patrick.net

My question is while prices in certain areas in CA have indeed not gone lower past its 2005 prices, has your personal affordability not increased since then? You've had 7 years to save up more for down payment, the rates are now 3.5-4% range instead of the 6-7% range. In the end yes the prices might not have come down in the highly sought after zip codes that you might have wanted to snatch up a home for a bargin, but in reality the same homes for the same prices should be more affordable to you now.

I dont think home buying has anything to do with fighting government policies but rather a reflection of people's purchasing power. I'm pretty certain that you were not the only person eyeing those zip codes in SoCal since 2006.

I lived in scottsdale when I was younger. I like it very much, and it's nice to be able to use a pool a good portion of the year. It seems that the quality of the neighborhood really depend on the housing development you choose to live in. I've thought of paradise valley too. They have large lots over there, and some fixers for sale that could be overhauled and turned into a dream home.

If you aren't trapped by a job/industry/family moving is a great option.

maxf-yes your point is correct. I've definitely saved more, but I don't feel that borrowing a ton of money on a home is worth it just because interest rates are lower. Property taxes will be higher. When you run the rent vs buy numbers in some of these areas, renting is still 50% lower.

The downside is that you don't get to make the home your own when renting. I guess the question is whether the extra money is worth the emotional payment you get from having a home you can make your own.

Pocky, you're right, and that's why I'm really weighing the options. The only thing holding us back is our family is out here, and it's nice to see them and have childcare help when we need it. Our jobs are independent of where we live (I work from home and my wife is a doctor, so we will always have work anywhere we go).

You are not the only one that is thinking this way, hence all the people running to buy into a over-heated price-war market. Once all these people like yourself that are falling victim to the same thinking end up with home debt, then where are the next wave of buyers? The biggest profits in your life are when you keep your course. Nothing about your thinking was incorrect. If anything, the same logic applied to today's monopoly money economy is more valid. Food for your thoughts. ;)

nw888. If you are educated, hardworking, honest person with a lot of debt unable never ever pay it down, than you are the best customer of FED.

You might consider a place that doesnt have wildly rollercoastering RE prices. Maybe Oregon or Idaho.
NM is cheap but supposed to the neck tattoo capitol of the country. ha.

if you consider
1) inflation and
2) lower mortgage rates (3.5% today vs 6.5% in 2006 - http://www.freddiemac.com/pmms/pmms30.htm)

even if the house price today is the same as 2006, the payments are considerably lower due to these 2 factors.

also consider, people don't buy houses based on price, they buy based on the monthly mortgage payment a lender is willing to finance and as i've mentioned payments have decreased and are much more affordable.

one of the fed mandates is price stability and that has been achieved (through artificially lowered rates). while the housing market did not experience a "soft-landing", it was much softer than we would see without the $13 trillion dollars of fed stimulus; i would say the plane crashed but most survived (as opposed to the more typical scenario of all passengers dying ).

my main point is while prices are back to 2006 (in some places), we're still far from 2006 in terms of interest rates which makes a big difference.

maxf says

he rates are now 3.5-4% range instead of the 6-7% range

Some of us don't base what a house is worth to us only on the monthly payment.

robertoaribas says

in scottsdale, you can still get a nice home in the 300K range

Actually that sounds expensive. I mean, you can get a house around here for that, I think.

RentingForHalfTheCost--I agree with your insight.

KarlRoveIsScum--Yes, more and more I wonder what is it about California that keeps us here? More and more I have trouble finding reasons to justify staying.

REpro--Haha true.

Pocky--Oregon is beautiful. Anywhere beautiful but not too cold works for me. Where in Los Angeles are you? We've been mostly looking at the pasadena/arcadia areas, which are just insane. We also want half and acre, which is even more insane. Maybe even just moving another 30 minutes outside of LA would be best.

Hysteresis--Yes, you're right. High prices mean higher property taxes, and I always keep that in mind.

nw888 says

Yes, more and more I wonder what is it about California that keeps us here? More
and more I have trouble finding reasons to justify staying.

Plus remember , just a bit more than a decade or so ago-when the dotcom bubble was in full swing and all you needed was a pulse to get a job, the housing market was very reasonable.

Nowadays I guess housing has become a commodity-like the Euro or Yen or gold . It is what it is and with it comes the resultant wild swings -up and down.

The plane did crash and most of the passengers survived, however, we've been sustaining life by eating one anothers flesh and meat, and after tasting human blood, the survivors are ravenous. Best not to make eye contact with anyone

Don't know where exactly you are in CA, but LA County is affordable outside few very expensive places like Beverly Hills and some beach towns.

Moving across state lines is not easy. It's a pretty significant lifestyle change. And grass really is not greener on the other side like everyone thinks.

I'm looking mostly in Pasadena and Arcadia, which are quite expensive. We also want half an acre, so the lot size makes the price go up significantly.

Maybe it's best to find a different neighborhood. Although state taxes here are something like 11% for us. Arizona is 4.5% I believe. That alone is a good chunk of money saved per year.

nw888 says

I'm looking mostly in Pasadena and Arcadia, which are quite expensive. We
also want half an acre, so the lot size makes the price go up significantly.

Half acre in Paradena, Acradia? Good luck.

nw888 says

Maybe it's time to move to Scottsdale, where prices have been depressed and there are still some great deals to be had.

Check out El Dorado Hills, half way between Lake Tahoe and SFBA. You can ski at Kirkwood Saturday and dine in SF Sunday.
Here's a random SOLD on Zillow I grabbed. Beautiful home, great school. It's gone up some but nothing like the Bay Area.
Not far is Granite Bay and Folsom, both nice area.

Its probably not a bad idea to access the weather situation in AZ too. Something about triple-digit heat for months on end doesn't sound totally appealing to me at least...

Roberto handles the heat by wearing a tank top that shows off his guns. If you can't manage that, then maybe Phoenix isn't for you.

As I remember it, yes the summers can be pretty rough when outside. You do get used to it though, and those hot days mean more months spent in a warmer pool. Love the monsoons in the summer too. Beautiful sunsets. Clean roads and freeways.

Yes, I'd rather be hot for two months rather then freeze in 5 feet of snow. Once you're used to the heat 75 degrees is freezing as I recall!

nw888 says

I'm looking mostly in Pasadena and Arcadia, which are quite expensive. We also want half an acre, so the lot size makes the price go up significantly.

Maybe it's best to find a different neighborhood. Although state taxes here are something like 11% for us. Arizona is 4.5% I believe. That alone is a good chunk of money saved per year.

Pasadena is very expensive for some reason, I don't know about Arcadia. We live in San Fernando Valley, and it is very nice here and prices are half of what those other areas are.

You just have to find the right neighborhood.

nw888 says

Where in Los Angeles are you? We've been mostly looking at the pasadena/arcadia areas, which are just insane. We also want half and acre, which is even more insane. Maybe even just moving another 30 minutes outside of LA would be best.

Why AZ? Vegas is a lot closer LA and dirt cheap.

Yeah the valley is a great bargain in LA county. Check out burbank, porter ranch, maybe as far as thousand oaks if you want to be in ventura county.

Thousand Oaks I would buy in a heartbeat-I love that area and still somewhat reasonable. But the 30-40 miles one way commute to the job centers is a killer. Though there seem to be a lot of jobs in Woodland Hills nowadays-that is much, much closer. Now if I can find a working from home job!!!!

robertoaribas says

the summers suck. I don't care about 105 degree days, but when it goes over 110, then i can only go for bike rides up to about 10 miles... and some nights it barely gets down to 100 at midnite, so even my dog gets exhausted on short walks.

I grew up in the rural South with 95 degree heat and 99% humidity. So I know what hot weather is about. But I remember a few years ago spending 3-4 days in Sacramento which gets as hot as a furnace for a few months in the summer. 2 days it got to over 107 degrees. When its that hot you really can't do much outside. It was just as bad as it was when I lived on the east coast when it was -10 outside: equally disabling. As far as the Bay Area, the weather is so crazy different from one place to another. SF is cold as hell for most of the year while the east bay across the bridge is warm and mild in comparison.

maxf says

the rates are now 3.5-4% range instead of the 6-7% range.

Yeah, but don't forget, there were a LOT of I/O and ARM loans at that time--which was a big part in fueling the bubble in the first place. Those I/O and ARM payments were a lot cheaper than a typical mortgage payment would have been. Not so much I/O or ARM action going on these days, at least not when there are 25+ offers on every house in LA and the seller is just going to take the high DP/cash offer.

So I don't take it for granted that everybody's payment when rates were 6% was necessarilly higher than now just because of raw interest rates dropping; mortgage type makes a huge difference in this analysis.

And either way, a house payment right now in LA is still pretty extreme compared to typical earnings here, unless you want to move to the outlying areas (which is no guarantee--as Pasadena proves).

donjumpsuit says

I was actually doing this one the other day and was pleasantly surprised (comparison of San Diego to San Jose home prices below).

I think the Bay Area has a serious problem, and it's only going to get worse.

I've lived in both areas. An average house in San Diego County is much nicer than an average house in the SFBA, but the population isn't as diverse or well educated. San Diego makes better financial sense though because most jobs will pay the same between the two locales.

It will be interesting to see how things sort themselves out in the Bay Area. . . .

Listen to y'all....cryin like boiled pumpkins....
whaaaaaaaa it's too hot....eeeeeyyyyyy!
bone up or get outta dodge...

edvard2 says

I grew up in the rural South with 95 degree heat and 99% humidity. So I know what hot weather is about. But I remember a few years ago spending 3-4 days in Sacramento which gets as hot as a furnace for a few months in the summer. 2 days it got to over 107 degrees. When its that hot you really can't do much outside.

KarlRoveIsScum says

did I mention the GRID LOCK!

It's pretty much like that everywhere during rush hour these days.

kt1652 says

Check out El Dorado Hills, half way between Lake Tahoe and SFBA. You can ski
at Kirkwood Saturday and dine in SF Sunday.
Here's a random SOLD on Zillow I
grabbed. Beautiful home, great school. It's gone up some but nothing like the
Bay Area.
Not far is Granite Bay and Folsom, both nice area.

El Dorado Hills is great.

Of course you have to consider that Sacramento is still in a depression. In Folsom most of the strip malls have at least 25% vacancy. The main mall that was completed years ago in Folsom still has over 50% vacancy and the anchor store is Whole Foods, in a mall, lol.

Compared to LA the weather is colder and wetter in the winter, and hotter in the summer, though it warms up later in the afternoon and generally cools down in the evening. You will be 90 minutes from Tahoe, 5 minutes from Folsom Lake, and 2 hours from San Francisco.

nw888 says

Yes, I'd rather be hot for two months rather then freeze in 5 feet of snow.
Once you're used to the heat 75 degrees is freezing as I recall!

If you can stand it being 85 all night. Has to make for one tremendous AC bill.

Yes AC bills are pretty high in the summer months in AZ.

nw888 says

Yes AC bills are pretty high in the summer months in AZ.

get swamp cooler, you can get it down to $20 for a SFH.

two words, solar roof

two more, battery backup

SoftShell says

Listen to y'all....cryin like boiled pumpkins....

whaaaaaaaa it's too hot....eeeeeyyyyyy!

bone up or get outta dodge...

Thanks. I did. Now I live in an area that's 60-70 most of the year.

yup1 says

Of course you have to consider that Sacramento is still in a depression.

Lol. Depression! You are in a mental state of depression.
Depression is 1930’s America or more recently, maybe Japan’s 15 years of falling RE and stock market valuation. It is very sad, the punishment the Japanese people had to endure. It was also unnecessary.
Folsom, El Dorado Hills and Granite Bay are where successful, higher educated households call home.
Let’s compare:
Median house prices/ yoy increase (from zillow)
SF $762K/16.3%
EDH $440K/16.2%
Folsom $380K/18.8%
Median household income (from US Census Bureau)
SF $73K
EDH $115K
Folsom $95K
CA ave$ 61.6K
Simple affordability index: Med HH income/Med house price
SF 0.01
EDH 0.26
Folsom 0.25
Get the message yet? Nice house, affordable, good living.