as to where home prices in California are going to go within the next two years.*

(*After then, I think there''s a good chance of inflation messing with our calculations; however, housing will continue to look uglier for a while yet. It might be as little as 12-18 months, it might be a few years, but the bottom will be right before inflation hits. There will be indicators when its happening. With Plan C, we''re happy and in a win-win place whether the tipping point comes in 6 months or 4 years; by making ourselves content in holding out, Plan C becomes worthy of consideration indeed. Who knows, maybe you can find a non-infested place you like for under 2k/mo; then Plan C becomes better still.)

 

[neatfreak]

FLEUR What indicators do you think will appear right before inflation strikes? We are just starting to get acquainted with real estate and will be buying in the next 2-3 years... probably in the bay area.

Tips or advice for the real estate newbie?

 

[cara]

I like the there is room to expand and a big yard. Just assuming SCal is like NorCal in that outdoor options really enhance the feel and size of your living space, at least in the non-rainy months.

I would also like it if it had some more storage even if its not as much in the house as you would like. Is there a garage?

1100 is small but layout becomes more critical at that size. How is the rest of the layout aside from the closet space? Is there room for large wardrobes, etc., in the bedrooms to enhance storage or are they that inconvenient size that just about fits a bed and not much else? If this meets a lot of your checkboxes... There is also the homebuyer's tax credit this year. $8k is not enough to mitigate a 10% decline in housing in the CA markets, but it is a little something to consider.

As for the current owner, one way to test his motivation to sell is to put in a reasonable but lowball offer, with contingencies for a thorough inspection in case Steel's spideysense is right. Of course you have to decide that you actually want the house to play this game. If you think his ask was 10% below market, maybe another 10% below his ask. Then you can take a little more softening in the market without being underwater, if it happens to get accepted. But likely they would not be willing to take a hit like that absent external factors or a nice, long stint on the market without selling.

ETA: I'm not in any way an expert. Just started at this RE shopping stuff. And the CA market is mindblowing.

 

[TravelingGal]

God, you guys are good. And such good spidey sense!

FDL, I kind of joke about the fleas...we do get them, but it isn''t insane. However even one bite a day is extremely annoying. There''s another factor here. TGuy and I are L.A.Z.Y. No way we want to move into a house, only to move AGAIN in a year or two. The location of the apartment is great. The smoke sucks, yeah, but fortunately it''s only once or twice a day that it is bad. I have to laugh at your comment that it would drive us to make crazy decisions...it sure does make it tempting! But I have to hope that I have enough common sense to figure this out (or put it out to PSers who might smack some sense into me.)

Italia, in SoCal at this point, homes are like cars. As soon as you sign on the dotted line and drive off the lot, you lose value. It''s nuts how fast it is going down around here. Not like 50K in 2 months fast, but enough where, as Cara said, the 8K tax credit is a joke as an incentive to buy (but it''s a nice bonus if you are going to buy anyway).

Gypsy, I totally agree it is mental!

Cara, there is a big garage. There is plenty of storage space for what we have. But there isn''t a lot of CLOSET space. And the way the house is, I see no way of getting that closet space in without making the rooms quite a bit smaller or expanding out.

TGuy laughed when I asked him, "Geez, didn''t people have CLOTHES in the 50''s????"

 

[fleur-de-lis]

Date: 3/23/2009 2:54:08 PM
Author: TravelingGal


Here are the numbers. I don''t mind sharing them. All the non SoCal residents will probably fall over.


Our preapproved loan price: $475,000 (DP is 75K)

Home sq ftage: 1111 for 3 bd/2bth on 5500 sq ft lot.

Current rent amount: $1025

Current apartment sq ftage: 900ish

Current savings on top of rent: $1000 every two weeks goes into a savings for down payment. So we are used to paying $3000 in ''mortgage''.

Current rent prices around here for a 3 bedroom home $2500-$3000 a month for about a 1400 sq ft home that is not in tip top condition (I''ve been looking at CL for listings)

Current market deprecation: Local market has gone down about 15% from peak in 2006.

Current listings in the area for similar, (but only one bath) $650,000

Comps in the last 6 months - about 600-625K.


notes: roof is not leaking but would need to be replaced. Owner states he will give 8K credit for roof and 2K for electrical.



Hm, looks to me like I should be making friendly with the fleas?

I love the way you phrase things, TG. (Are you this witty in real life?)





The bolded info raises a block of Qs: Is your $1025 a month renting a 3Br/2BA as well? Or is it that $1025 gets you a flea-infested 1BR/1BA apartment that''s been under rent control for years, and $2500-3000 would get you a 3BR/2BA house? If this is correct, what about the places in-between? What do 2BR/2BA condos/apartments rent for? What do non-flea-infested 2BR/1BA rent for? What do 2BR/1BA homes rent for?

For instance, if you were able to find a (middle-ground) kickin'' 2BR with huge closets, modern amenities, no freakin'' fleas, and wouldn''t mind living in for 6-24 months for $1900, you''d eliminate all the worries and problems, stop compulsively dreaming about escape via attending open houses, still be adding $1100/mo to your savings, and then be able to approach the home-buying experience from a position of strength and when the time is right for YOU and you, with your advanced interest and research in the local market, know the time is right to pounce.

(I know perfectly well this goes against conventional wisdom; of course, in times like these, going against conventional wisdom could make you come out far, far ahead.)

 

[cara]

Italia - if you do the math on Tgal''s situation, I''m pretty sure she is not ''throwing her money away'' by renting. If she were to buy, she would have to throw her money away on renting money (interest) rather than renting a home. I just ran the math for my husband and I, we have a similar downpayment and house shopping budget, and our current rent is 50% higher than Tgals (but no fleas yet LOL), and even including the income tax saving of home ownership, the rent/buy calculators are about break even with wide variations from the critical assumptions of what home appreciation rate you assume and what interest rate your cash savings can earn if you were to continue the rent&save plan. If we buy now and home values decline or stay flat, we are better off renting from a strictly financial standpoint. If housing starts appreciating, even just slightly, then we start to be able to make money bevause paying our mortgage actually starts building equity. But if housing declines, then paying your mortgage is just throwing money down a black hole - equity is wiped out as fast as you pay in (or faster!).

Just as for me, the reason for her to buy would be to spend her money on somewhere better to live, rather than just for investment reasons. Esp. if she thinks real estate in her area is going down in the near term. That makes renting more attractive from a financial perspective, and buying would be a potential money loser that gives Tgal and her family a place to put down roots away from the fleas.

 

[TravelingGal]

Date: 3/23/2009 4:42:26 PM
Author: fleur-de-lis

Date: 3/23/2009 2:54:08 PM
Author: TravelingGal


Here are the numbers. I don''t mind sharing them. All the non SoCal residents will probably fall over.


Our preapproved loan price: $475,000 (DP is 75K)

Home sq ftage: 1111 for 3 bd/2bth on 5500 sq ft lot.

Current rent amount: $1025

Current apartment sq ftage: 900ish

Current savings on top of rent: $1000 every two weeks goes into a savings for down payment. So we are used to paying $3000 in ''mortgage''.

Current rent prices around here for a 3 bedroom home $2500-$3000 a month for about a 1400 sq ft home that is not in tip top condition (I''ve been looking at CL for listings)

Current market deprecation: Local market has gone down about 15% from peak in 2006.

Current listings in the area for similar, (but only one bath) $650,000

Comps in the last 6 months - about 600-625K.


notes: roof is not leaking but would need to be replaced. Owner states he will give 8K credit for roof and 2K for electrical.



Hm, looks to me like I should be making friendly with the fleas?

I love the way you phrase things, TG. (Are you this witty in real life?)





The bolded info raises a block of Qs: Is your $1025 a month renting a 3Br/2BA as well? Or is it that $1025 gets you a flea-infested 1BR/1BA apartment that''s been under rent control for years, and $2500-3000 would get you a 3BR/2BA house? If this is correct, what about the places in-between? What do 2BR/2BA condos/apartments rent for? What do non-flea-infested 2BR/1BA rent for? What do 2BR/1BA homes rent for?

For instance, if you were able to find a (middle-ground) kickin'' 2BR with huge closets, modern amenities, no freakin'' fleas, and wouldn''t mind living in for 6-24 months for $1900, you''d eliminate all the worries and problems, stop compulsively dreaming about escape via attending open houses, still be adding $1100/mo to your savings, and then be able to approach the home-buying experience from a position of strength and when the time is right for YOU and you, with your advanced interest and research in the local market, know the time is right to pounce.

(I know perfectly well this goes against conventional wisdom; of course, in times like these, going against conventional wisdom could make you come out far, far ahead.)

No, I''m only witty on PS. I''m a dud in real life, cause ain''t that the way with Internet stuff?

1025 for a two bedroom, 1.5 bath "townhome" with no one above or below us. 2 bedroom/2bath would probably be in the low 2000s.

This apartment has a lot of closet space, good management (they fix things and keep the apartment looking nice). It is an old building though.

You make a good case FDL, for sure. I have my home office here (hah, what home office...that''s my kid''s room for now) so it would be annoying to have to change phone numbers if we couldn''t keep them.

Am I making excuses? You bet. Because as I said, I''m LAZY.

 

[Tacori E-ring]

So looks like the decision was made for you huh? Keep looking. The right house will come up!

 

[TravelingGal]

I think the fleas are getting a bad rap. We talked, the fleas and I. We agreed - no biting, jumping and grossing out only.

 

[TravelingGal]

Date: 3/23/2009 4:51:27 PM
Author: Tacori E-ring
So looks like the decision was made for you huh? Keep looking. The right house will come up!

I hope so Tacori. But does anyone else think this is so ridiculous that we can''t get a decent house with a HALF MILLION dollars to spend?

 

[fleur-de-lis]

Date: 3/23/2009 4:38:09 PM
Author: TravelingGal
God, you guys are good. And such good spidey sense!

FDL, I kind of joke about the fleas...we do get them, but it isn't insane. However even one bite a day is extremely annoying. There's another factor here. TGuy and I are L.A.Z.Y. No way we want to move into a house, only to move AGAIN in a year or two. The location of the apartment is great. The smoke sucks, yeah, but fortunately it's only once or twice a day that it is bad. I have to laugh at your comment that it would drive us to make crazy decisions...it sure does make it tempting! But I have to hope that I have enough common sense to figure this out (or put it out to PSers who might smack some sense into me.)


Italia, in SoCal at this point, homes are like cars. As soon as you sign on the dotted line and drive off the lot, you lose value. It's nuts how fast it is going down around here. Not like 50K in 2 months fast, but enough where, as Cara said, the 8K tax credit is a joke as an incentive to buy (but it's a nice bonus if you are going to buy anyway).


Gypsy, I totally agree it is mental!


Cara, there is a big garage. There is plenty of storage space for what we have. But there isn't a lot of CLOSET space. And the way the house is, I see no way of getting that closet space in without making the rooms quite a bit smaller or expanding out.


TGuy laughed when I asked him, 'Geez, didn't people have CLOTHES in the 50's????'

Ha, I totally get the lazy thing-- I hate moving! As a former exquisitely excellent Tetris player myself, moving forces me to face the fact that I am not so much a tidy minimalist as a glance around my home's public rooms would lead one to believe, but that I am in reality merely really, really good at placing a LOT of life debris behind every closed door.

Glad to hear that the fleas aren't so bad, BTW. (The upside of my FI's old place being so cramped and unpleasant was that we went out of town on vacations/road trips nearly every weekend. The downside, however, was coming home in the month of April to hundreds of tiny flying termite carcasses in the bathroom after two days away and having to clean them all up. Welcome home!)

 

[Gypsy]

Date: 3/23/2009 4:52:44 PM
Author: TravelingGal

Date: 3/23/2009 4:51:27 PM
Author: Tacori E-ring
So looks like the decision was made for you huh? Keep looking. The right house will come up!

I hope so Tacori. But does anyone else think this is so ridiculous that we can''t get a decent house with a HALF MILLION dollars to spend?

I do.

 

[Steel]

If you and the fleas are talking perhaps you could interest them in in a nice 3 bed/2 bath (1111sqft on 5500 sq ft lot)? Are they mortgage approved?

ETA: Let us know if they bite*.

*

 

[TravelingGal]

Date: 3/23/2009 4:58:03 PM
Author: Steel
If you and the fleas are talking perhaps you could interest them in in a nice 3 bed/2 bath (1111sqft on 5500 sq ft lot)? Are they mortgage approved?

ETA: Let us know if they bite*.

*

They''re holding out for a better deal...they''re bloodsuckers.

 

[E B]

Date: 3/23/2009 4:52:44 PM
Author: TravelingGal

Date: 3/23/2009 4:51:27 PM

Author: Tacori E-ring

So looks like the decision was made for you huh? Keep looking. The right house will come up!

I hope so Tacori. But does anyone else think this is so ridiculous that we can't get a decent house with a HALF MILLION dollars to spend?

Absolutely. It's precisely why we moved out of L.A. Out of California, actually!

I'm sure the right house (that fits most if not all of your needs) will come along in the next year or two. Gives you extra time to think about baby #2 as well.

 

[fleur-de-lis]

Date: 3/23/2009 4:56:48 PM
Author: Gypsy

Date: 3/23/2009 4:52:44 PM

Author: TravelingGal

Date: 3/23/2009 4:51:27 PM

Author: Tacori E-ring

So looks like the decision was made for you huh? Keep looking. The right house will come up!

I hope so Tacori. But does anyone else think this is so ridiculous that we can''t get a decent house with a HALF MILLION dollars to spend?

I do.

Ya know, living in NYC helped me wrap my head around the idea of paying very large sums for housing. CA prices are so much lower in comparison, but most of the variables that account for those high Manhattan prices simply don''t apply in California. It *IS* ridiculous.

Tacori, Gypsy, CA prices since 2005 are a freakin'' bubble wrapped inside a Ponzi scheme!

 

[decodelighted]

Date: 3/23/2009 4:49:21 PM
Author: TravelingGal
I have my home office here (hah, what home office...that''s my kid''s room for now) so it would be annoying to have to change phone numbers if we couldn''t keep them.

You can port your current number to a Vonage box (At least I think so .. DH still has his old apt # somehow).

 

[crown1]

i feel that you have been patient and saving, while doing a lot of research, to find the right place that is affordable for your family. this house did not sound like it was going to meet your criteria. i think you were wise to pass on this one.

i do feel you are getting the bad end of the stick on the flea and smoke issue. i know you have to pick your fights but the fleas would be one i would put the gloves on for. there should be a way that the land lord can force the guy to take care of the problem. if the ll can not do it i would hope the health department could make him do something. if he wants the cats he needs to take care of them. if you had an animal infesting his home with something i think he would be all over it. you are a smart cookie, either use your charm or some heavy hitting to make him get rid of the fleas.

 

[TravelingGal]

Date: 3/23/2009 5:09:14 PM
Author: crown1
i feel that you have been patient and saving, while doing a lot of research, to find the right place that is affordable for your family. this house did not sound like it was going to meet your criteria. i think you were wise to pass on this one.

i do feel you are getting the bad end of the stick on the flea and smoke issue. i know you have to pick your fights but the fleas would be one i would put the gloves on for. there should be a way that the land lord can force the guy to take care of the problem. if the ll can not do it i would hope the health department could make him do something. if he wants the cats he needs to take care of them. if you had an animal infesting his home with something i think he would be all over it. you are a smart cookie, either use your charm or some heavy hitting to make him get rid of the fleas.

He''s denying it''s his cat. We have not had the problem until he moved next door (there were no pets in my section of the apartment). Short of going in there and checking for fleas, not sure what we can do. The problem is the fleas are now OUTSIDE the apartment in the grass and that''s how the come in. We have not had an issue for months, so I am going to wait and see what the summer brings. I was pretty firm last year when they said they wouldn''t pay for an exterminator. I said I can either call the owner myself, or the manager could do it for me. I said it was unacceptable that there are fleas infesting apartments that have no pets and I would be happy to call the department of health. They took care of it for me that week.

 

[fleur-de-lis]

Date: 3/23/2009 4:49:21 PM
Author: TravelingGal


No, I''m only witty on PS. I''m a dud in real life, cause ain''t that the way with Internet stuff?


1025 for a two bedroom, 1.5 bath ''townhome'' with no one above or below us. 2 bedroom/2bath would probably be in the low 2000s.


This apartment has a lot of closet space, good management (they fix things and keep the apartment looking nice). It is an old building though.


You make a good case FDL, for sure. I have my home office here (hah, what home office...that''s my kid''s room for now) so it would be annoying to have to change phone numbers if we couldn''t keep them.


Am I making excuses? You bet. Because as I said, I''m LAZY.

Oh, okay! Your "Plan A" sounds a lot more tolerable than my FI''s was. (Poor guy kept asking me to move in with him, and as much as I adored both him and spending time with him --obviously, because we''re now engaged-- his cramped place was really, really cramped. Well, that, and there was no agreement in place with the Flying Annual Termite Brigade. You''re very lucky that your fleas are willing to negotiate with you.)

So, TG, is there anything you can do to your current townhome to make it so comfortable and "homey" so that you don''t feel the need to stalk open houses just yet? (Don''t tell me that you''ve lived there for 14 years and never painted the walls because of fear of losing part of your security deposit!

)

 

[luckystar112]

Date: 3/23/2009 4:52:44 PM
Author: TravelingGal

Date: 3/23/2009 4:51:27 PM
Author: Tacori E-ring
So looks like the decision was made for you huh? Keep looking. The right house will come up!

I hope so Tacori. But does anyone else think this is so ridiculous that we can't get a decent house with a HALF MILLION dollars to spend?

Yes. With your approved loan, you could buy my house in TX four times. And I live in an 1800 sq ft, 4 bedroom 2.5 bath single family home on a corner lot with a huge back yard and attached garage. Built in the 80s. With that said, our 3 out of 4 of the bedrooms are tinnnnnnnny. Like 8x10. No idea where all that square-footage is hiding.

We'll be getting out of TX in the next 2 years or so and we're freaking out about basically doubling our mortgage in the northeast. I can't imagine paying California prices, but I understand why people do. It's a beautiful state. I've seen the "Visit California" commercials with Ahhhhnold and all those other celebrities....