The comment section is on fire with discussion about buying real estate – thanks for participating!
Those of us who are reaching old age are feeling it – how much time is left?
How much does your AGE play into your decision?
Are those who are 50+ years old (like me) thinking that now is the time to settle down, give up their younger pursuits and plant some roots!
It would make sense that the older set would be the buyers with the big down payments, are they hitting the wall, deciding “Screw it, I’m not getting any younger” and buying now?
I think age could be a big factor in why people are saying that prices are low enough, rates are really low, and the game is rigged – I might as well buy!
Then you could have a week like I’ve had, where two people I know who are my age have passed away, including my dear friend and fellow realtor Jill Kammerude, the person I mentioned a while back who was diagnosed with Stage 4 cancer – God rest her soul.
Unlike pure investment vehicles like stocks and bonds, buying a house has an emotional component that is wildly unpredictable, and a simple thing like age could be a factor – is it for you? Do you think it’s helping fuel the latest run?
I think there are several components.
Ppl in the 50+ bracket, and ppl who have been priced out for the last decade.
Watching the buying frenzy return, many are probably saying screw it, the time is now, I don’t really give a rodents rear if I buy at the very bottom. I’m getting on with my life…
And I don’t blame them.
Aqualung, welcome back!
http://www.youtube.com/watch?v=gdz_G1VGJ4c
Approaching 40 but stocking up on gold and guns until the funny money leaves the RE market.
A little bit facetious. I’ll buy when either of these happens:
1) I can buy a place as nice as I’m renting inside the FHA zero-down loan limits, or
2) Mortgage rates double and prices are cut in half.
Not kidding about the gold and guns though.
Coming soon to COPS Realtor Jim busted! What did you do?
“Coming soon to COPS Realtor Jim busted! What did you do?”
Video drive by.
W.C.,
Did you realize that the last time the national monthly average 30-year fixed mortgage rate was above 7% was early 2002?
http://www.hsh.com/natmo2002.html
We have been spoiled for a long time.
Photo was taken about an hour before I turned 50, and the last time I promised to settle down. I did not go to jail, but click on the photo for a close up – I had the cop on the left cracking up, which may have made the difference.
I’d say age is a big factor in our decision.
Wife and I are both in our 30’s, and have been living extremely far below our means for a long time now waiting this out. As a result we have a very large down payment.
We’d like to move into a much bigger place and enjoy it for a while before kids come into the picture. Would also like to make the initial plunge while we both have high paying jobs. Don’t really care to spend a couple grand a month renting, as we currently already own a small condo. Wouldn’t mind having both completely paid off 15-30 years from now either.
Cameo! You know they canceled Reno 911, right?
If you are 50 and buy now with a 15 year loan, the thing is paid off as you enter retirement years.
The “new normal” for California housing markets — brisk sales and lean inventory on the low end, coupled with continued roadblocks to closing deals on the high end — could produce a slight increase in the state’s median home price, even as sales cool down a bit, CAR said.
In its 2010 forecast, CAR projects the state’s median home price will rise 3.3 percent next year to $280,000, even though sales of existing homes are expected to decrease by 2.3 percent, to 527,500 units.
After double-digit declines in sales in 2006 and 2007 — followed by double-digit increases in 2008 and 2009 — CAR sees sales moderating to “a more sustainable pace” in 2010.
During the boom, sales of existing homes peaked at 625,000 in 2004 and 2005, and bottomed out at 346,900 in 2007. The median home price has also been on a rollercoaster ride, peaking at $560,300 in 2007 and falling to a projected $271,000 this year.
“Housing in California has become a tale of two markets,” CAR President James Liptak said in a press release. “The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of homebuyers to secure financing as well as their concerns about where prices are headed.”
Lifes very short-market conditions for my hubby & I were right so we purchased a second hm in OC last may-Love it every chance we get. I’m 46, he’s 50. Lost alot of our retirement, 1st home paid for, can’t take it with us. Age has alot to do with choices we make
Wife & I are both 45, but we’re staying renters until sanity returns.
p.s.: Given the stories Rob has told, I immediately knew when that photo was taken.
We are in our mid 30s. Have beater cars and bought our first home in 2006. We are not underwater yet, but expect to be shortly once a few REOs close nearby and Winter comes rolling in. My wife wanted to be a homeowner and start a family after she established her career post college. I just asked her if she is still happy about our purchase and she gave me a big hug and a kiss and said yes. That said, I still wonder if we should have waited to purchase and we would have close to $200K (not including the free State and Fed tax credits) for a deposit, but I was laid off late last year and the economy is crap so who knows how life would have turned out. For me, knowing we could have saved $100K hurts a lot. That said, we are moving on with our life because life is too short to be playing Monday morning quarterback. Luckily our back end Debt to Income ratio was below 34% of gross income back in 2006 so life is still a party and we still have our beater cars. We also have a two year old daughter.
What’s funny (or stupid some would say) is back in 2005, I read and followed the real estate bubble doom and gloom blogs and even thought Zillow was a big joke when it launched in 2006. Armed with that knowledge, we still bought in 2006. LOL 🙂
“And the All-Time Winner has got him by the balls.” You referenced the Locomotive Breath, but your point is made nevertheless.
Personally, I am a big fan of “Teacher”: http://www.youtube.com/watch?v=_fNY0JuATpQ
(Not-live version)
“No man’s an island and his castle isn’t home,
the nest is full of nothing when the bird has flown.”
For us (early 40s), it’s not so much our age that’s a factor, but rather our kids’ ages. We’ve been patiently waiting in a rental since 2004, after selling a house purchased in early 1998. I’ve long thought the RE market wouldn’t bottom until 2010-2012, with a very stagnant/down market following that period, too.
If the govt succeeds in propping up the market beyond 2012, we will probably just stay in our comfy rental and wait until the kids are grown so we can buy our retirement/end-of-life home instead.
Under “normal” circumstances, we would have no problem buying a decent, older house in a safe neighborhood near work, but the prices we see today make buying a house far too risky for people who are using larger down payments, IMHO. It does make me mad that this govt manipulation is preventing responsible people who don’t like debt from buying normal homes for their families.
For me (early 30’s)
I say me cuz my husband is in no hurry. Age is a factor because I have young kids and I fall prey to the nesting instinct and ability to paint the walls. I don’t get it but I recognize it.
It also comes down to paying $2400 a month in rent. When you add up 3 years it becomes $90,000. So the thought of losing some equity in the next few years seems to be a wash at this point.
I am so grateful for this blog and all of the time and energy that is spent in trying to make sense of this bubble. It has been free real estate therapy. Thanks for all you do! I know it has saved us hundreds of thousands of dollars.
Hmmm… I guess it’s a lucky thing I split before the Sheriff’s deputies arrived. I don’t think I would have passed the field test, and to the best of my recollection, I didn’t hit anything on the way back. The flash photo nicely illuminates the threads amigo! (By the way, as far as I know, nobody gets out alive).
Bought our first home at 36, when our son was one, and paid cash. Bought our next home 3 years ago (48) and have a small mortgage and a bigger house. In 4 years youngest daughter heads off to university and wife and I intend to sell up and move to something much cheaper and smaller again.
I don’t see the point, given the cost, of having more house than you really need. I’d rather have the money to spend on other things, or not have to make the money in the first place (retire very early).
Wife and I are just sittin on $$$ waiting and both of us are working.
We could buy now but why? Rents are cheap and the kind of house we would like to buy is expensive.
Eventually sanity will return to the market. When it does we’ll be ready.
BTW I travel for work and gas in Houston is 2.14 a gallon right now.
This was emailed in, and I added the bold
Jim,
Greetings from Charleston, SC. I’m not a realtor, have no investment in housing currently, and am ready to buy a house for the first time in ~4 years. I follow your videos on Calculated Risk, and appreciate your views on the latest.
In my view, housing will not suffer much when the $8k tax credit expires (if it does at all). I ran some stats, population adjusted new home sales have never been worse (this past drop was at least 25% worse than the early 1980s pop-based). Keep up the fun videos and have a great day – and continue to speak your mind.
ps – here’s my view from 2 weeks ago on September New Home Sales. Sent this to a couple of my friends (I do this because I trade and have made some $ this year in housing stocks – mostly HOV). My friends pooh-poohed the below, giving me more confidence.
I recently looked at the Census New Home Sales seasonal adjustments. September is ~10-15% from August, so with ‘even’ new home sales for Sept (~38k), seasonal # would be close to 500k. Might be interesting to watch. Population-adjusted new home sales have never been worse since Census data began (based on US population and both SA and NSA). I think September new home sales will be similar to August new home sales NSA, but with the strong SA factor from Aug-Sept, I think September SA will be close to or over 500k.
all data from census http://www.census.gov/const/soldreg.pdf
Also, of note maybe, homes sold but not started showed 50% jump both M/M and Y/Yin Aug 09 http://www.census.gov/const/stagemon.pdf
New Home Sales Aug – Sept ~even or + NSA
NSA SA SA difference
1976 – 59 to 58 648 to 696 +7.4%
1982 – 36 to 39 407 to 481 +18.2%
1983 – 50 to 48 572 to 608 +6.3%
1984 – 48 to 53 567 to 662 +16.8%
1986 – 52 to 60 621 to 763 +22.9%
1993 – 57 to 57 645 to 726 +12.6%
Since 1963 (46 years), 6 times August to September were within 2k fall or higher NSA avg. 14.1% rise M/M SA
Since 1963 (46 years), 3 times August to September rose NSA (1982, 1984, 1986) avg. 19.3% rise M/M SA
Since 1963 (46 years), 1 time August to September stayed the same NSA (1993) avg. 12.6% rise M/M SA
“Wife & I are both 45, but we’re staying renters until sanity returns.”
Friend of my parents was this age when he decided to sit out the Earlyt 90’s bubble til sanity returned. Prices never got down to his personal definition of “sanity” even at the bottom.
That was 20 years ago. Hes dead now.
“In its 2010 forecast, CAR projects the state’s median home price will rise 3.3 percent next year to $280,000, even though sales of existing homes are expected to decrease by 2.3 percent, to 527,500 units.”
I didn’t know there were that many houses For Sale in Compton for that low price…
Happy B-Day JTR!
It’s a new bull market.It’s always a great time to buy real estate in CALI.
Regrettably, the fifties are the age when many more people around you start dropping dead for a variety of reasons. My father went through the same thing during his fifties when an alarming number of his old friends and co-workers were passing away.
The best time to own your own home? As soon as you can afford it so that you can enjoy it while you’re still alive. We all hope to live to a ripe old age, but unfortunately that doesn’t always happen.
BTW, I’m only in my forties, and I’ve already experienced the loss of a couple of people I know, including my own father.
Don’t wait too long to get the home you’ve always wanted.
p.s.: Given the stories Rob has told, I immediately knew when that photo was taken.
On advice of counsel I am refraining from telling any more stories until the statute of limitations expires.
San Diego is a deep market for renters and getting deeper. People will pay and pay and pay to be in a good area that they can never afford because they are not willing to move to where they can afford. There is something about living in a place that is not yours that makes you hold back on life. Improvements to make the place the way you want it and/or the thought that the place could be sold out from under you and you could be forced to move.
To answer JtR’s question; there is probably nothing more satisfying than loving the place you live in. Why not enjoy life more? Rates are low and the correction has for the most part run it’s course. If the people who can buy, don’t right now, they will regret it. And, may never buy.
CA Renter–The Government has been manipulating real estate as far back as I can remember–my first loan (1986 when I was 20 years old) was a CHFA loan with 3% down first time buyer–Did it bother you that the Govt. was manipulating things in 2004 when you sold??? Everyone seems to be a victim these days. Real Estate is, has been and will be the largest special interest group that our government aids.
“People will pay and pay and pay to be in a good area that they can never afford because they are not willing to move to where they can afford.”
That right there is a shame. I can understand people doing that for schools, that makes sense to me. But doing it just because someone is too proud to live amongst the lesser classes is just stupid.
The perfect is the enemy of the good – Voltaire.
Houses are a pain the ass and an ongoing expense, but the freedom to paint a wall whenever you feel like it, the freedom to remodel and improve, the sense of security and pride that comes with being able to say “I own this” — those things have a value, no matter how low-class you think the neighborhood is.
If you wait for perfect, you’ll never do anything in life. Learning to be satisfied with life lowers your stress level immensely. Sure, you can want the larger house in the nicer neighborhood, but you have to look at the reality of what your income will support. And you especially have to look at the long term. If you stretched your buying power so hard that you MUST have 104 checks to make the mortgage payment (both partners fully employed) then you have no room for sh*t to happen – and it always does. There is no room for someone to lose their job, there is no room for someone to get sick or injured and need time off. There is no room for a child to get sick or injured and a parent needs time off. Having your mortgage payment depending on two people fully employed is gambling. Better to live below your means than risk losing it all because you were financially stretched.
For us age isn’t so much a factor, but quality of life is. Actually that’s what drove me out here. I guess you win some and you lose some.
But If I were 50’s+ I think FL is the better deal, especially for NYers. No state income tax and they aren’t writing articles about Florida being a failed US state. Good bargains there too.
But your millage may vary, and San Diego is a very nice place to retire. I could see a place like Santaluz in Del Sur being the “lick” for that crowd.
I’d shutter to think though of an average income retiree here. That’s not going to pretty imho.
Art–Well Put!!!!!
I guess I just don’t get it. Maybe it’s that people in SoCal are even more shallow than I previously believed?
I don’t personally see the difference between owning a home and renting a home, except for the question of selection. It’s a roof over my head, and keeps the wind out. Renting has a lot of advantages that owning does not have, and owning has a lot of advantages that renting does not have, but in the end, everything is negotiable. It’s far cheaper to paint your rental than buying a house. The worst is you might lose your deposit. The worst part of buying a house is being house-poor, which in all of coastal SoCal is going to be the case.
Personally, I’d rather forfeit my deposit than be house-poor, but I don’t begrudge someone else their irrationality. Enjoying life is more than just owning things.
For example, I used to look down on people who leased a car. Not anymore… it’s a smart business decision in the right circumstances; the same as renting in the right circumstances. To everything there is a time and a season.
To those people who are 50+ and feel the need to squander the effort of the past 30 years of working for “the man” or whatever; I don’t think buying a house will make you happy. I think you’ll get a lot more mileage going on some kick-ass vacations or taking a year off of work to live on the beach in Hawaii. but, that’s just my opinion. Knock yourself out.
Chuck Ponzi
My grandparents never owned. They lived a comfortable middle to upper middle class life that involved renting long term. They lived in a townhouse in Michigan for 27 years, then when they retired to San Diego they lived in the same apartment in Pacific Beach for 23 more years.
My brother died 2 years ago at age 48. He died with a fancy house that he’d refi’d after divorce – and was totally upside down. My sister and I made the payments on it when he was going through chemo and unable to work… and continued till we were able to sell it at a loss.
Life is unpredictable.
After reading 34 comments, it seems like the moral of the story is to enjoy life. I’m in my upper 20’s, a frugal renter, have a six figure down payment, but spend most of my time ‘analyzing’ the numbers. I even stress out from time to time about all the government BS and rigging. Most of my peer group doesn’t really ‘get it’ and I’m starting to think that may be the right way to live life…stress free.
My condolences on the loss of your friends, Jim.
Mozart wrote: “Why not enjoy life more?”
I completely agree. Mozart, you need a vacation. 🙂
-Erica
Time for: Hawaii 5-0
I agree Chuck. Why buy when you can rent for much cheaper in SoCal and have the flexibility that comes with it? These mid to higher end homes are so not worth the $3-4K PITI, not even accounting for HOA and ridiculous M/R fees.
Age is not a factor in my case. Rapidly approaching 40 and having owned twice before I don’t feel like I missing out on anything. I understand the emotional component especially when kids are in the equation. I don’t think it is anyone’s best interest to have such volatility in home prices. We can thank policy makers, lax lending regulation, and market manipulation for turning homeownership (once a safe place for savings and foundation for stable communities) into a totally rigged crap shoot. Happy renting, great landlord, enjoying family and friends. I still like to window shop and enjoy this blog and the variety of perspectives.
Erica,
I live in San Diego, at the beach. My choice was to live in a place that is a vacation as opposed to living in a place in order to afford to go on vacation. Worked really hard to do it.
Frankly whenever I leave on a vacation it’s always a huge relief to land at Lindbergh, enter Camp Pendleton or come over the hill in La Mesa.
“and a simple thing like age could be a factor – is it for you? Do you think it’s helping fuel the latest run?”
I can’t speak for anyone else, but…
52, own a home & a condo, both free and clear. Desire to downsize in stages. Semi-liquidating current house in favor of a smaller less expensive house; smaller lot, in a more affordable (lower utilities, lower taxes, no HOA’s, etc..) and maintainable location. Eventually liquidate condo, which is currently used as a coastal get-away, and currently let by a family member for primary occupation.
Our most preferred relocation in southern coastal CA, unfortunately there is no “more affordable” option available, nor does it appear that this will ever be the case. Our current search focus has shifted elsewhere. We will continue to enjoy what we do have coastally for the forseeable future until it doesn’t make sense or we need the cash.
As far as the latest run goes – I don’t know what’s fueling it, are there stats available for age demograhic regarding current buyers & sellers? That would be interesting information.
I’m soon to be 56 and would love to have my own house. I owned a house and condo and sold too early in the Great Housing Spike-UP. My timing sucked. I now rent in Carlsbad – have a 4 bdrm house with a nice canyon view. To buy this thing, if it were for sale, would at least triple my monthly housing nut – exchanging rent for a mortgage plus. Buying at this time makes no sense. I have to follow my head, not my heart.
With the US$ crapping out and the Chinese slowly backing off buying our treasuries, we’ll see a spike up in rates. When? I can’t tell you exactly but it’s coming. I’m waiting for the interest rate to jump up and prices to fall. Then I’ll go in with all cash or a big down payment.
I’m looking at next summer for my scenario to play out.
Mozart,
Please don’t take this the wrong way, but if that’s really how you feel, that’s not what comes through in your writing on this blog.
You come off as either deeply insecure, or deeply conflicted. Erica is not the only one what has picked up on it.
You seem to be trying too hard to convince someone of your way of thinking. Most often, that means that you don’t believe it yourself.
Please, tell me I’m wrong. I hate to see people in such internal pain.
Chuck
Why is the market rigged?
“Why is the market rigged?”
Because of the gov’t intervention with the free operation of the real estate market. What would the current real estate picture look like without the stimuli and other ‘free’ cheese?
Ok. That’s a good one. But what are the other reasons the market is rigged? There’s got to be a very material, and real, top 10. It doesn’t seem like it’s a free market.
I would like to say something on behalf of the “forgotten” – Senior Citizens. The area I work and live in is predominately well over 50 and retired – or thought they were retired. Many are losing their homes due to substantial losses of investment income, 401K’s, reduced pension/benefit plan income, home value, etc. Many are supporting adult children moving back home because of job losses. These are not irresponsible people. They have worked hard, raised their families, educated their children, paid their taxes, spent wisely and are now screwed. Many need to sell their homes to scale down, but can’t – their homes are mid to upper mid range which is not selling. They cannot qualify for a Refi or Heloc. Some have tried to obtain reverse mortgages, however the outrageous fees for these loans and the recently reduced loan maximum make these vehicles basically worthless (and a ripoff, I might add). This is a major reason the $8000 tax credit should be extended to all purchasers – to help activate the mid range move-down and move-up markets. Without activity in all price ranges, the economy will not improve.
As prices are now stagnating, I think this next year will separate the wheat from the chaff among us bubble sitters.
The unfortunate fact of the matter is that some of us frugal types likely were “priced out forever” from certain markets. As such, we have to be comfortable with the fact that it will always make more economic sense to rent than buy – thus, if frugality is your #1 ethos, perma-renting will be a way of life.
Its not that strange really. In most of the world, people rent from cradle to grave. Even in this country, in places like NYC where the vast majority of people have been priced out, a lifetime of renting is de-rigeur.
I am becoming increasingly resigned to the fact that if I want to live on the coast, I will have to rent forever – Ive made my peace with that. I can only hope the realization is as smooth for my fellow lifelong renters in the upcoming months and years…
Desert Realtor,
No credit extension. That only delays the inevitable. This government cannot borrow from the future to support a standard of living today that in not sustainable. The hard thing most middle to lower income Americans will have to come to grips with is that their standard of living and expectations are too high. Over the next 25 years every element of American society will need to scaled back, because we are over committed on everything everywhere and are driving up the deficit to sustain them (i.e. Medicare, soc. Security, think all entitlements). Unless there’s some boom that can bail us all out like the industrial revolution, we are all in for a big life style change.
I’m 50 own too many properties, have a bad knee from playing 10,000 basketball games. I am headed for the guys that sold real estate in Prescott when I started. You know the guys. 70 years old, black shoe polish, hairdo with a little comb over. Bolo tie with a name tag. Driving people around in a big ole El Dorado. Sitting on floor duty and telling everyone the houses they sold for $20,000. Talking about pagers, mls books and car caravans. I could be morphing into THAT GUY. Oh the humanity.
Desert Realtor, with all due respect, I think that’s a wrong way to look at the $8k credit. Everybody nowadays either wants to start receiving cheese or wants more cheese if they’re already receiving it.
Whatever happened to taking our pain? You mentioned that many of your clients are losing their homes – How many of them purchased > 10 years ago, had a good amount of equity but refinanced to the gills to pay for their vacations, toys and other goodies? Just playing both sides of the line here…
Chuck,
Give Mozart a break – not that he needs it. I understand exactly what he meant and I share the same sentiment. You should know that there aren’t many people who can go on a vacation to Belize, Costa Rica, Hawaii, the Cook Islands even, and upon seeing Lindbergh Field get a big relief. San Diego Coastal is a great place to be and that feeling Mozart is referring to is something most will never experience.
I still do not get how people think real estate is “cheap” or such a good buy right now.
Sure its cheap compared to summer of 2006, but prices should have never been at those levels.
Looking at historical trends of rising a tick over inflation we’re no where near real affordable levels for decent real estate.
North County Coastal, $800k minimum price for a newer home not even in the best school district??? Seriously now.
Let’s get to $200/sf max. Remember, KB home, etc build a house for under $50/sf for their good stuff….they just overpaid for the dirt (which is where the value is anyway)
Jim, you should highlight dirt deals someday
SadSac and Shawn, why should responsible, tax paying citizens suffer in order to provide perks and freebies to flakes, cheats, losers, and society’s leaches?? Its time for fair play, not redistribution of wealth and marxism. Your are dead wrong about seniors playing the ATM game. Most lost income – don’t you remember September 2008? Many are helping their children and grandchildren – an added expense. In case you don’t know it, the “forgotten” are mad as hell and won’t take it anymore. Help may be on the way in 2010 and 2012.
I moved to SoCal in 2005 at age 34 for a temporary contract project (renting out my starter house I kept in Atlanta). I decided to rent on the beach because I wasn’t sure I would stay long term plus the fact that prices seemed insane to me. I ended up staying here, and over 4 years I rented in 2 different oceanfront ~$1M condos, paying around $2300K/mo. I loved it, like Mozart said it was literally like living on vacation, grab a surfboard and step onto the sand. And it was obviously an incredible bargain vs. owning on the sand.
However even I got lured away from that when I realized I could get a 4 bedroom house in good shape, still a couple of minutes from the beach, for less than I was paying rent. So at 38 I decided to jump into the terrifying waters of southern california coastal real estate.
Desert Realtor,
So YOU want to fix the problem by expanding the cheese to everyone (including YOUR client demographic?) That doesn’t make much sense. Well, it would increase the amount of commissions you make, right?
I’m not for the $8k credit or any of the other stimuli. Gov’t needs to stop spending altogether and stay out of the markets.
Desert Realtor,
I agree with your disposition and with senior concerns – it is troubling. But don’t forget society’s other leaches, Special interest lobbyists influencing bad government policy (think the SEC during the Bush & Clinton years), or large global banking entities like Goldman Sachs whose average salary is over $100K annually per employee. Most of the problems we are in today are due to the greed of the super rich and their influence on government policy – that includes the NRF. Most seniors today take home pensions from a bygone era and collect social security – not all. Pensions do not exist for most of us any more and social security is on the course of becoming insolvent in 18 years – Medicare is also currently insolvent. Your very worried about your situation now, but I don’t see many seniors really concerned with the solvency of this country and the future for our children. I don’t know why you feel so forgotten, it’s the future generations that will really have to deal with the repercussion of today’s decision making.
The joys of being a renter: I have a story about my recent experience as a temporary renter in a furnished condo (an in-between arrangement while waiting for my escrow to close). The day I was supposed to move-in, the landlord took off on a plane with the key. Had to pay moving assistant for the wasted time. The landlord’s sister would make surprise visits – at 8:00 am, 7:00 pm, or whenever she felt like it, supposedly looking for something she left behind. The property was beyond filthy and had not been cleaned per lease terms. I hired a housekeeper who spent 3 days attempting to clean up the mess left behind. The property had a spider infestation which required treatment by my physician. The vacuum cleaner expoded (it was 20 yrs old). Old spaghetti sauce congealed in the oven. Sticky syrup or whatever in kitchen drawers. Filthy area rugs. Termites were crawling out of the electrical outlets in the master bath. The vertical blinds fell off when moved. Landlord’s left personal items stuffed and jammed helter skelter into every inch of closet space. The glass shower door was not connected properly, fell off, and nearly killed my visiting sister. The Landlords were absolutely the worst of the worst. It was World War 3 to get my deposits back, but I won. I was never so happy as the day my escrow closed and I moved into my own house. Home sweet home and its all mine.
Desert Realtor, as Jim says — nothin’ price won’t fix. Mid and high range will start selling when they start dropping their prices to what buyers are willing to pay, with or without a government bribe.
If the old people had diversified their savings into stocks, gold, housing, etc they wouldn’t have taken such a hit. Unfortunately the only way people know not to catch a falling knife is if someone gets hurt.
I’m 46 and age is definitely a factor. My goal is to have a home paid off by retirement age, so I don’t have to deal with rising rents in my golden years. I’ve no desire to become a WalMart greeter just to make my rent payment.
I agree–Give Mozart a break–I travel alot (business and pleasure) and ALWAYS feel the same way–great to be home in SD.
First time buyer here, age 28, closed in February of this year. At some point you have to get on board. Stop fighting the fed, NAR, congress. Feels good actually.
“In the long run, we’re all dead.” -JM Keynes
Age is a definite factor for me, but in the other direction. I’ve been a homeowner and have ridden the market values through their ups and downs for the past 25 years, and if circumstances (job change or other) called for selling now, I’m close enough to retirement age that I think the thing to do would be to bank the cash and rent until SS kicks in and I look for someplace to buy the retirement home/condo/whatever. I have a hard time seeing myself selling and buying again before that.
“Cheap” and “good decision” are not the same thing. Getting married and having babies are very expensive. So is buying a house. I’ve done all three and personally they were among the best decisions I’ve made. Of course, I have the crazy thinking that a house is meant to be lived in, quickly paid for, and not speculated on.
I’d say it’s not so much age as the stage you are in life. People 20 years older than me went through the same issues of being blocked out of buying by the bubble but having strong reasons to have a home.
Count me as another happy SD homeowner. I purchased not due to my advancing age (almost 40!), but because I wanted to put down roots with my wife and toddler son.
“Frankly whenever I leave on a vacation it’s always a huge relief to land at Lindbergh, enter Camp Pendleton or come over the hill in La Mesa.”
So true! No matter how much I love where I am vacationing, it always feels so good to come home. That doesn’t really pertain to the owning vs renting discussion, but SD is awesome in spite of our local and state governments.
And perma-renters, I love you guys. My family owns some rental propterties and you’re paying for my inheritance. 😀
First time buyer here, age 28, closed in February of this year. At some point you have to get on board. Stop fighting the fed, NAR, congress. Feels good actually.
I’m hoping to be in the same boat as you, I’d probably have bought in February but I wanted to save 20% down first. The big advantage is now with my down payment in hand, I can afford a much more expensive house (with a lower monthly payment) than when I was considering the FHA route.
The other big advantage I have is that my father-in-law really wants me and my wife to buy a house and has made me an offer I can’t refuse. I have a feeling it’s a short-term offer so I might as well buy. The offer will make it so my net monthly payments will be right around my rent for a 2/1 apartment in PB.
Besides that, my wife is pregnant so there’s a big incentive to buy. I know that I could rent but with everything above it’s going to be cheaper to buy a similar house in the end.
So true! No matter how much I love where I am vacationing, it always feels so good to come home.
It’s the best in the winter, since I visit relatives in the Pacific NW during Christmas. It’s typically 34 degrees and raining (this year it was 10 degrees and snowing) there. When back with family and old friends I end up having a thought of moving back. I land at Lindbergh field and then it’s 72 degrees and sunny in the middle of winter. That’s the big reminder of why I don’t want to move.
Turning 50 in March 2010. Like everyone here we have survived financial crisis from post 9/11, dot.com bust, all the recent financial meltdown and housing implosion, not to mention any other personal hurdles. Seems like they they just keep on coming more frequently now don’t they! The latest a double whammy leaving no where to hide. If the next 10 years lead to more of the same its hard to imagine how many times we can half investments and have anything left. Get me to 60 in the financial health I had at 40 and I’ll be pleased to say 60 is the new 40 as 50 is gonna be, well just 50!
Chuck, you gave me a good chuckle.
Getting on Mozart with this-
” You seem to be trying too hard to convince someone of your way of thinking. Most often, that means that you don’t believe it yourself.
Please, tell me I’m wrong. I hate to see people in such internal pain.”
AFTER starting out your first comment with this gem,
“I guess I just don’t get it. Maybe it’s that people in SoCal are even more shallow than I previously believed?”
I’m in my mid-30’s; my husband and I have bought 3 times and sold twice already (starting in 2001). We are always willing to live in the houses we purchase ‘forever,’ but when we see/saw opportunity, we did leg up when we could, and only after owning for 2 years. It’s been too large a part of our net worth to consider renting forever. We would have missed out on hundreds of thousands of $ if we rented instead in 2001, when a lot of people were encouraging us to do so. Unless you mean BUYING a rental property – that’s another thing, and I think the next step in our overall portfolio.
That doesn’t mean I don’t curse this house or this mortgage or dream about longer, more glamorous vacations instead of paying my property tax…but we’re in the accumulation part of our lives — we need to accumulate wealth if we’ll have anything to support us in old age. We have no inheritance coming our way (never did), no pension, and I really doubt any entitlements for that matter via SS, medicare, etc. Being that we also started investing in the stock market in 1998, and our investments have made just about 0% over that 10 year span — and looking back at how painful it was to put money in the market back when I was making $18,000 a year!…it’s clear to us we need other vehicles to get us to retirement besides equities alone.
Take all the homeowners comments with a grain of salt.
Houses I looked at in 2006/2007 were listing (and selling) in the 700k-800k range. Today those same houses are listing at 450k-500k. Sometimes they still sell over list but overall prices are down.
Ask yourself…
Do you see any reasons prices might go up in the next couple of years?
Yes…Age is influencing my decision making. I turn 40 in January and have ridden out the boom as a renter, mainly because I was taking some career risks and didn’t want to be tied down to a monster mortgage.
I think there’s still *significant* downside risk for housing prices, but I’ve been out looking and making offers in LA…though all the houses I’ve gone after have gone for more than 10% over asking.
I’m ready to put down some roots…and it’s not clear who’s going to win this battle, my head or my heart.
Also, it’s not entirely clear to me that prices will continue to fall in the east-side neighborhoods where I’m looking. And it’s almost a certainty that rates will go up.
JTR:
Maybe this might be more appropriate??
http://www.youtube.com/watch?v=80LJTeto8MQ&feature=related
Bull’s-eye! Absolutely everything just as you said it, Jim. I’m also in the 50+ category, and for me it’s all about my family. So, a house of our dreams is really for them. I’ve learned there’s never a situation where all our criteria score a perfect 10, and if we wait too long we’ll only miss out. I’m now tired of always getting ready to live life, and want to start living it. If that means finally buying the “right” house that meets our needs even if the price isn’t exactly right, then so be it. Time’s a wasting.
Jakob, item #64 – You’re good.
“Do you see any reasons prices might go up in the next couple of years?”
As a “commenting homeowner,” I’d say not terribly likely. If I had bought my first home anytime after 2000 instead of back in 1983, I’d have very different feelings today.
“If the old people had diversified their savings into stocks, gold, housing, etc they wouldn’t have taken such a hit”
Well no, their homes would still have taken the same hits. The question is what else they invested in that might have leveled that loss out.
Unfortunately for a lot of people who *thought* they were diversified, many investment funds that formerly were in different market segments jumped headfirst into mortgage-based equities during the past 10 years, and many businesses and company retirement funds not remotely connected with housing stashed their spare capital in them as well. The smoke and mirrors of the faux economy of this decade did a hack job on just about everyone who didn’t over-mortgage over-priced houses and then run for the hills with the cash.
It’s amazing how deeply ingrained the “ownership society” is in America. Anything you can buy you can rent for less, and a good landlord will let you do almost anything with it, too.
Not owning a home hasn’t significantly impacted the quality of my life, so I see no need to risk anything for it at this point.
I’m 69, wife 59. Sold in 2005 and been following the market ever since (this site, CR and The Housing Bubble blog). Now renting (Toluca Lake CA) but will eventually buy (unless I run out of time:-)). Refuse to get in any bidding wars or sucked into the craziness that’s starting up again.
BTW, I have also owned my share of homes over the years and it’s just not that “magical”. Of course at my age the perspective is very different!
So true! No matter how much I love where I am vacationing, it always feels so good to come home.
My theory is that that’s why they built the skybridge from Terminal 2 to the parking lot. You get out of that stuffy plane … you grab your bag … and you walk out into that pink evening light with the scented breeze wafting off the ocean. I am fortunate to be able to travel to many interesting places for work, but I still always love getting back.
In response to all those that used that nasty 4-letter word…
I love that house
.
“Many are losing their homes due to substantial losses of investment income, 401K’s, reduced pension/benefit plan income”
“why should responsible, tax paying citizens suffer in order to provide perks and freebies to flakes, cheats, losers, and society’s leaches??”
I would say those who lapped up those 15%+ annual returns on their investments, 401K’s and pension/benefit plans for years are the flakes, cheats and losers.
There was nothing “responsible” about it. These folks wanted their cake and eat it too. They’re as responsible as anyone else, time for them to take some responsibility.
“I’ve learned there’s never a situation where all our criteria score a perfect 10”
Speaking of which, give my “subjective home evaluator” a spin and see what you think of it.
http://homeval.kwaping.com/
It’s a tool I created for selfish reasons while doing my own home shopping. I decided that other people might find it useful too, so I “web-ified” it. (It started life as a command-line program.)
I’m gonna wait this one out until Obama gives me a free house 🙂
The best thing that could happen to seniors would be for interest rates to rise. At their ages, they should be primarily in very highly-rated/”risk free” fixed-income investments. The fact that the PTB has spent the majority of the past decade beating the heck out of interest rates is what’s causing all the problems.
CA Renter–The Government has been manipulating real estate as far back as I can remember–my first loan (1986 when I was 20 years old) was a CHFA loan with 3% down first time buyer–Did it bother you that the Govt. was manipulating things in 2004 when you sold??? Everyone seems to be a victim these days. Real Estate is, has been and will be the largest special interest group that our government aids.
Local Boy | October 8th, 2009 at 9:11 am
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Yes, the real estate market has always been heavily manipulated on both supply and demand sides; however, we have never seen the kind of “Alice in Wonderland” policies we see today. It’s surreal. They are going to destroy our currency, our way of life, and our position in this world, all in the name of asset inflation. They have been fooling everyone into believing they are wealthier than they really are, by replacing our income-based buying power with credit-based buying power. How anyone outside of the financial institutions (who profit handsomely from this arrangement) see this as a positive is truly baffling.
Believe it or not, we would have been far better off if the housing market were not artificially inflated when we sold in 2004. Our HH income had more than tripled during the time we owned the house (got married and had some promotions, etc.), and we would have far preferred to buy a somewhat larger house for our growing family at a lower price — we even had an offer in on a house at the time, which is why we sold. We did not need the “bubble equity” from our sale to buy another house. But I realized what people were doing, and that “the wealthy” weren’t really moving to San Diego — which was the excuse for years during the bubble. People didn’t find new sources of wealth with which they could buy all those new cars and new kitchens. It was DEBT.
Today, again, the primary reason the market is so hot is because they are back to their old tricks — getting people deeper and deeper into debt via low-down FHA loans, and other gimmicks designed to lure people into their low-interest loans. Granted, more of these loans are of the fixed-rate variety, so at least that part is right, but the cost basis on all these purchases is still too high, IMHO, and we will end up with wave after wave of underwater borrowers as rates rise at some point in the future.
We are very comfortable in our rental, and we also get to come **home** to coastal San Diego whenever we travel. We also get to do whatever we want to the house, as long as we return it in its original condition; though we do not **have to** fix things that break over time or do preventative maintenance if we don’t want to. We love our house, and plan to stay here for as long as the risks outweigh the rewards in the housing market.
CA Renter–I am with you on the Currency part of things, but that extends WELL beyond Govt. incinties towards real estate–but what can you or I do about it??? Given that thought, is it not a good time to aquire real estate–prices down 25-60% depending on the area of town, and as you mentioned, asset inflation is coming. If you are happy continuing to rent how about buying rental property for a hedge??? Just a thought?
“Friend of my parents was this age when he decided to sit out the early 90’s bubble til sanity returned. Prices never got down to his personal definition of “sanity” even at the bottom.
That was 20 years ago. Hes dead now.”
Yep – hate to say it, but 1/2 this board is so convinced prices in their pet area will get to “their” view of what is affordable (never mind what the market is doing) they will die before they ever own.
A word to the wise, get over it. Either buck up and pay, or do what I did – move!
I have a question for those in their 40s and 50s who seem to be happily keeping out of the housing market; sitting on what sounds like many hundreds of thousands of dollars…I presume you all want to retire one day, or at least plan for some type of financial freedom in the future. How are you going to get there? Do you have a pension in your future? An inheritance? 1% interest on a cash account will not get you there. Perhaps you are already retired in your 40s and 50s, and if that’s the case, I’d like to hear how you do it.
I’ve never had even a 401k match in my lifetime, let alone a pension or any other type of income beyond our salaries. Basically, we *have* to invest somewhere because we can’t make enough to provide for our family both now and in the future (and provide for my parent’s generation, but that’s another topic)…
I guess I’m bewildered, and I hate to think people are b.s.ing on this topic/blog, but sometimes I do believe they are. Everyone is posturing like they don’t need their money to appreciate. CA Renter – you are getting to the crux of a capitalist economy. We all ‘need’ 8% or so appreciation on our assets in order to retire in a number of years. I think that ‘need’ is what ultimately creates greedy financial people, shaky investment vehicles, .com bubbles, housing bubbles. If we don’t grow our money, we’ll never stay up with inflation, or growing health care costs, or long term care cost…the list goes on.
So I ask the older, wiser bunch – where DO you put your money if not in your house? And if you say ‘vacations and living life!’ I will barf all over my computer screen.
Tyrone, great parody! Probably how many got into trouble in the first place.
“We are very comfortable in our rental, and we also get to come **home** to coastal San Diego whenever we travel. We also get to do whatever we want to the house, as long as we return it in its original condition; though we do not **have to** fix things that break over time or do preventative maintenance if we don’t want to. We love our house, and plan to stay here for as long as the risks outweigh the rewards in the housing market.”
Or at least until the owner decides he wants to sell your rental, like what happened to my wife and I. That’s when we decided it was the right time to start home shopping.
Or how about the lifelong renters of my father’s who are now looking for new apartments – they never thought they would. The building is just too old and needs to be torn down for a rebuild. My dad loves the tenants, and they love him, but it they have to live somewhere else for a year. We hope they can come back when it’s completed.
Not trying to rain on your parade, but just sayin’, when you rent your fate is not 100% in your own hands. I hope you are never forced to move out of the rental that you so obviously love!
“So I ask the older, wiser bunch – where DO you put your money if not in your house? And if you say ‘vacations and living life!’ I will barf all over my computer screen.”
Actually, I’m going to Machu Picchu at the end of the month. But retirement from the grind is 5-15 years off for me (I don’t intend to never have some job, retirement will be a hobby job). No inheritance (well, my folks will leave me something, but that’s a ways off), no trust, I just live within my means and save about ~25%, not including a 401K.
The world has been made flat, wherever you see an economy on the ropes, there will be an economist with a Harvard MBA. The influenza is everywhere, so risk is everywhere. You’re going to have to wait to see whether some other part the world will provide a better ROI. It could still go a lot of ways – the next decade will be a battle between Wall Street and the rest of the world, and a lot of wealth is going to disappear and be created. We could avoid a lot of trauma if we just turned Wall St. over to the Chinese now.
Sarah is right, but rent until you know where you want to live. If you want to live on the SD beach, well, you and 6 billion other people. If you’re 30 and are living the high-life and renting now, think about that 1/2 acre you may want to retire to in 20 years. All my uncles were never rich back in their youth, but they all had summer cabins. They never saw it as an investment to profit on. They didn’t have plans for kitchen remodels, Harvard for the kids, or a new car every few years, they just plugged away.
“Sarah is right, but rent until you know where you want to live. If you want to live on the SD beach, well, you and 6 billion other people. If you’re 30 and are living the high-life and renting now, think about that 1/2 acre you may want to retire to in 20 years. All my uncles were never rich back in their youth, but they all had summer cabins. They never saw it as an investment to profit on. They didn’t have plans for kitchen remodels, Harvard for the kids, or a new car every few years, they just plugged away.”
I think that’s the best comment of this thread so far. I actually wish I had read that before I purchased my home, I may have done things differently.
srv,
Thank you for your candor, although I did barf a little bit with the Machu Picchu comment! So play along with me —
Say you make $200k a year:
– tax: say 30% Fed+CA = $140,000/year net
– save 25% (gross, i presume?) = $90,000/year net
– 401k (say full $16,000 for deduction?) = $74,000/year net
– annual macchu picchu trip ($10k?) = $64,000/year net.
say you spend 30% of your take home for housing costs = $1600/mo. On a 5.5% loan that is a $275,000 home. You must not be living in California.
If you are making more than $200k/year then THAT is how you will retire in 5-15 years…not via any emerging market fund investment strategy. You are an extremely high income earner! Or you live in a 1 bedroom apartment in Alpine with no mouths to feed but your own.
I say this all in good Friday afternoon humor.
BAM,
This may be TMI for my anon desires, but I gross under $140K/year. Live in the Bay. My share of rent is < $1200/month. My pension was switched to an enhanced 401K, and my contribution is only 6%. Lost about 15% of my 401K’s value, even though I was extremely defensive. Probably have regained most of that. Have a 15 year old car I wish would die. When it does, I won’t need one out here.
If I find that 1/2 acre, it is a high-probability I’ll cash out the 401K, and take the tax hit. I just don’t have medium-long term faith in the ponzi scheme lasting long enough.
This MP trip will be far and away the most expensive trip ever, but less than 1/2 your guess. Moved to CA because it was cheaper to live here for awhile, take the tax hit, and do all the local trekking I was not able to do from elsewhere.
I was helping a semi-dependent for awhile here, but not for the last year or so. Will probably have to help siblings kinders through college (not Harvard). My folks are set, double-dippers.
A good part of my savings is from having lived somewhere cheaper, good income and keeping sane during the dot-com era. But if I run the numbers right now, I could probably save more than 25%. $3K+/month is pretty luxurious for me. Of course, a family is a big and wonderful expense, but most of the double-incomes I know would be doing quite well if they didn’t need a new Seqouia, new countertops, or that move-up. These people dropped $45K on a car, $15K on a kitchen remodel, horse camps for the kids, etc. They HAD the money.
If health-care were affordable or “free” when I turn 50, I would retire early and try to do a start-up. Someone else here said gov’t shouldn’t be bailing out old businesses, we should be investing in new businesses. The #1 or #2 obstacle to people going into business for themselves is not having any health coverage options for their family. It is crippling us.
My retirement plan is savings protection, another 7-10 years real work, finding a job that will cover medical and break-even living expenses. Deflation would be a boon for me, significant inflation will require a lot of brain-work to mitigate.
Worst case, expat path, or find that widow/divorcee who can support me in my old age.
“Screw it, I’m not getting any younger” and buying now?
How about “I’m too old to lose six figures in real estate”?
I can’t help but laugh about the comment about 1% returns on savings going forward. If you believe that ZIRP is forever (ala Japan) then you also have to believe that housing has much, much further to decline (also ala Japan).
Kwaping, item #86 – Thanks for sharing your HomeVal calculator; it’s sort of what we’ve been doing in our heads while RE shopping. We must have finally done it right after all these years, because it scored a 10.0 for us! We also track other criteria, such as condition of home, upgrade features, cul-de-sac, and aspect (direction house faces) – a big plus for us is a house that faces W/SW, because the backyard will be in the afternoon shade (priceless).
CA Renter–I am with you on the Currency part of things, but that extends WELL beyond Govt. incinties towards real estate–but what can you or I do about it??? Given that thought, is it not a good time to aquire real estate–prices down 25-60% depending on the area of town, and as you mentioned, asset inflation is coming. If you are happy continuing to rent how about buying rental property for a hedge??? Just a thought?
Local Boy | October 9th, 2009 at 6:11 am
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I am always looking for inflation hedges (including real estate), and have probably spent more time physically looking at RE over the years than most non-realtors out there. If something compelling comes up, I will definitely jump on it.
In the meantime, we have a significant portion of our money in foreign currencies and FC bonds, so that helps a bit. Also, gold, stocks, commodities…all go up with inflation, and can be much more liquid than RE, with much lower transactions costs.
CA Renter – you are getting to the crux of a capitalist economy. We all ‘need’ 8% or so appreciation on our assets in order to retire in a number of years. I think that ‘need’ is what ultimately creates greedy financial people, shaky investment vehicles, .com bubbles, housing bubbles. If we don’t grow our money, we’ll never stay up with inflation, or growing health care costs, or long term care cost…the list goes on.
So I ask the older, wiser bunch – where DO you put your money if not in your house? And if you say ‘vacations and living life!’ I will barf all over my computer screen.
BAM | October 9th, 2009 at 10:36 am
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Under normal circumstances (and these are NOT “normal circumstances), I would suggest people invest in the most diversified portfolio possible, especially when they are young: domestic and international stocks (agressive and conservative), bonds (especially when yields are high), real estate (yep, in a “normal” market, I LOVE real estate!), direct investments in companies/ideas/start-ups, etc.
Truth be told, there are a number of ways people can invest, and by carefully watching global money flows and trends, one can be relatively successful (which means ~3-10% average, annualized returns, NOT 25%).
The problem is that so many people have gotten greedy, and credit has become so loose, that the “get rich quick” crowd has distorted so many markets, almost everything is now high-risk.
Cost inflation is a direct result of monetary inflation, and it forces people to chase returns that are far too risky for what their wealth/investment acumen can honestly allow.
Personally, I’d much rather see **very low-cost** housing and **very expensive** debt, so that people could SAVE more for retirement, and not have to depend so much on asset inflation. Asset inflation that results from credit expansion is NOT a productive use of financial resources, and eventually, it will cause massive distortions and elevate risk to such levels that we end up with catastrophe after catastrophe — which ends up wiping out the wealth of J6, while enriching those who control money flows.
Just MHO.
Good stuff, guys and girls.
“The #1 or #2 obstacle to people going into business for themselves is not having any health coverage options for their family. It is crippling us.”
So true! You are very wise, srv.
Also, househippie thank you for the kind words about my HomeVal site! I think you’re the only person to ever use it besides me, LOL. Thank you for validating my effort in putting it online. 🙂