The banks will lend obscene amounts of money, way over the price range that is comfortable for people who want to enjoy the little luxuries of life, such as eating. We ended up spending about 60% of what the bank pre-approved us for and it was still a bit of a struggle in the first few years.
I have no idea who keeps buying these houses, but one thing is clear: if the economy turns, there’s going to be hell to pay because a lot of Americans are leveraged up to their eyeballs.
Calgary was like that, PunditLisa. I just missed it, but I’ve heard lots of stories about people who just turned their house keys into the bank when the oil boom busted in the 70’s (80’s?) - awhile ago. Calgary was almost exclusively an oil-based economy in those days, and with interest rates at 20% or so, if I recall correctly, people just walked away from mortgages that were crippling them.
I know what you’re saying, Elza. After looking at tons of houses, you get a pretty good idea of what a place is worth, and some sellers just don’t get it. I guess they’re holding out for someone not as knowledgeable or more desperate than you - best of luck to them.
Yup. And what’s especially scary is that, even though fixed rate mortgage rates are very, very low right now, a lot of the people stretching their budgets to buy those McMansions are getting ARMs–something like 34% of new mortgages are adjustable-rate. When interest rise quickly, I think something very bad could potentially happen.
And the market in some places seems completely irrational. When I visited my family over the holidays in Ventura County, CA, I saw new developments featuring big McMansions (in the worst sense of the world–big, square stucco monstrosities devoid of ANY interesting architectural details) on TINY lots “from the $1,000,000’s”. That’s just totally fucking ridiculous. I just bought a 4-year old 1800 sq ft place on 4 acres about an hour out of Dallas for well under $200k (OK, so I do have to drive 20 minutes to get to a supermarket, but still…)
I’m in the early stages of starting to look for a house. In the Boston area. This thread scares me.
How to buy property while a resident of NY City, Boston, anywhere in the LA area (including Ventura County) or anywhere in the Bay Area:
[ol]
[li]Find a job in an affordable part of the country.[/li][li]Find a nice house there.[/li][li]Buy it.[/li][li]While relaxing in your nice, affordable home, laugh at friends in home state who are living on Target[sup]tm[/sup] furniture and just scraping by in their $1M McMansions while praying that rates don’t rise and the bubble doesn’t burst and plunge them hundreds of thousands of dollars upside-down on their mortgage.[/li][/ol]
I’ve been hunting for a house for months - the Morgantown market isn’t insane at California levels, but it is pretty demented.
Our Realtor was a saint. He only showed us houses in our price range in the neighborhoods we selected. He was very patient, explained things fully and was cheerful and helpful no matter what we requested. The Elf did most of the early hunting by taking a few afternoons off from work, and then on the weekend the two of them would show me the best ones. The one type of house we really didn’t want to look at was split-levels, we were more interested in ranch style, really. On Labor Day (US) weekend we had toured half-dozen places that we didn’t really click with. It had been raining steadily for days and almost every place we looked at either had a leaky roof or a leaky basement. One new construction house we saw had a river of water coming in through an apparently badly installed chimney. We were on the last house on the list. The picture on the infromation handout was pretty blah, plus it was a split level, but we had arranged for the viewing so we went anyway. The picture truely sucked because when we pulled up it was actually pretty cute, one a quiet cul-de-sac, next door to a park we already liked to walk in and had been recently re-roofed with 30-year asphalt tiles. When we walked in we fell immediately in love with it. Big great room with a beautifully built brick fireplace, kitchen was nice, but needed updating, but it was something we could easily live with until we could get around to changing it. Big bedrooms, two baths, nicely kept up. Then we went into the basement… dry. Dry as a bone after 4 days of constant rain. The sump hole wasn’t even damp. It was a bit over what we wanted to pay, but the owners were very elderly and were moving to a smaller patio-style home and accepted our offer, which in my opinion was what it really was worth.
We have since had a few very minor exterior issues fixed and had it painted and now we are planning bathroom and kitchen upgrades. We love our house.
So to those who think this is a scary thread, well, it is, but you can also have a positive experience if you are patient. And I cannot stress the importance of having a good realtor. A good realtor is supposed to be working for you, not for their bottom line. Our guy was awesome and made it very clear up front that he did this because he loved it, and he loved to see happy buyers. If there are folks in the KCMO area looking for a realtor, let me know and I will give you his number.
Luke, I feel like if I’m going to take the plunge, I really should get an actual house. Buying a duplex or condominium seems like it combines the disadvantages of owning and renting.
Metacom, thanks, I feel so much better now.
How about:
[li]Get a good job[/li][li]Buy a house in the area 10 years ago while people still whined and bitched about the cost of housing[/li][li]Smugly read these threads while sitting on a pile of equity[/li]
Sorry to burst your bubble but the bubble ain’t gonna burst. We may see a 10% or even a 20% drop some day but at some point people just won’t sell below a certain level. There will be a few who will have to but most will just wait it out.
California housing prices had their worst slump in my lifetime from around 1989-93 when prices dropped around 20%. For the most part, the people who were screwed were the speculators who were leveraged into several houses. This was a time when the interest rates and the unemployment rate was much higher.
It does seem like things are levelling off in my area but there is no evidence for a drop any time soon.
Haj
My condo had (I kid you not) red Formica countertops. (Of course, I redid the kitchen before selling, along with painting/recarpeting).
I’ve been in a duplex in East Taunton, they’re really quite solid. Couldn’t hear a thing from the neighbors.
BWAHAHAHA!
The first item in your list might as well read “Win the lottery.” In order to afford a home in the most bubbilicious areas of Southern California (Ventura County, Santa Barbara, etc.) you need a household income approaching $200k.
There may not be a “bubble” as spectacular as the dot-com burst, but housing prices in Southern California are just flat-out insane right now. If it was my money, I sure as hell wouldn’t be buying there. You think there could be a 20% adjustment? If you buy a $500k home now and the price declines 20%, you’re now $100k in the hole, and if house appreciation rates return to more typical levels, you’re still looking at 5 or 6 years before you’ll be at a point where you can start building equity. Of course, I couldn’t buy there, even though I have a solid professional career. That was the primary reason I moved out here to Dallas. The weather may suck, but damnit, your money goes a long way!
This thread makes me truly appreciate the good fortune we had in finding our house. It was literally the first house we viewed. It had been on the market for about five months, and the seller was willing to pay all closing costs to seal the deal. I’ve been tracking what similar houses in the neighborhood are listing for, and the prices are steadily increasing. We could slap a few coats of paint on the walls, and sell it for $20,000-30,000 more than we paid.
I have been saying that San Digeo housing prices have been insane for about 3 years. But they keep going up. Although lately the news has been saying that they are not going up anymore.
If you’ve ever considered Harlem here’s a new place that I think is up now. It’s for middle income folks. The requirements are on the application. There’s a huge Pathmark on the ground floor. My sister lives across the street in a similar place. She bought a really nice sunny three bedroom for around $270,000. Might not be your cup of tea, but I thought I’d throw it your way anyway.
Our house has bright orange formica countertops, shag carpets, and needs a coat of paint throughout. We’ve covered the countertops with Contact paper for now, but fortunately, Jim is an experienced tilesetter, so we’re going to tile them in the summer. Jim’s aunt sells carpet, so we can (theoretically) get some good carpets wholesale, and Jim was a professional painter for years, so we can do all these renos ourselves. This was part of what made this house perfect for us - we can handle most of the stuff it needs ourselves.
Well, the horrors of house hunting may have come to an end tonight. We went back to see one again from Sunday, and both of us felt like it was perfect. Even FIL was pushing us to make an offer on it. So my husband is calling his dad in the morning to write the offer - and we don’t think we’ll get any arguments from FIL this time - in fact, I expect he’ll be doing it pretty quickly. It’s somewhat smaller than the first on we had a contract on, but it’s a perfect fit for us - we’ll be able to afford our mortgage, decorating, and furniture all while being able to EAT at the same time:). So that will be nice.
We’re happy. I guess we lost the first house for a reason. Now we get to go through the stresses of the inspection again, but I’m not going to panic over this one like I did over the last one.
E.
Don’t be too scared, all is achievable but just get used to the idea that in many markets it will be a full-time job to hunt for that house.
I’m a single guy living in the aforementioned horror-story SF Bay Area and it took me about 2 years of hunting to buy a house. I’m not earning 6 figures by a longshot but I have a big house in a nice area and it’s working out well. Surprisingly well!
A great book I can recommend is “Home Buying For Dummies”. Read it through, there’s lots of good advice in there.
Armed with info on costs from that book, fire up your copy of Excel (or go online, you can find real estate calculators) and make yourself a little spreadsheet so that you can figure out what a home selling for $X, with such-and-so mortgage rate, downpayment, etc. will cost on a monthly basis. The numbers are huge and will probably scare the bejeebers out of you. Don’t worry, keep fiddling with the numbers and looking at home prices. You’ll very quickly develop a sense of what you can afford, both in dollars and what that will buy you physically.
And get a good agent. The first couple I worked with (husband and wife team) dropped me as a client. Reading between the lines it’s because I didn’t have a duffel bag full of cash to strew about the landscape. Got another agent who listened to me, spent a lot of time driving me around, obviously knew her stuff, etc. Found me a nice house and earned her 3% (remember that despite feeling like you are at the mercy of all these folks, everyone except for the seller’s realtor is working for YOU. YOU are paying their salary).
The first couple of bids I put in (in this area the “asking price” is generally laughable, multiple offers in the 10-30% over asking are the norm) weren’t high enough and actually signing papers to the tune of many hundreds of thousands of dollars was frightening. After a couple of rejected bids it became routine, or at least didn’t scare me any more, so that was one less source of stress.
Thanks, mack, I’ll look into it. The price is right and the location is convenient too.