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

[TravelingGal]

OK, so I''d be interested in some opinions.

Long story short:

I was at a broker''s open house (my realtor told me to check it out and just say she represented me). A neighbor was poking around the house with his son. I was in my work gear so he thought I was a broker and struck up a conversation with me. Obviously I was not. I found out he was going to put his home up for sale soon (FSBO) and we talked. He invited me over, I checked it out, met his family, and went for a second visit with my husband, who liked the house.

They know what we''ve been preapproved for (I said it thinking I''d spare their time since homes in the area are going for more than what we can pay). He is moving to a military base and getting free housing and wants to be out by next month. Surprisingly, they seem to like us and want to work with us. No numbers have been tossed around yet, however. They seem like an honest, lovely couple (and I do consider myself a decent judge of character).

The area is perfect - right where we want to be and haven''t been able to afford. The house is in turnkey condition and he would throw in all appliances, BBQ, backyard playground (with slide, swing, etc, - would be great for my kid) and even a barely used lighted Christmas tree. It''s nothing that would "wow" anyone, but it''s a nice house for sure. Closet space is sorely lacking though, as is common in these older homes.

The caveat? The house is small. 1100 sq feet. We were hoping for 1400 at least. Our apartment is almost 1000 now so we''d be moving into a place that isn''t much bigger. And while if we were able to purchase it from them for our preapproved amount, it still is a sh*tload of money for a 1100 sq ft house. We are all aware (them and us) that the market will continue to go down in this area.

They definitely made a pitch, but it wasn''t pushy at all. They also told us what needed to be fixed (and would offer a credit) and obviously told us to bring in an inspector. They invited us to bring in whomever and also offered to leave the house if we just wanted to hang out for awhile and check everything out without them there. It would be an interesting opportunity to really LOOK at a house before we buy.

My husband I don''t think we can part with that amount of money yet. I''m wondering if we''re having cold feet or if we''re being smart with the way market conditions were going. I would say at this point that if we bought the house, it would be about 10% under current value - which I would foresee being eaten up within a year.

Thoughts? What would you do?

 

[Gypsy]

It's scary to think about spending so much money on CA real estate.

It sounds like you have some solid reservations, but are being tempted by a really pretty deal. But, at the same time... what seems like a deal now may not seem like one in a few months, and the reservations you have (about the amount space and the storage issues) it will continue, and if you move to sell (as it is an investment and it sounds like you guys would grow out of it in a few years if it's small for you now) those would be the same issues you would have from a selling perspective. You know what I'm going to say, "A deal isn't a deal..." I would probably pass, unless the house had enough land for an extension or an addition. And it was discounted further.

 

[meresal]

IMO, wait.

FI and I are in a similar position. We could move into a house, but not one that we would particularily love. If you don't mind renting for a little bit longer, wait till you find something you really like. Like you indicated about this market, you're going to need to be in it for at least a couple of years. After you put the 10% you "saved" back into the house, is the price point higher that what you originally wanted to spend?

As my mom always told me and I tell FI, "Just because there's a coupon, doesn't mean you have to buy it."

 

[LAJennifer]

How much per square foot?

 

[decodelighted]

Couple of thoughts ...

* only seriously consider it if you think you'll be there for at least five years (& if it has room for one more "surprise" kid)

* think about Mrssalvo's "A deal is only a deal if you're getting exactly what you want". Houses aren't *exactly* the same as everything else -- as there are no "perfect" houses. Every house has SOME drawbacks. But really, really consider what it is you want out of homeownership & whether this one fits the bill. If one of your biggies is "more space" (including storage/closet space) then this doesn't seem to meet that requirement.

FWIW -- after nearly seven years of homeownership, renting is looking PRETTY DAMN GOOD. A house is a never ending black hole of frustration & expense & heartache -- not to mention A VORACIOUS VACUUM OF ANY & ALL FREE TIME. That house better be pretty darn amazing for you to want to put up with it through all the hard times. (Sound like anything else, cough, marriage).


ETA: If you think diamond shrinkage syndrome is bad -- wait 'til you experience HOUSE shrinking syndrome. We have just over 1600 plus a full, unfinished basement and I can't BELIEVE how small that has become (with four cats, tiny dog & 2 hefty peeps - one of whom is a bit of a hoarder

. Can I interest you in some Star Wars figurines or baseball cards or enormous hunks of aging computer thingamajigs?)

 

[Bia]

If you don''t love the house, then you''re not really getting a "good deal."

Wait, and buy when you find what you really want. Especially since you''re hoping to buy something bigger than what you have now.

 

[TravelingGal]

Gypsy, we would commit to being there the long haul. We are not sure if anything will be a "forever" house but we are looking with the purpose of at least 10 years. There is enough land to expand for sure. Storage space is an issue, "mentally". Basically, we have a lot of crap. Most of it can be thrown out. I have a closet full of old clothes that I can''t fit into. What I do wear could probaby would only take 10 hangers and one drawers. I wear flip flops 350 days out of the year and have 4 pairs of those. There is a garage with a ton of organizational storage space. So we could move in and make it work easily. But we would have to MAKE it work, i.e. cull, cull, cull.

LaJennifer, the area is going for about $530-$550 a sq ft. We''d be hoping for the high 400''s but that seems like way too much for me.

Deco, it''s not really "pretty darn amazing" but I have been looking on and off for 2.5 years and it''s the closest to having everything we want (location, lot, reasonable price, turnkey). The only thing that is missing is size and storage within the rooms.

 

[TravelingGal]

Oh and yes, if we had another kid, this house would be problematic. Not sure if we will though. And I use "problematic" loosely...plenty of kids in my time had to share a room and we would not be opposed to making our kids share, especially if we had two girls.

A couple of other tidbits of info:

- it could be possible our company may have layoffs. We could afford this house if I were laid off. But if we don''t buy and I''m laid off, it might be a problem to secure the loan when we actually want to buy.

- TGuy works for a credit union. While he is employed, we save 1 point off the interest rate. It would be nice to take advantage of that as long as possible.

 

[musey]

For what it''s worth, our real estate flipper friend (LA area too) told us that the market will likely keep descending for the next ~2 years, at least. He thinks that 2.5 years from now would be a perfect time to buy.

... I would personally wait. I am absolutely no expert, though. I only know what people who are more expert than I are telling us to wait (not that we''re ready to buy, anyway).

 

[decodelighted]

Date: 3/23/2009 1:19:17 PM
Author: TravelingGal
We could afford this house if I were laid off. But if we don''t buy and I''m laid off, it might be a problem to secure the loan when we actually want to buy.

I hear ya on the "might not qualify" later front. I bought my house after a particularly good year for just that reason - though I spent way less that I was qualified for -- attempt at being prudent LOL.

Re: the affordability even if laid off ... just wanted to make sure you''re factoring in those less-obvious expenses of home ownership: insurance, gas/oil for cooking/heat, water, sewer, garbage pick up, lawn care ... those types of things. And the surprise 2K-10K OMG the roof has a hole in it -OR- was that the side of the house that fell off? things that maybe only seem to happen to me

.

In the past month alone - (purely for example)
$200 bat inspector
$200 chimney cleaning
$500 vet bills due to a bat being in the house
$850 estimate for foundation/roof gap filling + wildlife trapping

$1000 estimate for tree trimming
$400 for garden stones & weed barrier (& only 1/2 the beds are done so this amount will easily double)

 

[tlh]

Date: 3/23/2009 12:58:14 PM
Author: meresal
As my mom always told me and I tell FI, ''Just because there''s a coupon, doesn''t mean you have to buy it.''

DITTO. If you aren''t thrilled I say wait. You can save up more in the meantime... plus I would expect that you''ll be able to find another deal 6-12 months from now... but who''s to say you''ll be able to sell this house in 2-3 years when you''ve outgrown the space?

 

[VegasAngel]

With the ways things are going, I'd wait until you find something you love.

 

[TravelingGal]

Thanks for your input ladies. I guess part of me wants to get out of this apartment before flea season. Ever since our neighbor moved in 4 years ago, we get a massive infestation during the spring/summer months because he lets his cat roam around even though he''s not supposed to, and the fleas come into our place (and we have no pets). I spent the first 5 weeks of motherhood sleeping on the couch and getting eaten alive by fleas.

Deco, yes, we''d probably be OK with those bills as well. We would have a fair bit of cash cushion even after buying the house. Weird things happen to me too, so I''d better account for the side of my house falling off!

musey, I personally believe 2-2.5 years would be a better time to buy. But I don''t need to buy at rock bottom - I just don''t want to be too far off the mark. It would be tough to wait that long (we''ve already been saving and waiting over 3 and I''m getting the itch to get out of here - been here 14 years already) but say the market goes down conservatively at 5% a year here. That''s 30K. We also save 25K a year. That''s 55K with each year of a better house we can get into. Not chumpchange

tlh, we couldn''t sell if we out grew - not in this market. We''d have to suck it up or expand out.

 

[zhuzhu]

I think the most important thing to consider is how much you love the house, and how comfortable you are to live in it or a while.

There are a lot of aspects of home ownership that can not be quantified by money/profit margin, the fact that your heart desires to have a home to call your own speaks to it.

If you can afford a place reasonably comfortably while truly see yourself and family being happy living in it for the next 5 years min, then maybe this could be the right house for you.

Continue to shop around though, you just may find another gem.

 

[Hudson_Hawk]

Date: 3/23/2009 1:38:33 PM
Author: decodelighted

Date: 3/23/2009 1:19:17 PM

Author: TravelingGal

We could afford this house if I were laid off. But if we don''t buy and I''m laid off, it might be a problem to secure the loan when we actually want to buy.

I hear ya on the ''might not qualify'' later front. I bought my house after a particularly good year for just that reason - though I spent way less that I was qualified for -- attempt at being prudent LOL.


Re: the affordability even if laid off ... just wanted to make sure you''re factoring in those less-obvious expenses of home ownership: insurance, gas/oil for cooking/heat, water, sewer, garbage pick up, lawn care ... those types of things. And the surprise 2K-10K OMG the roof has a hole in it -OR- was that the side of the house that fell off? things that maybe only seem to happen to me

.


In the past month alone - (purely for example)

$200 bat inspector

$200 chimney cleaning

$500 vet bills due to a bat being in the house

$850 estimate for foundation/roof gap filling + wildlife trapping

$1000 estimate for tree trimming

$400 for garden stones & weed barrier (& only 1/2 the beds are done so this amount will easily double)

Oh and don''t forget the property taxes and painting every 5-10 years!

 

[MichelleCarmen]

TG - Do you work from home? For some reason, I thought you do. Even if not, is there room for office stuff (computer, printer, etc.) and a baby/child room? FWIW, the last three homes DH and I owned all had three bedrooms and the boys still shared a room (up until my younger son turned 5 - then they needed more space). We used the 3d bedrooms for an office. Luckily, here in our condo/townhome we have three bedrooms *and* an office. Our last home was 2,600 sq. feet and was bigger than we needed. Our townhome is 1900 and with four people and two cats, I doubt we could handle anything smaller. With your option to add on, sounds like you'll be okay as long as you can afford to do so.

Regarding closet room: Use moving as an oportunity to get rid of junk and stuff you do not need. We listed loads of stuff on CL and sold what we could and the rest we gave to the thrift store. It was a huge relief unloading all the strange/unnecessary things we had accumulated.

 

[TravelingGal]

Date: 3/23/2009 2:12:51 PM
Author: MC
TG - Do you work from home? For some reason, I thought you do. Even if not, is there room for office stuff (computer, printer, etc.) and a baby/child room? FWIW, the last three homes DH and I owned all had three bedrooms and the boys still shared a room (up until my younger son turned 5 - then they needed more space). We used the 3d bedrooms for an office. Luckily, here in our condo/townhome we have three bedrooms *and* an office. Our last home was 2,600 sq. feet and was bigger than we needed. Our townhome is 1900 and with four people and two cats, I doubt we could handle anything smaller. With your option to add on, sounds like you''ll be okay as long as you can afford to do so.

Regarding closet room: Use moving as an oportunity to get rid of junk and stuff you do not need. We listed loads of stuff on CL and sold what we could and the rest we gave to the thrift store. It was a huge relief unloading all the strange/unnecessary things we had accumulated.

Yes MC, I work from home. With our current situation, the house would work just fine. If TGuy and I would just make up our mind for additional kid or no additional kid, it would make our decision a lot easier.

Zhuzhu, I agree. Last night, TGuy and I were joking about the cost of the house and whether it would be worth it. Not sure if you know that South Park episode where the guy says "two fifty" in a funny way. We were saying, "Fleas? Two fiddie?" "No tandem parking, Two fiddie?" "No reeky smoke smell coming from neighbor''s, Two fiddie?" And so on and son on.

 

[Tacori E-ring]

Can you add onto the house at a later date? I have no idea what the housing market is like where you live but I think if you LOVE the house, LOVE the lot, LOVE the location don''t get cold feet. Personally I love being a home owner. 1100 square ft is *small*. Really, really small. If you can add on (or add a second story) and plan on living there for 10 years I would go for it.

 

[LAJennifer]

Date: 3/23/2009 1:10:09 PM
Author: TravelingGal
Gypsy, we would commit to being there the long haul. We are not sure if anything will be a ''forever'' house but we are looking with the purpose of at least 10 years. There is enough land to expand for sure. Storage space is an issue, ''mentally''. Basically, we have a lot of crap. Most of it can be thrown out. I have a closet full of old clothes that I can''t fit into. What I do wear could probaby would only take 10 hangers and one drawers. I wear flip flops 350 days out of the year and have 4 pairs of those. There is a garage with a ton of organizational storage space. So we could move in and make it work easily. But we would have to MAKE it work, i.e. cull, cull, cull.

LaJennifer, the area is going for about $530-$550 a sq ft. We''d be hoping for the high 400''s but that seems like way too much for me.

Deco, it''s not really ''pretty darn amazing'' but I have been looking on and off for 2.5 years and it''s the closest to having everything we want (location, lot, reasonable price, turnkey). The only thing that is missing is size and storage within the rooms.

Yeah, I still think that''s way too much. I would wait. I''ve spent the last 2 Sundays going to open houses - my friend is listing her house (just to see if anyone will bite) so we''ve been looking at comps. She is listing at $1.5 M - so we''ve been looking in the same range. Last weekend we were looking at homes listed from $1.2 - $1.8 M. In that range you could get a pool or a view of the city for $520 - $550 a sq ft (Hollywood Hills).

This weekend we were looking in the $900K - $1.2M range in Hancock Park and West Hollywood - those people are smoking crack. Most were high $500''s - $700 per sq foot. And there were a ton of them! None of them are selling. I think if you hold out another year - you''ll get something you like much better for less money.

 

[LAJennifer]

Date: 3/23/2009 1:30:22 PM
Author: musey
For what it''s worth, our real estate flipper friend (LA area too) told us that the market will likely keep descending for the next ~2 years, at least. He thinks that 2.5 years from now would be a perfect time to buy.

... I would personally wait. I am absolutely no expert, though. I only know what people who are more expert than I are telling us to wait (not that we''re ready to buy, anyway).

Agree. We''re trying to wait that long - but might be more like 18 months for us.

 

[MichelleCarmen]

Best of luck deciding on the kids

. Like I said my kids did share a room even with having plenty of space. Kids love to share rooms when they are young. It wasn''t until our younger son turned five that we decided to seperate their bunk beds and give them each their own room. A lot of the reason we seperated them is my younger son would climb into bed with his brother and they''d either talk or read books until 9:30. If we had instead had a boy and girl, they''d have been given individual rooms at a much younger age.

 

[fleur-de-lis]

Date: 3/23/2009 1:50:07 PM
Author: TravelingGal
Thanks for your input ladies. I guess part of me wants to get out of this apartment before flea season. Ever since our neighbor moved in 4 years ago, we get a massive infestation during the spring/summer months because he lets his cat roam around even though he''s not supposed to, and the fleas come into our place (and we have no pets). I spent the first 5 weeks of motherhood sleeping on the couch and getting eaten alive by fleas.


Deco, yes, we''d probably be OK with those bills as well. We would have a fair bit of cash cushion even after buying the house. Weird things happen to me too, so I''d better account for the side of my house falling off!


musey, I personally believe 2-2.5 years would be a better time to buy. But I don''t need to buy at rock bottom - I just don''t want to be too far off the mark. It would be tough to wait that long (we''ve already been saving and waiting over 3 and I''m getting the itch to get out of here - been here 14 years already) but say the market goes down conservatively at 5% a year here. That''s 30K. We also save 25K a year. That''s 55K with each year of a better house we can get into. Not chumpchange


tlh, we couldn''t sell if we out grew - not in this market. We''d have to suck it up or expand out.

TG, as a fellow LA real estate observer, I hear where you''re coming from. Since you''ve mentioned in the past about having participated in bubble blog forums, you *know* that the Qs you need to ask yourself on a financial front involve: (1) the actual numbers to determine both the affordability for *you*; as well as (2) the metrics on the house itself (like purchase price vs. what it would rent for ratio) to evaluate if it actually is a good deal or just seems like a good deal in comparison to the crazy prices we Angelenos have become used to over the last 5 years. If you''d like to post some numbers, I''d be more than willing to help you with the numerical heavy lifting.

On a different note-- and I KNOW you''re not mentioning this, so you''re probably not thinking it either-- but if staying is your Plan A and purchasing this 1100 sq. ft. home is your Plan B, have you considered there''s a Plan C that might actually meet more of your goals?

--Not flea-infested
--No potential for going down 20% in a year and leaving you stuck
--Size that you want with amenities that you want
--Allows you to keep money in the bank in case of emergency or layoff
--If situations change, you''re not chained to it for decades
--Allows you to buy on that 2 year timeline
--lower monthly cost than a $500,000 mortgage /+ PITI
--no unexpected $12,000 roof replacement
--ample storage space and big closets

So here''s the Plan C: instead of Plan A (staying in Fleaville) and saving $25K/year, or Plan B (buying house) and saving $0/mo while watching home prices decline the next two years and being scared, why not Plan C: why not "splurge" and rent a nice, non-flea infested place that will allow you to ride out the next two years in comfort-- for less than the cost of owning and still allowing you to bank some money each month instead? (Heck, if prices go down like you expect them to, even the priciest rental you can find will be a big money-saver in comparison to catching a real-estate falling knife.)

 

[TravelingGal]

Tacori, yes we could add onto the house at a later date - I would check into how much that would cost. We could effective extend the kitchen, bathroom and master if we extended one side of the house. Or the dining and living if we extended out the front. It is definitely a small house Tacori. Plenty of backyard entertaining space, which is what we would have to use (not a bad thing here in Sunny California).

But yeah, unless they come back and knocked off another 50K on the house, I don''t think we could do it. I''m not going to even ask. They are nice people and I don''t care to insult them at this point.

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

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

 

[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?

 

[TravelingGal]

Date: 3/23/2009 2:41:23 PM
Author: fleur-de-lis


TG, as a fellow LA real estate observer, I hear where you''re coming from. Since you''ve mentioned in the past about having participated in bubble blog forums, you *know* that the Qs you need to ask yourself on a financial front involve: (1) the actual numbers to determine both the affordability for *you*; as well as (2) the metrics on the house itself (like purchase price vs. what it would rent for ratio) to evaluate if it actually is a good deal or just seems like a good deal in comparison to the crazy prices we Angelenos have become used to over the last 5 years. If you''d like to post some numbers, I''d be more than willing to help you with the numerical heavy lifting.

On a different note-- and I KNOW you''re not mentioning this, so you''re probably not thinking it either-- but if staying is your Plan A and purchasing this 1100 sq. ft. home is your Plan B, have you considered there''s a Plan C that might actually meet more of your goals?

--Not flea-infested
--No potential for going down 20% in a year and leaving you stuck
--Size that you want with amenities that you want
--Allows you to keep money in the bank in case of emergency or layoff
--If situations change, you''re not chained to it for decades
--Allows you to buy on that 2 year timeline
--lower monthly cost than a $500,000 mortgage /+ PITI
--no unexpected $12,000 roof replacement
--ample storage space and big closets

So here''s the Plan C: instead of Plan A (staying in Fleaville) and saving $25K/year, or Plan B (buying house) and saving $0/mo while watching home prices decline the next two years and being scared, why not Plan C: why not ''splurge'' and rent a nice, non-flea infested place that will allow you to ride out the next two years in comfort-- for less than the cost of owning and still allowing you to bank some money each month instead? (Heck, if prices go down like you expect them to, even the priciest rental you can find will be a big money-saver in comparison to catching a real-estate falling knife.)

Excellent post FDL. We have thought about plan C and would consider that but feel we would be better off staying here if it were only for another year or two. If at that point home prices are still crazy, then we''d just become renters.

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?

 

[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.

 

[decodelighted]

Fleas?? Put some Frontline behind Amelia''s ears** & call Terminex (they were here last week too, did I put that on my list? Ants. Sigh.)

**do not proceed without consulting a physician

 

[Aloros]

I''d say wait. If you''re going to be in it for the long haul, then find something that you are 100% about. 1100 sq ft is very small.

I know when we looked for a house, we considered a few different houses, but we always had the tiniest reservation about each. One was perfect but slightly small, another was perfect but close to a busy road, and yet another was perfect but was in the middle of a renovation.

We eventually found a house that we are both thrilled about. I am really really happy that we didn''t purchase any of those prior homes. If you can expect housing prices to go down, then maybe more houses in this neighborhood will become available to you in your price range.

Good luck!

 

[TravelingGal]

Date: 3/23/2009 3:02:14 PM
Author: decodelighted
Fleas?? Put some Frontline behind Amelia''s ears** & call Terminex (they were here last week too, did I put that on my list? Ants. Sigh.)

**do not proceed without consulting a physician

Great idea! Who needs a physician? If she passes out, I''ll know I did something wrong.

Aloros, good point...and one I think I need to keep in mind. I don''t think there is such a thing as a perfect house, but size does matter.

It just sucks to stay here because of the neighbor. He smokes like a chimney and the smell comes through and it seems like he is smoking in the same room (the stench is awful, truly). But we''ve managed thus far!!

 

[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?