Is it me, or are home prices high

[Nord]

I cant wait to bump these threads, in a few years after everyone said the bubble (yes, we are in a bubble) will not pop, prices won't plummet and blah. For a minute, I thought this was a Hot Boat thread in 2005.

One thing many people forget about is inflation. Our currency is not worth what it was in 2009. It's much, much less. Prices going up is a bad thing. In a healthy economy, more Americans would be able to afford homes.

It's not a supply and demand issue, most everyone wants to own a home. Get real! The problem is what the OP is facing. Unless you're a trust fund kid, already wealthy or one hell of a hard worker and profitable, it's near impossible to buy a home in LA/OC (in this market). Sure, you could move to the IE, but who wants to live 10-15 hours a week of their life on the freeway? That's no way to live! The last pop, hurt a lot of the middle class, many of whom are still priced out of the market and suffering. This next pop is going to wipe out an entirely different class of people, then who's left? It's not like all the homes that were foreclosed upon were resold to new families. The majority of them were sold to hedge funds (the rich) to rent out. What's that old saying?... The rich get richer and the .....


My suggestion (unless you MUST buy now), is to wait. I'm no economic expert, but one thing I know is that you buy stuff when it's on sale and being practically given away. Not when the product is overpriced and of limited supply. Inventory is limited, because people cant afford replacement homes(inflation), so they're staying put and fixing up their existing homes. This is why residential construction is so busy.

BTW- Don't listen to Realtors and Mortgage Brokers about what do to. They're trained to tell you whatever necessary to earn that commission paycheck. No offense, I was in retail sales for a long time, I get it, so I feel I can comfortably say that most of them have no idea what they're talking about. Just because you're a Realtor, does not mean you know anything about world economics. :rolleyes


History repeats itself. I know a lot of guys who earned big money in the last bubble and then lost it all at the pop. Now they're back on their feet, yet they're doing all the same stuff (reckless spending) like they did last time. T

The shit is about to hit the fan and catch many with their pants around their ankles, just like it did in 2007 and 2008.

Nobody is arguing a bubble, it's obvious. But to compare to the last pop I think is lofty. When this bubble pops, there is absolutely no way we can fall as far and hard. It will hurt but not like the past and this is my reasoning.
You can't just go out and get a loan these days. There are no stated income loans and banks are still very stringent on who qualifies and how much they qualify for. There is not a bunch of ridiculous variable loans that were given to people that didn't qualify in the first place. My point is there are not as many bad players in the game as there was in 08'.
Secondly, this time around a lot of the houses were bought cash from out of the country money. Those numbers don't apply either.
I do think we lost the mentality of struggling. We lost the people that buy houses and struggled to save to make it happen. They eat ramin, have very little furniture, and work longer and harder until everything balances out. Now days, people make the purchase and continue to live the same lifestyle they did before he big purchase. These are the people that will Feel the blast of the next bubble pop.

 

[Abc123]

Nobody is arguing a bubble, it's obvious. But to compare to the last pop I think is lofty. When this bubble pops, there is absolutely no way we can fall as far and hard. It will hurt but not like the past and this is my reasoning.
You can't just go out and get a loan these days. There are no stated income loans and banks are still very stringent on who qualifies and how much they qualify for. There is not a bunch of ridiculous variable loans that were given to people that didn't qualify in the first place. My point is there are not as many bad players in the game as there was in 08'.
Secondly, this time around a lot of the houses were bought cash from out of the country money. Those numbers don't apply either.
I do think we lost the mentality of struggling. We lost the people that buy houses and struggled to save to make it happen. They eat ramin, have very little furniture, and work longer and harder until everything balances out. Now days, people make the purchase and continue to live the same lifestyle they did before he big purchase. These are the people that will Feel the blast of the next bubble pop.

You're missing the bigger picture. It's not relaxed lending guidelines that created the last bubble, it was a tool used, but it wasn't the problem, the big picture. The big problem is our money system, which has only become worse since 2008. I disagree with you, the fall will be worse. Where we are today, is even more artificial than where we were in 2005.

 

[milkmoney]

Me too......10,000k lot.

+1, 1& 3/4 acre [emoji202]

 

[LargeOrangeFont]

You're missing the bigger picture. It's not relaxed lending guidelines that created the last bubble, it was a tool used, but it wasn't the problem, the big picture. The big problem is our money system, which has only become worse since 2008. I disagree with you, the fall will be worse. Where we are today, is even more artificial than where we were in 2005.

It was relaxed guidelines that allowed exploitation of other tools. Without subprime lending, the problem would not have been nearly as bad.

You are forgetting that everyone's money system is worse, and ours is still the best.

Also people are not yet losing their jobs and defaulting on things.

If you are all of a sudden not able to get a loan at all, that will change prices, and people with cash will scoop up all the homes. Banks and the govt won't let lending stop.

 

[Bobby V]

It was relaxed guidelines that allowed exploitation of other tools. Without subprime lending, the problem would not have been nearly as bad.

You are forgetting that everyone's money system is worse, and ours is still the best.

Also people are not yet losing their jobs and defaulting on things.

If you are all of a sudden not able to get a loan at all, that will change prices, and people with cash will scoop up all the homes. Banks and the govt won't let lending stop.

I have to agree with you on the jobs. Back in 05-07 we knew the construction industry was down and the housing was due to follow. I am still bidding some major new construction projects then I did back then. Once that stops. I'm sure the housing will follow years from now.

 

[TOBTEK]

I have a big back yard here in YL and my house was built in the late 80's.

Lets SELL IT ....... I'll have a sign out there tomorrow.

 

[Nord]

Yea but I paid 365k for this 900K home. My taxes are probably still lower.

You sold your home for 900K !?

 

[TOBTEK]

Nobody is arguing a bubble, it's obvious. But to compare to the last pop I think is lofty. When this bubble pops, there is absolutely no way we can fall as far and hard. It will hurt but not like the past and this is my reasoning.
You can't just go out and get a loan these days. There are no stated income loans and banks are still very stringent on who qualifies and how much they qualify for. There is not a bunch of ridiculous variable loans that were given to people that didn't qualify in the first place. My point is there are not as many bad players in the game as there was in 08'.
Secondly, this time around a lot of the houses were bought cash from out of the country money. Those numbers don't apply either.
I do think we lost the mentality of struggling. We lost the people that buy houses and struggled to save to make it happen. They eat ramin, have very little furniture, and work longer and harder until everything balances out. Now days, people make the purchase and continue to live the same lifestyle they did before he big purchase. These are the people that will Feel the blast of the next bubble pop.

Sure there are.... No Doc, Stated income loans are Back! Negative amortization/pay options are not. (thank God)

 

[Nord]

Sure there are.... No Doc, Stated income loans are Back! Negative amortization/pay options are not. (thank God)

Show me a stated income loan please.

 

[TOBTEK]

Show me a stated income loan please.

sure..... let me find them. please hold

 

[Nord]

sure..... let me find them. please hold

Standing by ....... lol
I would be shocked if I can take one of these offers you are going to show and actually get a loan to buy a home.

 

[mbrown2]

You're missing the bigger picture. It's not relaxed lending guidelines that created the last bubble, it was a tool used, but it wasn't the problem, the big picture. The big problem is our money system, which has only become worse since 2008. I disagree with you, the fall will be worse. Where we are today, is even more artificial than where we were in 2005.

What specifically with the money system? Gimme some facts Subprime, over buying/investors/flippers with relaxed guidelines, heavy dependence on construction, loose and low reserve capital ratios needed by banks, mortgage assets on bank books not part of capital reserve ratios by banks and the huge investments into mortgage backed securities by many banks and investment houses caused the last one....when the secondary market dried up, all the other dominoes fell.

Other than price increases and low interest rates, where are the other issues now that existed in 05/06? Most have been dealt with DODD/Frank and a number of other changes in banking regulations. The banks have a much larger capital reserve requirement and much less dependency on mortgage profits/assets...if anything most large banks offer mortgages these days so that it is just part of their product offerings not because it is some huge part of their bottom line...It will flatten and it will dip, but don't see 40% drops that occurred in some communities...

Where is all the evidence of over building with new construction and new buying that dominated the last one? Most have refi'd into a competitive rate over the last 8 years....

I would think China's monetary issues and slowing growth will have more to do with the our currency valuation and stock markets than a real estate bubble...

 

[COCA COLA COWBOY]

Show me a stated income loan please.

They are plentiful, but not at 100% LTV. You still have to put a healthy down payment. It's not going to crash like 07/08. It will just be stagnant like the 90's.


http://qkmortgage.com/mortgage-loans-for-self-employed/?gclid=CPjEhNyX4M8CFcOBfgodNx0PnQ

 

[TOBTEK]

Show me a stated income loan please.

As CCC said. No doc loans hit my email all the time now. Most are requiring 20-30% down.

Here's a snap shot of one in my inbox.

 

[Nord]

As CCC said. No doc loans hit my email all the time now. Most are requiring 20-30% down.

Here's a snap shot of one in my inbox.

View attachment 517318

Am I reading this right at 6.75% rate?

 

[TOBTEK]

Yep. If a buyer wants a special NO doc loan. It's not going to have aggressive pricing. What's the old saying? " risk = cost"


Anyone signing up for something like that, is going to be flipping the home. Be in and out in 60 days.

 

[LargeOrangeFont]

They are plentiful, but not at 100% LTV. You still have to put a healthy down payment. It's not going to crash like 07/08. It will just be stagnant like the 90's.


http://qkmortgage.com/mortgage-loans-for-self-employed/?gclid=CPjEhNyX4M8CFcOBfgodNx0PnQ

Finally a doomsday prediction I can get behind!

 

[Nord]

Yep. If a buyer wants a special NO doc loan. It's not going to have aggressive pricing. What's the old saying? " risk = cost"


Anyone signing up for something like that, is going to be flipping the home. Be in and out in 60 days.

I didn't know they existed but still apples to oranges in comparison to the old ones. Thanks for the education.
Still not going to lead us to the destruction of what the first bubble did.

 

[Bobby V]

You sold your home for 900K !?

No. Neighbor with the same floor plan did. Another neighbor on the next street got 1.1 million. I'm staying put for now.

 

[Nord]

No. Neighbor with the same floor plan did. Another neighbor on the next street got 1.1 million. I'm staying put for now.

l

So basically that point is a moot unless you sold your house, wouldn't you agree? It's like saying your up in the stock market but haven't sold anything yet.

 

[HOOTER SLED-]

l

So basically that point is a moot unless you sold your house, wouldn't you agree? It's like saying your up in the stock market but haven't sold anything yet.

Kinda like him talking shit about the Dodgers when his Angels had the horrible season they had and are on the sidelines.

 

[TOBTEK]

No. Neighbor with the same floor plan did. Another neighbor on the next street got 1.1 million. I'm staying put for now.

That's it....... The sign will be in your lawn tomorrow.

 

[Bobby V]

l

So basically that point is a moot unless you sold your house, wouldn't you agree? It's like saying your up in the stock market but haven't sold anything yet.

If having equity in your house is a moot point. Im liking it.

But your right I can wait a year and get much more...lol

 

[Nord]

If having equity in your house is a moot point. Im liking it.

But your right I can wait a year and get much more...lol

Equity means absolutely 0 unless your borrowing or selling

 

[Bobby V]

Equity means absolutely 0 unless your borrowing or selling

Really...I sleep much better at night knowing that I have equity rather then being upside down.
Wouldn't you?

 

[DaBank]

As CCC said. No doc loans hit my email all the time now. Most are requiring 20-30% down.

Here's a snap shot of one in my inbox.

View attachment 517318

Leave INCOME section empty.

 

[Bpracing1127]

The reason I say home are too much is the "rule of thumb" for how much you should buy is 2.5 times your annual salary. So given at 100k a year we are looking at 250k. Find me a decent starter home for 250 in oc. Ok I know what you are thinking. Its oc should be 3-4 times your salary. Well that puts me at 300-400k. Still cant touch a decent starter home. So obviously I dont make enogh or home prices are too high. Well making 100k a year should be plenty.

 

[LargeOrangeFont]

The reason I say home are too much is the "rule of thumb" for how much you should buy is 2.5 times your annual salary. So given at 100k a year we are looking at 250k. Find me a decent starter home for 250 in oc. Ok I know what you are thinking. Its oc should be 3-4 times your salary. Well that puts me at 300-400k. Still cant touch a decent starter home. So obviously I dont make enogh or home prices are too high. Well making 100k a year should be plenty.

I'm not trying to be a dick, but houses are just too much for YOU. The 2.5 your annual salary does not work anywhere within 100 miles of your job. The median income in OC is around $75k. At $100k you are basically hovering above that. The median home price on OC is $645k as of a couple months ago. So the houses you are looking at reflect being below even that median price.

You are living in a highly desireable area. In another part of the country your small condo would be a nice sized house.

You don't have too many options if you refuse to commute from the I.E. or other areas. In your situation I would not buy a house here, unless you have $100k saved and are going to sell the condo and roll the equity into a new purchase.

 

[HOOTER SLED-]

Sometimes you gotta take 2 steps back in order to get a few more forward......suck it up, make the sacrifice to get into a house. And by sacrifice I mean commute. No one said it's for forever.

 

[stephenkatsea]

Lived in So Cal for many years, moved with my wife and worked over seas, saved some money but returned to Carter's mortgage rates approaching 20%. Bought what and where we could afford in those years. Later moved back to So Cal. Rented for years. Finally found a new home and price we could afford. Bought in Camarillo. Wife never worked. That was our choice. She was able to be a "stay at home Mom". We matched our wants and desires with MY income. Throughout those years there was much we liked, but couldn't afford. It is called a budget. If the annual combined income of your's and your wife's income is 100K, buying a home you desire in OC is going to be tough. It is called a budget and market affordability and it is not going away.

 

[HOOTER SLED-]

Lived in So Cal for many years, moved with my wife and worked over seas, saved some money but returned to Carter's mortgage rates approaching 20%. Bought what and where we could afford in those years. Later moved back to So Cal. Rented for years. Finally found a new home and price we could afford. Bought in Camarillo. Wife never worked. That was our choice. She was able to be a "stay at home Mom". We matched our wants and desires with MY income. Throughout those years there was much we liked, but couldn't afford. It is called a budget. If the annual combined income of your's and your wife's income is 100K, buying a home you desire in OC is going to be tough. It is called a budget and market affordability and it is not going away.

It's also called reality.

 

[77charger]

When we bought our house in fullerton in 2000 my dad was shocked that is was 189k he had paid 175k for his house in laguna niguel built in 85 and mine was 1300 sf and built in 53,

but nows its in the upper 400s last i checked and that was a while ago

 

[HOOTER SLED-]

I know it's frustrating... I still look on Zillow all time time in Orange County & Corona, but if I punch in 300k Max, then that eliminates about 99% on my screen, it makes me laugh.

There is currently a 650 sqft 1 bedroom/1 bath condo in Corona @ Green River for sale. No garage (1 carport) & it looks like an apt complex, just selling the units as condos? No clue, but they're asking 250k. I also saw a 419 sqft studio in south OC recently for 229k. So 20% down on those (roughly 40-50k) make a mortgage payment extremely low, but the units are so dam small, I can't get myself to do it....Other than that, I saw a few townehomes for 400+k.... Otherwise, the commutes start to get really really long for the nicer homes in the IE, off the 15.

Like I mentioned before.....sacrifice.......or just continue to pay for someone else's investment. It's a no brainer.....pay yourself. And shit, it's best to do it when you are single or have no kids.......less people are affected by the sacrifice.........suck it up buttercup. It ain't gonna be your last place you get into.....just get in the game....stop sitting on the sidelines.

 

[Bpracing1127]

No one is being a dick to me at all. I know its reality. However what most of you are saying is 100k is not enough money to buy a house in oc. I am not looking for a mansion but a nice 1500-1800 sq ft home that is move in ready this is a ten year house I would think. I just cant believe that we dont make nearly enough money. My question is how are others who make what I make doing it? Who (demographics) is buying in oc and how the hell am I doing it. Shit 100k doesnt even get me in corona really

 

[LargeOrangeFont]

No one is being a dick to me at all. I know its reality. However what most of you are saying is 100k is not enough money to buy a house in oc. I am not looking for a mansion but a nice 1500-1800 sq ft home that is move in ready this is a ten year house I would think. I just cant believe that we dont make nearly enough money. My question is how are others who make what I make doing it? Who (demographics) is buying in oc and how the hell am I doing it. Shit 100k doesnt even get me in corona really

When I was making what you are making I was able to buy, but I had saved over $100k to use as a down payment. It took about 5 years to save it all.

My plan was the same as yours a - 10 year house that I'd like to keep and rent out. I may be here longer than that though. I'm in the same situation as you if I want to move. If I keep my house I need around $200k to throw down on a new house. If I sell my current house, I might need $100k to keep my payment in a similar range.

Obviously you have a boat and other hobbies. My advice is to save as much as you can, live as lean as you can, and if you buy a house getting something with a lower payment really makes life better.

 

[BHC Vic]

No one is being a dick to me at all. I know its reality. However what most of you are saying is 100k is not enough money to buy a house in oc. I am not looking for a mansion but a nice 1500-1800 sq ft home that is move in ready this is a ten year house I would think. I just cant believe that we dont make nearly enough money. My question is how are others who make what I make doing it? Who (demographics) is buying in oc and how the hell am I doing it. Shit 100k doesnt even get me in corona really

I'll say this. Even with what my wife and I make it's still not easy. Even with putting 80k down on a 400k house doesn't give you a great payment. Then add in cars like the burb. That shit ain't cheap. Now let's say you want to have kids. I pay roughly 500 a week for baby sitting. It's not easy in California at all. But my wife and I both make sacrifices. She commuted from chino to Yorba Linda. An 18 mile drive that would take more than an hour. Now she's brea so she takes the canyon. I just got of the Beverly hill project. 5 hour+ a day commute. But like hoots said I knew it wouldn't be forever just like I knew me commuting to Palmdale wasn't forever. For me I really don't have a choice because of the wife and kids. I just do what I have to

 

[Nord]

What amount of $ do you guys have to put down. I'm missing that part. Forget the 20-30%. What have you saved to throw down? What kind of moves can you make to put more money down? Looks like you have a nice boat that you could sell to help put more money down ?

 

[Bpracing1127]

We have about 50k we can use. Still saving more as well. Rather not sell the boat or condo if I dont have to

 

[BHC Vic]

Will you be able to
Make two payments if you don't have a renter? Will you have money set aside for any problems that pop up w the condo or the new home?everyone warned me when we bought the lake house. I kind of brushed them off but not were they right. Something always needs fixing and it usually isn't cheap

 

[Your ad here]

I'm in the same position. Would like to get in a house but with property tax and all the other fees its out of reach. Its insane that now both couples in a relationship have to work full time to make the morgage, put food on the table, and cover the other cost. Usually one of them works 3-1/2 weeks out of the month to make the morgage.

 

[HOOTER SLED-]

We have about 50k we can use. Still saving more as well. Rather not sell the boat or condo if I dont have to

Sounds like you wanna stay in your current situation more than make changes to get to where you wanna be. You have the resources....change the equation.

 

[Roaddawg]

I'm in the same position. Would like to get in a house but with property tax and all the other fees its out of reach. Its insane that now both couples in a relationship have to work full time to make the morgage, put food on the table, and cover the other cost. Usually one of them works 3-1/2 weeks out of the month to make the morgage.

Not necessarily true. My wife stats home with the kids. Trade off is we live in Winchester and I work in Santa Ana..If you really want to get in then you gotta make sacrifices somewhere

 

[Nord]

We have about 50k we can use. Still saving more as well. Rather not sell the boat or condo if I dont have to

You have a condo? Sounds like your in a good position already. Original posts says your a first time home buyer. Sounds like you need to sell one to buy the other maybe? Can't have your cake and eat it too.

Sounds like you wanna stay in your current situation more than make changes to get to where you wanna be. You have the resources....change the equation.

Exactly.

Not necessarily true. My wife stats home with the kids. Trade off is we live in Winchester and I work in Santa Ana..If you really want to get in then you gotta make sacrifices somewhere

X2

 

[LargeOrangeFont]

We have about 50k we can use. Still saving more as well. Rather not sell the boat or condo if I dont have to

How much equity is in the condo? If you say $150K or more this thread should be closed and deleted.

 

[Bpracing1127]

Condo had 150k or more in equity now. However as orginally stated we owe 100k on it. If we rent it out. We get a nice chunk of money for rent even with the mortgage and hoa. I am first time home buyer. My gf owns the condo. We are soon to be married as well. I really want to keep it and use it as a rental. Because of that. The condo is fine for the two of us. However we plan to have kids soon and we would rather move into house before kids come. I know I could sell the condo but being as close as I am I dont think it makes sense to sell or pull money out of it.

Also I started,this thread not to say I cant do it. It was more of home prices are high and if people don't think so I think you are in denial about it that was all

 

[BHC Vic]

When you sell you pay off the 100k and take the 150k and 50k you have saved and id say you are in a great position to buy. That's what I would do. Then save and buy a rental after the correction.

 

[LargeOrangeFont]

Condo had 150k or more in equity now. However as orginally stated we owe 100k on it. If we rent it out. We get a nice chunk of money for rent even with the mortgage and hoa. I am first time home buyer. My gf owns the condo. We are soon to be married as well. I really want to keep it and use it as a rental. Because of that. The condo is fine for the two of us. However we plan to have kids soon and we would rather move into house before kids come. I know I could sell the condo but being as close as I am I dont think it makes sense to sell or pull money out of it.

Also I started,this thread not to say I cant do it. It was more of home prices are high and if people don't think so I think you are in denial about it that was all

No one is going to argue with you that prices are high.

Look at it this way...

You are already "IN" the market. If you sell the condo it is going to cost you the same amount to move up to whatever house you want if prices are up or down. It is simply a sliding scale. Be happy you are at least in.

If you don't sell the condo what would the rent of the condo net you per month? How much buying power does that give you? If we are talking $1K per month or more that is a significant offset. If you are banging your head against the wall for $500-$600 per month you should sell the condo. You can make that on cheaper investments. If you are not willing to liquidate all toys and expenses, how long will it take you to get a reasonable down for a house in OC? Also how soon are you going to want a kid?

My advice -

Sell condo when ready and move to a house you like. If you get into something around $600 you'll have a reasonable payment.. That is like $1900 a month with $200K down. Very easy payment when making $100K.
Keep saving money and look for other real estate investment opportunities with lower entry points down the line.

 

[RodnJen]

Don't forget about the tax advantages of owning a rental property, they are substantial.

 

[LargeOrangeFont]

Don't forget about the tax advantages of owning a rental property, they are substantial.

They are indeed.

 

[EmpirE231]

welcome to southern california AKA "the rat race"

200k down on a 600K home will not be a 1900 payment, once you factor taxes and insurance.

you don't want to sell at the top of the market to buy at the top of the market unless you absolutely NEED to. Like I mentioned earlier... keep saving, stay in the condo... buy your next home in a down market and rent the condo.