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250K buys a shack in socal

  • Thread starter Thread starter OS
  • Start date Start date
thats one thing i can say about living in the sticks(oklahoma)

250K would buy a very nice home here...

hell, a house like the one pictured above would go for 6-7 grand here...
 
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
 
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
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Vic, are you saying that an increase of 7% or more would cause depreciation, or are you saying that a mortgage rate of 7% would cause the same? Confused!

 
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
Click to expand...

I'm certainly concerned about this, but haven't rates gone up somewhat and prices haven't really moved?

The other thing is if rates go up, but values fall, won't monthly payments be about the same?

This situation is something I've been thinking about for a long time.

 
Originally posted by: HappyPuppy
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
Click to expand...


Vic, are you saying that an increase of 7% or more would cause depreciation, or are you saying that a mortgage rate of 7% would cause the same? Confused!
Click to expand...

He's almost certainly talking about mortgage rates. There's a lot of talk in the news about at what rate will be the straw that breaks the camel's back.

 
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
Click to expand...


but it's all relative if you don't have substantial cash down
 
Originally posted by: HappyPuppy
Vic, are you saying that an increase of 7% or more would cause depreciation, or are you saying that a mortgage rate of 7% would cause the same? Confused!
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I'm saying that these markets are vastly overpriced relative to average household incomes in the area. If mortgage interest rates go up over 7% (for Fannie/Freddie conforming 30 fixed), values may begin to depreciate. How much, I won't say, but first-time home buyers are already priced out of these markets, leaving only speculators and those "buying up" on the basis of previous equity, but even they are tight now. IMO, these markets need to cool or they court disaster if they continue to go up as they have.
 
Originally posted by: notfred
You'd hate to buy a house in my parents zip code
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I think what the OP is saying is that, for that much money, you get crap. Those houses you posted, are a bit of money, however they are also nice (looking at least) homes.

In Irvine, CA, (I know it's nothing compared to a lot of other places in CA, I just only know the prices around here really), 700k will get you only a small town house (attached home, 3 bdrm, 2 bath, 1 story, with a tiny back yard). Don't forget though, there's also HoA fees and such if you live here. Where as in the city next to Irvine, 700k will get you a single 2 story house with 5 bdrms and 3 bath, with a very spacious back yard.
 
Originally posted by: OS
I'm certainly concerned about this, but haven't rates gone up somewhat and prices haven't really moved?

The other thing is if rates go up, but values fall, won't monthly payments be about the same?

This situation is something I've been thinking about for a long time.
Click to expand...
You have good points but (hold onto your hat) rates actually went down in 2004. Just never as low as the lowest in 2003.

Rate is payment. Payment is rate. When I pre-qualify prospective new homebuyers, they always tell me how much in total value they want to pay for a home, I always ask them how much they want to pay every month. Make sense? And whatever it is they were expecting, the reality is always more.

edit: here's the biggest hint I will give - in my experience, people always do the opposite of what they should do in financial markets. They buy hot and sell cold. Get it?
 
Originally posted by: Vic
I'm saying that these markets are vastly overpriced relative to average household incomes in the area. If mortgage interest rates go up over 7% (for Fannie/Freddie conforming 30 fixed), values may begin to depreciate. How much, I won't say, but first-time home buyers are already priced out of these markets, leaving only speculators and those "buying up" on the basis of previous equity, but even they are tight now. IMO, these markets need to cool or they court disaster if they continue to go up as they have.
Click to expand...

These markets have cooled somewhat in the past couple months but yeah they are still near historical all time highs.

I spoke to my dad fairly extensively about this and he doesn't think there will be an all out collapse, at best a 10% correction near term and stagnant values for a couple years to come. He has a real estate license. The reason I am looking to buy now is because I would buy in half with another family member who also needs housing in this area, but I can opt out if need be.

What exactly are mortgage rates based off of? AFAIK, it's not tied to federal prime rates.

 
If interest rates go up, which they surely will, and property values fall it won't affect me in any appreciable way. My mortgage is less than 25% of the present valuation of my property. I have lived here for 22 years and intend to live here at least another 12 years.

When property values are high and you sell you have to buy at the inflated price. Same is true for when property values are in a slump.

The only way to really make ouot big time is to sell when values are high and then move to another part of the country that is suffering a depression/recession. Of course you are going to beliving in a community with less than desired services.

That is why I have no plans on ever moving. Why should I? I would lose proximity to my family and friends in a community that I know and love in trade for living amongst strangers in a locale that is below my standards.

Eh, just musing.
 
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
Click to expand...

He is spot on in the Vegas market.

 
Originally posted by: HappyPuppy
That is why I have no plans on ever moving. Why should I? I would lose proximity to my family and friends in a community that I know and love in trade for living amongst strangers in a locale that is below my standards.
Click to expand...

People completely ignore this, and I think it's because they're used to living in Missouri or somewhere, where the landscape is identical for hundreds of miles in each direction, all the houses are part of identical looking subdivisions, and every town has the same Walmart, Home Depot, etc.

I honestly think that there's a lot of people out there who have no idea what it's like to live in a place that has character.

I know I moved away from my hometown (Santa Cruz), to somewhere only two hours away (Davis), and I still plan on moving back because I honestly miss the place I grew up. I like it more than anywhere else I've ever been.
 
Originally posted by: HappyPuppy
If interest rates go up, which they surely will, and property values fall it won't affect me in any appreciable way. My mortgage is less than 25% of the present valuation of my property. I have lived here for 22 years and intend to live here at least another 12 years.

When property values are high and you sell you have to buy at the inflated price. Same is true for when property values are in a slump.

The only way to really make ouot big time is to sell when values are high and then move to another part of the country that is suffering a depression/recession. Of course you are going to beliving in a community with less than desired services.

That is why I have no plans on ever moving. Why should I? I would lose proximity to my family and friends in a community that I know and love in trade for living amongst strangers in a locale that is below my standards.

Eh, just musing.
Click to expand...

It's the socal folks relocating to Vegas after selling that brought up our property values to where they are now.

 
Originally posted by: OS
These markets have cooled somewhat in the past couple months but yeah they are still near historical all time highs.

I spoke to my dad fairly extensively about this and he doesn't think there will be an all out collapse, at best a 10% correction near term and stagnant values for a couple years to come. He has a real estate license. The reason I am looking to buy now is because I would buy in half with another family member who also needs housing in this area, but I can opt out if need be.

What exactly are mortgage rates based off of? AFAIK, it's not tied to federal prime rates.
Click to expand...
I'm with your dad. I don't believe in mass calamity. But a lot of folks will take it in the shorts with all these zero down loans just from a stagnation in values.

Mortgage rates are NOT based off the Fed prime rates. That's a common misconception. The Federal Reserve Bank does NOT set mortgage rates in the US. Mortgage rates actually are their own commodity, called Mortgage-Backed Securities (or MBS), but they usually follow closely the yield on the 10 year Treasury Bond (note that this website always puts the decimal in the wrong place, it should be 4.285% today). In my experience, prevailing Fannie/Freddie mortgage rates used to always be 2% above that yield, or 6.25%. But right now, the spread has reduced to about 5.5%, an all-time low spread.
 
Originally posted by: HappyPuppy
If interest rates go up, which they surely will, and property values fall it won't affect me in any appreciable way. My mortgage is less than 25% of the present valuation of my property. I have lived here for 22 years and intend to live here at least another 12 years.

When property values are high and you sell you have to buy at the inflated price. Same is true for when property values are in a slump.

The only way to really make ouot big time is to sell when values are high and then move to another part of the country that is suffering a depression/recession. Of course you are going to beliving in a community with less than desired services.

That is why I have no plans on ever moving. Why should I? I would lose proximity to my family and friends in a community that I know and love in trade for living amongst strangers in a locale that is below my standards.

Eh, just musing.
Click to expand...
If you never plan on selling, your home value is irrelevant except for refinance purposes.
 
Originally posted by: Vic
On the west coast, I seriously recommend against buying a home in the following metropolitan areas at this time: LA, San Diego, SF/Oakland/San Jose, Las Vegas, and Sacramento. Possibly Seattle/Everett/Tacoma as well. Just the slightest market mortgage interest rate fluctuation (say to 7% or more) in the near future could cause a depreciation in home values.
Click to expand...


Dont forget Orange County.Heres probably the smallest house in our track

0.17 acres of land in not even that great part of tustin

Where my uncle lives (about 10 min away from me)
 
Originally posted by: Raincity
Originally posted by: HappyPuppy
If interest rates go up, which they surely will, and property values fall it won't affect me in any appreciable way. My mortgage is less than 25% of the present valuation of my property. I have lived here for 22 years and intend to live here at least another 12 years.

When property values are high and you sell you have to buy at the inflated price. Same is true for when property values are in a slump.

The only way to really make ouot big time is to sell when values are high and then move to another part of the country that is suffering a depression/recession. Of course you are going to beliving in a community with less than desired services.

That is why I have no plans on ever moving. Why should I? I would lose proximity to my family and friends in a community that I know and love in trade for living amongst strangers in a locale that is below my standards.

Eh, just musing.
Click to expand...

It's the socal folks relocating to Vegas after selling that brought up our property values to where they are now.
Click to expand...



20 to 30 years ago it was the CA folks selling out and moving to OR and WA that drove up the property values there. Californians are not readily welcomed in either of those states these days for the "damage" they did.


 
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