Basically I’m getting divorced and have to move. I’d rather buy than rent again. The other day I spoke briefly to an ex coworker who moved to Arizona in 2007. He’s thinking of coming back to SoCal. He is upside down on his house now. It took only 3 years for his house to get from around 250K to 100K.
Was it because the house is in Arizona or this could have happened anywhere?
I was planning to get a big house (3bd, 2/3bath) but I may have now to settle for a smaller one now that I’m going to be the only one taking care of the mortgage payments.
Is it a good idea to buy a starter home or condo and then get something else later?
What happened to your former co-worker could and did happen in many areas.
Remember, unless you are selling, the value of your house is just a number and an abstract one at that.
At the height of the market, my house was knocking on the door of 600K. Now? Who knows? 350? 400? 450? I don’t care and it does not matter as I am not selling, and I have owned it long enough that I am not upside down.
If this a good time to buy in So Cal? Yes. No question. Property taxes are based on purchase price, so the cheaper you can get in the better.
So my advice is find a neighborhood you like and buy.
As Will Rogers once said. “Buy land, they ain’t making no more of it.”
Thanks Rick,
I was already set on buying but talking to this guy threw me off.
I’m also thinking on buying in a remote area and do the (longer than current) commute thing instead of buying something smaller and in a not-so-good area for a similar price, closer to L.A.
I think it’s easier to change jobs than change the neighborhood/house.
Another SoCal person here… It’s certainly a better time to buy than 3 years ago, but not ideal. You can still rent around here for cheaper than you can buy (including the mortgage interest reduction, etc.) which in my opinion means the market hasn’t quite hit parity yet. There is a LOT of extra inventory in my area right now because people won’t reduce their prices to what buyers are willing to pay.
That being said, I agree with Rick: it’s always a good rule of thumb not to buy if you think you may move in 3-5 years or less (transaction costs will eat you up even if you are not upside down) – but if you’re going to be around for a while, if you want the homeowner lifestyle (lots of fixing up stuff! but also privacy, etc. as well) and think your job/industry is pretty stable, and can afford it and think the extra cost is worth it, then go for it. We bought recently because we had a baby on the way and wanted that extra security of not having to move and were willing to pay a little extra for it even though neither of us think the market has bottomed yet (and in fact I believe our house is probably worth a little less now than what we paid for it).
I lived in Corona and commuted to Orange County for about a year before I moved to OC. The reason? The 91 freeway. If you haven’t experienced it, I highly recommend spending a night at a hotel in Corona during the week and commuting to your job in the morning. That freeway is always on the “Top 10 Most Congested Freeways” lists you see on the news.
The fuel, tire replacement and oil change cost savings will help make up for the increased cost of living closer to your job. Ignoring those costs, what is your time and frustration worth to you? There are reasons real estate is cheaper in the Inland Empire.
I strongly suggest that before you buy in any community, you rent a hotel room in that area and drive to work at your normal time, and then that evening you drive back again so you know the real commute times.
Going to live off of the 91? Just kill yourself now, you will thank me later.
Thanks for the input **toofs **and Rick
I live off the 91 but in Buena Park. Not good. If I lived in Corona and kept my current job I don’t need to get on the 91 at all. I would take the 71 or the 15. Not sure if it’s a good thing or not.
The hotel idea is good. Just to test the waters. And kill myself after realizing how much my commute sucks.
There are two things that are holding me back from either moving or re-financing. Firstly because real estate crashes always go on for longer and usually deeper than most people think. Secondly because instead of writing down the mortgages which were bundled into those “toxic assets” the federal government bailout just gave the banks cash to cover their losses. Those crappy bundles of mortgages are still out there, and default rates are climbing as the economy remains weak. This means more distressed properties are going on the market and will drive property values down more. A bargain for the buyer. There hasn’t really been a full adjustment to the property values in a lot of the areas which had big run-ups. The historical guideline has been housing that grows pretty much with inflation. I just think the corrections aren’t done yet. It’s possible we’ve hit bottom on the housing market, but I really don’t think so.
That having been said, the future of the market is only part of the decision. Neighborhood, your family needs, and the specifics of the deal you’re looking at all come first. If you plan to buy and hold, then you can ride out a possible further devaluation of housing. Maybe even get your taxes re-adjusted downward so your home ends up costing you less in five years than it does upon purchase(assuming home prices slide further). You’d be underwater longer, but if you’re planning on this being your home for the next 15+ years that’s not a big concern.