patrick.net

HEY YOU says

As far as advice from comment sections, don't take them as gospel. Including mine.

Those are words to live by. I take them as Gospel! :)

Yeah, I know I probably am crazy :)

I grew up in and then inherited that house and while I'll never let it out of the family, I've always wanted "my own" place. As a matter of fact that's why I've been saving for the past 15 years.

I certainly could afford to buy a house in Santa Clara/Campbell (I have a couple hundred K in cash I need to do something with) but I'm just not sure I want to deal with the rat race (indeed) for the next 30 years to pay it off.

So yeah, the 3rd option is certainly the smart and conservative move. Luckily my girlfriend is open to the idea as well.

As someone who recently bought and went through the whole buying experience, I too can attest to the fact that "things are different" from what they were even 6 months ago. I have a few humble opinions about it.

There seems to be a few things happening at once. First of all, there seems to be a generally improved outlook amongst many in regards to the Bay Area economy: Things are improving and people are less scared of the idea of buying. So demand has probably picked up. That opinion seems to have spread like wildfire and now many are like : " we gotta buy now!" Perhaps because the memories of the recent housing bubble are all too fresh in people's minds. I'd be willing to assume many of these same people probably also patiently sat out the bubble, have saved up, and been very careful. But lo and behold the market turned a corner and perhaps many feel that they'll sure as heck not get "priced out" again. Whether this is true or not or whether the current situation is a fluke I have no clue.

As constantly mentioned, inventory has fallen. That's an understatement. There are literally only about 40% of the homes for sale in our town as there was last year. Of those, it seems like there is very little within the "reasonable" ( by Bay Area standards) range. The weird, really crappy, or bad location houses sit. So there is a lot of competition for the "good stuff".

Secondly, as also mentioned interest rates are ridiculously low. In other words money has gotten cheap to borrow again. Doing the math, there isn't a whole hell of a lot of difference between buying a 500k and a 600k house: The rates are so low that we're not talking about a huge delta in monthly payments.

At the same time rents have gone up, and especially for rental houses. There are very few homes for rent in our area at this point and if you do find one the rent is pretty high. We were lucky in that the landlord never raised the rent on us. But if we had had to find another similar home the cost of renting would be more than what we now pay for the mortgage. When we first moved into our rented house there was about a 60% delta between the cost of renting and buying in our area. Now its about even or even slightly more to rent the same thing.

At least from my experience I very shortly found that bidding on foreclosures, short sales, and whatnot was a useless endeavor: Not only were the houses nearly impossible to see, but more often than not investors would swoop in at the last minute. So I didn't even bother to look at them.

Wild card is future interest rates. But todays buyers will still be 'sitting pretty' if rates rise - even if they have to move or lose job its not like they are paid cash.

Only risk is downpayment AND you can easily get back your downpayment by squatting for 3 years before the foreclosure.

Lets remember CA is still non recourse state so a 3.5% downpayment is NOT at risk. Buying is risk free financially (unless u refi, then you can alwasy declare BK)

BMWman
The 4 decades of a technical professional:
20-30 Go wherever, do whatever it takes to gain the edge.
30-40 You are gold. They will recruit you.
40-50 Hang on or move up.
>50 Jump off or be kicked off.

I'll pass on the joys of being a landlord in *Phoenix* which rhymes with "fucked".

Roberto is lucky, he had the HUGE media focus on foreclosures in Phoenix plus all the overbuilding and very little hype in the aftermath of the bubble imploding. On the other hand SFBA still has the aftermath hype in full motion. Heck, his area may well start seeing more jobs migrate to Phoenix due to high costs. Not what I want to see, but certainly when cost of living is lower, its more attractive.

Fred Flintstone says

And Cinncinati has a lower cost of living.

Why lie for a liar??

Remind me again why Silicon Valley companies shut down operations and moved it to Arizona, upper New York, Colorado, Texas and other lower costs regions. All due to higher home costs. Not something im cheering about.. but at least the jobs are going to Americans.

Reversal = investors with shitpiles of money/easy credit, just like OP, so they can live/ride off the backs of ordinary working Americans. Nothing wrong with that, it's the American way.

RobertoAribas is perfectly credible IMO. He got a little lucky that he was living in an area where there were good buying opportunities and was smart enough to see it for what it was. I appreciate his highly localized but interesting info.

YesYNot says

RobertoAribas is perfectly credible IMO. He got a little lucky that he was living in an area where there were good buying opportunities and was smart enough to see it for what it was. I appreciate his highly localized but interesting info.

Agree. I think many people on this site wish we had similiar opportunities where we live, thus, more inclined to hopefully jokingly give him a hard time.

hehe, by the end of the decade there will be a widespread awakening to Arizona's water future AND peak oil. The double whammy will make houses much less desirable in that desert, and everywhere really. But in the desert they are going to be worth dogshit.

Prices may be bumping there now, but the coming crash will make what's happened so far look mild.

Get ready for the end of growth homies.

Global warming and peak oil are hoaxes created to get $ out of suckers and pass agendas/power grabs.

Jim Kunslter is a hack writer who only starting making real $ by pandering doomsday books to the global warming religion IMO.

There are probably 500 different doomsdays you can choose to believe in. I'm choosing zombie apocalyspe - its the most fun.

Peak Oil a hoax? Zombie needs to eat more brains.

As for the butt pulling Realtor, he's sticking his head in the desert sand

But lo and behold the market turned a corner and perhaps many feel that they'll sure as heck not get "priced out" again.
I know of a couple of young families in the Bay Area who are in that boat and bought earlier this year. That said, I was talking to a friend recently about some of his work colleagues. The highlights included one that was 'well off' but sold his two houses (one primary and one rental) at a loss. He did, though, take his remaining equity and bought a nice place east of the hills. Another had an ARM resetting and was trying a short sale on a million dollar home. Yikes.

http://www.wired.com/science/planetearth/magazine/16-05/ff_peakwater?currentPage=all

Intel is stockpiling water in Arizona. Maybe Robert can get himself an aquifer :).

Seriously, the above article has a good discussion of the two big water projects for Pheonix. It would be silly to write it off as a non-issue.

PockyClipsNow says

Jim Kunslter is a hack writer

His "Geography of Nowhere" and "Home from Nowhere" are excellent reading and well worth the time of anyone interested in city planning.

All Kunstler does is bash everything and promote mixed use development and local everything (due to oil will run out). same message forever. He predicted TEOTWAKI back from the y2k scare days. (lots of IT work for that, not so much for peak oil/global warming scare mongering)

Phoenix is one of those places where they ripped off the bandaid quickly (due to non-judicial foreclosures). Extremely painful initially, but why delay the agony? From the WSJ today:
Nearly 94% of Phoenix ZIP Codes and 90% of Denver ZIP Codes saw values rise during the three-month period ending in April, up from 5% and 6% a year ago, respectively.

CrazyMan says

I certainly could afford to buy a house in Santa Clara/Campbell (I have a couple hundred K in cash I need to do something with) but I'm just not sure I want to deal with the rat race (indeed) for the next 30 years to pay it off.

How about a remodel in SC? Cheaper than buying and would make it "your house."

I am soooo with you on the rat race. I am 47 and looking at essentially retiring in the next 3-5 years to a more laid back, "work when I want to" sort of job, doing something that I really enjoy. My career has lost a lot of the fun in the past couple years. Three years ago, I imagined I'd work in this field "forever" because I was having fun.

PockyClipsNow says

Global warming and peak oil are hoaxes created to get $ out of suckers and pass agendas/power grabs.

Holy fucking cow. You're gullible.

RobertoAribas,

I don't mind a healthy, intellectual debate on these matters and welcome opposing views, arguments and such. But I agree that the trolls are completely useless and bring nothing but noise to these threads. Glad I blocked them all too.

I'll add some other reasons for the market reversal. There are other threads explaining the tight inventory and low supply. But allow me to posit where I'm seeing the source of the extra demand --

- foreign money coming in after fear of global slowdown or European debt crisis coming to fruition. This is a "flight to safety" in a way. U.S. real estate appears much better priced now, so foreigners are wanting to shovel their money here to escape the uncertainty elsewhere.

- Strong stock market in early 2012 with people unloading liquid assets and now needing to put it somewhere else.