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Buying a house

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Buying a house

Postby Urge » Thu Jun 24, 2004 5:02 pm

What's everybody's opinions on buying a house in the current market? Rates are on the rise and housing prices are starting to level off. Here in SoCal, prices on the areas I'm looking at are up 50%-75% from 2 years ago.

On the one hand I think it's a bubble ready to burst, which of course probably won't happen until I buy. The last thing I want to do is buy a $350k house and then be stuck in it for 10 years just so I can break even on selling it.

On the other hand the economy hasn't been so good here the last 2 years and prices rose substantially despite that. As the economy continues to improve and thousands of new residents move into the area every day I can't really see prices declining much, if at all.

Any thoughts?
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Postby Nomar4prez » Thu Jun 24, 2004 5:13 pm

Just live in a van down by the river.... ;-D
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Postby shpuck » Thu Jun 24, 2004 6:37 pm

Get the house. We bought at 250,000 Condo in Santa Barbara almost three years ago, and other units in our association just sold for 549,000. I'd say that's a pretty good appreciation.

Even if you spend 350k and sell it ten years down the line for the same,

1. you will have not been paying rent and basically flushing it down the drain,

2. you can take a pretty good tax write-off, and

3. your credit will be good (provided you make all your payments).

Plus any improvements you make while living there will increase the value of the house. If you can afford the down payment, I'd suggest getting the house.
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Postby Urge » Thu Jun 24, 2004 8:35 pm

I've already made the decision to buy, the question is would you buy now at what could be the peak or wait a couple months and hope for a pull back in prices and hope rates don't go up too much in the meantime?
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Postby Madison » Fri Jun 25, 2004 12:18 am

Here in Texas, new home prices are still falling and the interest rates haven't budged in the least. If anything, there's a chance they go down yet again. I have no idea about SoCal though.
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Postby Urge » Fri Jun 25, 2004 12:23 am

Asking prices in SoCal haven't come down at all, but houses are staying on the market longer and there aren't really bidding wars anymore. Last couple of years if you offered asking price you were probably laughed at while the seller received a couple more offers.
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Postby LBJackal » Fri Jun 25, 2004 2:38 am

Nomar4prez wrote:Just live in a van down by the river.... ;-D


:-D That's a Chris Farley reference, for those who didn't notice.

Also, I think there are more reputable and knowledagble sources to turn to than a fantasy baseball website for this sort of investment. Just my opinion, though........
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Postby Urge » Fri Jun 25, 2004 12:46 pm

LBJackal wrote:
Also, I think there are more reputable and knowledagble sources to turn to than a fantasy baseball website for this sort of investment. Just my opinion, though........


I like to get opinions from people who don't have an interest tainting their views one way or the other. Same reason I don't buy stocks based soley on an analyst's report...and I trust real estate people even less than stock analysts.
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Postby shpuck » Fri Jun 25, 2004 1:00 pm

Ask around about trends for buying over the summer in the area you're interested in. If people typically buy in late summer early fall, then you'd have somewhat of an advantage shopping hard now to find the perfect place.

Also, what are the current rates? I've been a bit out of touch, but we paid ~5% for ours 5 years fixed Flex after that (with the intention of refinancing after 5 years). Another thing you can do is buy it now and then if the rates drop significantly over the next couple of months, refinance at the better rate. It will cost a little bit (in the grand scheme) to adjust your rate, but will pay off in the long run.
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Postby Cornbread Maxwell » Fri Jun 25, 2004 1:55 pm

Mortgage rates will continue to rise - but not significantly, so there is room for you to wait 6 months to a yr if you dont mind giving .5%.

As for the Californian market, people have been talking about a bust there for over a decade and it hasent happened in any significant sence yet. If it is reverting to a buyers market as you are suggesting (longer time to sell a home), I would use that to your advantage.
Basicly it comes down to this: If you can be flexible about what house you want to buy, you can dig up situations where the owners are more desperate to sell. Be nimble - have the loan ready - and express that if they want to sell, they have to meet your cost. This type of environment allows you to become the aggressor. DO NOT become attached emotionally to any potential house (If you are married, Im referring to your wife).

Good luck.

ALSO - Use the State Equalized Value (public information) of the home as leverage when discussing price. This has 2 advantages - it lets the seller know that you know how much it is worth, and it also lets him know you are a serious buyer.
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