patrick.net

Sorry. No offense but I hate HOA or any home association of any kind. That is why renting in this is much better option than buying. IMO.

Yes I agree! When one of my friends from med school who owns a 2br 2ba here told me his HOA fee was mid 500s...my jaw nearly dropped. It's a nice building, but it doesn't have a pool or anything! Just a small gym and doorman. Really I think the location is the selling point, but a HOA fee that high really shocked me!

CaffeineAddict

A major leg down in home prices coming soon. Just my opinion.

Yeah man! Id take the worst land lord over the best HOA any day.

Just rent for now, and enjoy your career path. Sounds like you are on your way.
Don't jump into anything where you have a HOA on top of mortgage, tax insurance, and the frequent assessment charges for pea brained upkeep and over maintenance those buildings will impose on you.

By time you are making the salary that would commiserate with something more substantial i.e. a house you will really like. Prices will even be more cheaper I'm sure. Rent save and plan in the mean time and enjoy good beer and fresh fruit with your dinner.

And never make decisions based on your perception of what the Joneses are doing.
Chances are they up to debt to their eyeballs and rock them selves to sleep in a fetal position.
But of course they would never tell you that.

In this short-sale market, agents, not banks price the listing...although HAFA was supposed to fix that by forcing terms up front. Banks simply "approve" the short-sale of the property. Despite "net amount" guidelines banks must follow when reviewing offers...agents don't care and simply want to get a %$#$ offer. So, you'll see crazy pricing; some high, some low. Some very low because the agents trying to stop a sale on the courthouse steps. Without acceptable ranges detailed by the banks, agents are pricing dynamos. Now, who hurts? The buyers. Be careful...what looks like a great deal has NOT been approved by the bank and do not be surprised to see the bank's counter-offer come back well above even the agent's formal list price.

IMHO...your capital appreciation will not outpace your purchase related and ownership expenses until you're well into your scheduled fixed salary under Obamacare. :) Watching your net-worth decrease with all the student loan debt will make you wish you went into Psychology instead.

... and for when you do buy, the smart money says nothing over 25% of your monthly income.
Regardless what slick chart the bank or the FHA people send you. I've seen it as high as 38% in reference material that has been sent to me in loan disclosures in more than one place.

Get a Single family home definitely. They are on land, that is going to be real value as we run out land to develop.

Now is a good time to buy if you can find the house that fits your criteria.
Get as much house for the least amount you can. Aim high have a base of what you want and what your needs are, a minimum that you want. And put a price on that minimum price you want to spend. Have a max but to even consider that max price there has to be plus plus.

Here were my conditions...

Does it meet your space requirements?
Does it offer amenities(pool jacuzzi ect...) that you weren't looking for?
Does it have a good sized lot?
Does it have room to grow and is it an area where you can build more if you want?

and in my town another factor was detached units that have income potential.

Does it have In law quarters or detached building?

It took me three years to finally find it, but I found a house that had all of these feature except for a pool. Which I really didn't want anyway. I live a mile from the beach after all.
I figured for what I got, I would have paid about what I'm paying now in 1999.
Even if does go down more, my usage options are limitless.

I don't get these people looking for 1400 sqft on a 3000 sqft lot.
That house is an example of the phrase "it is what it is".

Yeah I remember in the 80's when Real Estate wasn't selling, there were tons of commercials saying Stop giving money to the Greedy land lord.
I remember one in particularly a greasy fat guy with gold on every finger counting his money.
As the bank comercial pleaded for you to call and save money over renting.

And they were right. I think I was paying $700 or so for 2br apartment, and the average mortgage on a 3br house was less than that with taxes and insurance.

Tenouncetrout says

Yeah I remember in the 80’s when Real Estate wasn’t selling, there were tons of commercials saying Stop giving money to the Greedy land lord.

I remember one in particularly a greasy fat guy with gold on every finger counting his money.

As the bank comercial pleaded for you to call and save money over renting.
And they were right. I think I was paying $700 or so for 2br apartment, and the average mortgage on a 3br house was less than that with taxes and insurance.

Really! Wow! How far we have come to screw the system by excessive debt. God Bless us!

Addict,

Please don't "take advice" from anonymous posters on a blog, oops that was some advice.

Folks who post here share ideas to consider, which can raise some points that may be good to consider. Not the same thing about advice.

Since you recognize that you are confused about the pricing, it sounds like you answered your own question; it is not advice but it is what I would do: I would not purchase any"thing" nor any service while I am confused about the pricing.

Thanks for the replies so far. I guess my initial suspicions were not entirely wrong, despite what everyone has been telling me!

I guess the question I still have is, why are all the prices different? Common Sense says it's because it's a "short sale" market? It looks like a lot of these listings have been around for 60+ days, does that constitute short sale? As far as I know, none of them are foreclosed property.

Is it because people are just trying to get a price they think is fair? Since they paid more or the same and are unwilling to go lower? There are ~20k differences in the same condo-types... ~20% or more price difference for the same unit!

Do the prices tend to go back down to "market price" after people have their property unsold for a long time? I asked my friend who owns a 2br2ba the same question, and he says he's not sure, but he knows that these units go "pretty fast" because of the location. He wouldn't reveal to me his purchase price, so I suspect he bought for much higher than these listed prices, especially since he bought in 2004.

Thanks!

Here's a simple reason why everyone wants you to own: Misery love company! Can you roll your student loans, car payments and credit card bills into the cost of the condo, then just go bankrupt and live for free in the house the bank now owns? Rats.

There's a bunch of ways sellers try to price their properties. Location, condition, past sales, ect. Here's one that used to be reserved for cars about to be repossesed: How much I owe! I suspect that's why you're seeing so much of a swing. Maybe your locations are on the softer side of desirable, and so a really high HOA makes up for it by giving you "a really good building" because the city/town has washed it hands of the neighborhood.

Hospitals contribute greatly to high property taxes. Your proximity to the hospital is a double-edged sword.

CaffeineAddict says

-I am currently training in my medical residency for the next 5-6 years here so I will be in Pittsburgh for this time period at least, barring some horrible event. Single. Not sure if I will end up staying in Pittsburgh.
- Currently I am renting a small house with 2 roommates, ~700/month (depends on utilities). If I buy a larger place, I will have to find roommates and I’m not sure if I want to deal with all the hassle of looking constantly for one.
-Location is decent, but it takes me about 15-20 minutes to get to most of the hospital sites I work at. Street parking.
-I’m concerned that if I do end up buying, my monthly cash flow may be inadequate. My parents are offering a 20% down payment to help me out and are pushing me to buy.

Disclaimer - all of this is my humble opinion. Let's start from the top...
-You'll be there 5-6 years; why would you make a 15 or 30 year committment if you don't know where you'll be? You may have post residency career opportunities across the country, ya never know.

-You're single; if you were to buy, then marry someone with a different lifestyle (children, pets, large animals...) you'll have to sell or rent out your condo. The best way to guarantee that your life will change is to buy a place that's perfect for your single life...

-Roommates? (we don't need no stinkin' roommates!). You have them now, have to make sure that they stick around and you don't sound thrilled about it. If & when you buy, get a place you can afford without roomies - then, if you have 'em the money is extra.

-Rent a place closer to your work. If you can find a place to buy, you surely can find a rental.

-Your parents want to help you buy, and are urging you to do so. But it'll be your responsibility to make those payments... Have 'em give you the money, invest it and when the time comes to buy you'll have that much more to put down.

Many people are urging you to buy - but that doesn't mean it's the best move for you. One way to equate that is to remind you that many people urged others to invest in Madoff investments as well. Buying might not be a bad thing, or might not be a good thing - only time will tell where our economy is headed. But it doesn't sound right for you.

This is about you, btw. Don't let anyone tell you different.

People can list them for anything they want all over the place.
I actually offered 1K over the asking price off the place I bought.
But in the end I only paid what the appraiser said it was worth, which was 10K less, because that's all the bank said they would loan.

Oh so listed price has NOTHING to do with the buy price? That makes little-no sense to me. Isn't the asking price, the price the seller is willing to take. I guess the Ebay equivalent is "BUY IT NOW"

I always thought that when buying real estate, you negotiate your way up. For example I would look at past sale prices, list prices for similiar units nearby, then offer say 75% and work my way up to something between that and the asking price...

You're telling me people bid the asking price or ABOVE that?....

CaffeineAddict says

Oh so listed price has NOTHING to do with the buy price? That makes little-no sense to me. Isn’t the asking price, the price the seller is willing to take. I guess the Ebay equivalent is “BUY IT NOW”
I always thought that when buying real estate, you negotiate your way up. For example I would look at past sale prices, list prices for similiar units nearby, then offer say 75% and work my way up to something between that and the asking price…
You’re telling me people bid the asking price or ABOVE that?….

It depends on your market. In the Bay Area, if a house is priced attractively, it will get multiple offers ABOVE (sometimes tens of thousands of dollars above) the asking price within a few days. Where you are looking could be completely different.

CaffeineAddict says

Oh so listed price has NOTHING to do with the buy price? That makes little-no sense to me. Isn’t the asking price, the price the seller is willing to take. I guess the Ebay equivalent is “BUY IT NOW”
I always thought that when buying real estate, you negotiate your way up. For example I would look at past sale prices, list prices for similiar units nearby, then offer say 75% and work my way up to something between that and the asking price…
You’re telling me people bid the asking price or ABOVE that?….

Howard Hughes Bought a lot of real estate. He negotiated top down. He's agree to a price, then chew them down untill they were exausted, and convinced he was now the person setting the price. If you don't know what the house is worth then you wouldn't know if 1k over asking price was good or not. This ain't E-Bay, but I like your plan of 75% and up so GET TO IT BIG GUY! GO GET US A HOUSE!!!!

Hello, fellow Caffeine Addict -- I would only buy if there's something really special, whether this be where it's located or if the structure itself is special in some way. Is it architect designed/built? Did Lincoln sleep there? Does it have a room perfect for storing your rare book collection? Does it have a view of something other than your neighbor's bathroom window or carport? That kind of thing. School districts are also a big fat hairy deal, even if you don't have kids and don't plan on having any. When you go to sell your place, it will more than likely matter to the next buyers.

So I say, if it's really a unique opportunity, go for it. If not...I wouldn't be in a hurry.

Water is big for us in the North East. Water view is 100k option. Water access is more and actual for-real-goodness on the water is about 250k plus the cost of a regular house, but you have to be within an hour of Boston. Colebrook NH doesn't count.

danville woman says

Caffeine Addict
A major leg down in home prices coming soon. Just my opinion.

I Totally Agree Danville Women (Dublin Man)

robertoaribas says

compare the monthly cost buying the home [mortgage, insurance, hoa, tax], to the amount it would cost to rent. Unless they are reasonably close, don’t buy, period.

But this was the mistake I made in 2000-2001. When I was FOB in the bay area I was renting from a friend for $700/mo so buying a nice $350K condo with its $2600/mo cash expense was not attractive.

Ten years down the road, had I had bought in 2000 by now I'd have refi'd at least twice, say to 6.5%, 5%, and 15-year 4% now.

My principal balance would be around $290,000, my monthly nut would be $2700 but that includes over $1000/mo in principal so the actual tax-adjusted housing expense would be around $1500/mo, about what my rent is.

I'd also have around $200K in equity since the mid-300s are the high-400s now thanks to the low interest rates.

And I'd have the house completely paid off in 2025 and not have to worry about the monthly nut after that.

Now, I don't know what's going to happen to prices (down if we get systemic paralysis, up if they can teleport us to the 1970s, even to up if they lower interest rates to 3%) but this is just an object lesson to run all the numbers on the 30 year horizon not just think about this year or next.

Hi,

I know nothing about the Pittsburgh area but I can tell you comparable housing / condos in the Miami, FL area at around 40-50k. You can get a 2 br/bath condo in a decent miami neighborhood now for 70-90k.

Just remember to stay around 28-35%(35 being the max) of your debt ratio after you factor your mortgage, HOA fees, and prop taxes.

However, I still think prices will continue to drop unless your area has some sort of really low unemployment rate, there is no jobs, anywhere, which equals no buyers.

@CaffeineAddict

So what did you decide after all?

Best advice you can get is simply throw down numbers:

1)
http://patrick.net/housing/calculator.php - this will tell you if something is worth buying. Really great calculator.

2) Assess your own risks though. If your student loans are high (and they sound pretty high), you might be risking too much by going into more debt. If you lose your income completely one day or get into some accident or legal issue can you afford your life for 6 month to a year with no income at all? If the answer is "no" than you probably should not buy yet. Otherwise you will take on too much risk.

3) Also if you don't plan to stay in Pittsburgh than you shouldn't waste time buying there. If you buy something you basically tie yourself down, considering your huge student loans especially which sound back breaking.

Hope this helps, it's really up to you to assess your own risks. Don't overdo it like so many people did recently. I know people who have lost 5 years of their life because they paid and eventually it became too much and they foreclosed.

P.S. Asking price isn't the minimum price. It's what someone wants. You should always negotiate lower to what you are comfortable paying. Care about yourself, not the guy selling where greed and commission are a huge motivator.

In Japan, quit resurrecting dead threads. Seriously. The original poster is likely long gone from the site.

Follow the rent vs. buy calculator and learn to ignore people's ignorance on this topic. Math is more objective than human opinion, unless that human is a recognized yogi who has attained enlightenment.

@ sfbubblebuyer

Ok, I'll try to check if the poster has been gone for some time.
"CaffeineAddict" has posted as recently as 8 days ago, though. Sometimes some good threads that get lost in the shuffle, later could have some interesting follow ups. I prefer a long thread with interesting updates and resolutions months later to a bunch of "hype and fade" threads without resolution.

20% for down payment!? Whay can't your parent give you that money to pay off your student loan? $48k salary is not good if you have to pay about $500 for condo fee. How much for the mortgage? do stressed yourself until you can easily afford it.

Fille makes a great point. That 6.8%-interest portion of your student loan is like a giant albatross; get that paid up, and preferably your other student debts also, before thinking about buying property.

How much do those 1000-sqft $70k apartments rent for? I thought Pittsburgh would be more expensive than that. If those are in a central, walking-distance location, they sound like a great deal.

To answer the question on what I ended up doing:

I actually went to look at this unit:
http://www.zillow.com/homedetails/128-N-Craig-St-APT-706-Pittsburgh-PA-15213/11528893_zpid/

I offered 75k and the realtor visibly snickered when I offered that price. Needless to say I got a call back saying, no we will not go under 99k but will offer 2000 for closing costs. I said no and I didn't really follow through on it. The unit was empty when I went to look at it.

Well I checked and it's now listed at 80k. It even looks like they had dropped the price around the time I went to look at it. The HOA fees are mid 500s so I have no idea if the owner ended up subletting the unit. For their sakes, I hope so.

Did not end up buying and continue to rent. Not happy with my current arrangements (sort of living with strangers) but not unpleasant or anything.

Sorry regarding the 6.8% loan, I ended up borrowing 50k from my parents to pay it off, and paid the rest off with my savings. They were disappointed that I didn't want to buy a home so the 50k was considered an interest-free loan instead of a gift (instead of the 20% DP which would have been a gift).

I am more than happy with that, since I never wanted the free money to begin with. The fact that I'm not forking over 6.8% interest payments is a nice perk as well.

Michinaga says

Fille makes a great point. That 6.8%-interest portion of your student loan is like a giant albatross; get that paid up, and preferably your other student debts also, before thinking about buying property.
How much do those 1000-sqft $70k apartments rent for? I thought Pittsburgh would be more expensive than that. If those are in a central, walking-distance location, they sound like a great deal.

They are in a central location, right between University of Pittsburgh and CMU, which is why I looked at those. The high HOA fees were a big turnoff though.

CaffeineAddict says

To answer the question on what I ended up doing:
I actually went to look at this unit:

http://www.zillow.com/homedetails/128-N-Craig-St-APT-706-Pittsburgh-PA-15213/11528893_zpid/

I offered 75k and the realtor visibly snickered when I offered that price. Needless to say I got a call back saying, no we will not go under 99k but will offer 2000 for closing costs. I said no and I didn’t really follow through on it.

Well I checked and it’s now listed at 80k.

good thing you stuck to your guns.
know what you want to pay (have a range of prices in mind). then wait for your price.
simple strategy - but hard to do for most.

As someone who did residency, the best financial thing I did was that maxed out my retirement. You probably have a 403b. Max that. If you have extra, do a ROTH IRA. It trains you to live beneath your means and leave money aside so that you can't touch till later.

Physicians are notorious for not handling their money well. They work hard forever and then when they come into real money, they live at or beyond their means, with banks happily lending and entrapping them with debt to no end.

Sounds like you're in a surgical sub specialty. When you're done, you'll be able to buy a condo like that every other year. Why struggle to maintain a primary residence with all the hassles that come with owning while you're on call every 3rd night right now?

Buying the property isn't the worst financial move you could make, but you would be putting your eggs in one basket for now paying a $500(HOA) a month for the privilege.

I'm certainly not an expert, but I do believe that RE should be in one's portfolio, eventually. I'm 10 years out of residency and have managed to build a modest nest egg composed mostly of stocks and now some RE, and that's via the primary care route.

Good luck. YMMV

How could you possibly have contributed 16,500 a year to your 401k/403b? I've been probably putting in ~1000/yr after-tax dollars to my 403b and 5000 into my Roth IRA since I started.

Kudos to you but for me personally, it's very hard to contribute just this 6000ish/yr.

SF ace says

CaffeineAddict says

Sorry regarding the 6.8% loan, I ended up borrowing 50k from my parents to pay it off, and paid the rest off with my savings. They were disappointed that I didn’t want to buy a home so the 50k was considered an interest-free loan instead of a gift (instead of the 20% DP which would have been a gift).

I am more than happy with that, since I never wanted the free money to begin with. The fact that I’m not forking over 6.8% interest payments is a nice perk as well.

From the IRS perspective, it still sounds like a gift unless there is evidence otherwise. Actual repayment, signed contract.

It wasn't all given in the same year. I was fortunately aware of the 13k limit annually. :)

so lets see, rent at 700, HOA fee of 500. Then 30 year mortgage PITI on a 100K mortgage is 743.
figre get 200 back on taxes, so pay almost 1000/month to meet the condo, or 700 for the rent.

Seems like it's a question of do you want to pay 300 more a month to save on the drive in the winter?

I used to live in western PA back in 90's. Friendly people, nice universities, but the weather sucks big time. It generally was relatively cheap area to live and maybe still is now though, I can't believe a condo in Pitts is selling less than 100K.

But if I were in your shoes, I'd be rather concerning more about student loans and other debts than buying a cheap condo. You're starting your professional life with 180K debt. Think about it. My wife and I started with less debt than that, and it put us in a shithole for years to pay them off. You definitely will need another loan in few years and you may want to go other cities after you done with your residency there. What would you do w/ that condo in Pitts when that happens?

700/mo rent sounds reasonable to me, but 500/mo HOA? in western PA?
Of course, I wouldn't mind you buying a 100K condo or 500K SFH by the river when you don't have to worry about 180K debt already have or you're from a wealthy family that surely will wipe your debt in a blink. Otherwise, I'd say keep looking for another rent that is close to your hospital. Keep your self moving ready, and keep saving for a while.