Scared? Is is it a good time to buy a home?

[Anonymous]

This is a excellent site and I respect and value everyone's perspective. I live in the Northern California Bay Area which appears to be an anomaly with housing prices in itself. I considering buying my first home but I am scared because of the instability of the of the housing market. Should I wait to see were the bottom is? or jump in if I find a sweet deal? Don't want to loose any down payment (on paper) if the values continue to fall.

Here are some quick facts. I am Social Worker and make approximately take home approximately $3,800 (this number will be adjusted to appr 4,000 by the end of the year)per month. I am pre-approved for 300K I plan on putting 20% down towards a loan no greater than 170K (leaning towards around 150 to 155K).

If I buy, I plan on either keeping the property (condo) for at least 8 years with the option after that to sell or keep it as a rental property (plan on living overseas afterwards). Only Debt I have is 15K Student Loans, 200.00 credit card bills and 400.00 misc that will be payed off within 12 months. My current rent is very, very low, so I am in no need of moving anytime soon. Any advice would be mucho appreciated!
Thanks Jonathan

Message Edited by Mkris7 on 09-30-2008 07:57 PM

[Miner]

Only you can make that call.  If you believe that the market is likely to fall further, then I would wait for it to start upward and then jump in.

However, the home values in the Bay Area have held their overpriced value better then the rest of the nation for more then 20 years so if you are not lookig for a quick turn around, even if the market falls more, you are likely to be ahead by the time you sell.  Only you'll possibly feel bad because you could have gotten a home a little cheaper and made more money.  This can only be your call.  Talk to some real estate professionals in your area and see what they think about the home prices in the near future.

[Anonymous]

It may be a good time to buy if:
1. You can afford to
2. You'll be happy with what you can afford for several years
3. You can deal with being "stuck" in your home for 4-5 years if the market continues to go down (until the market rebounds and/or you can rebuilt equity).

As long as you look at your home as a home and not an investment or credit card, then the above conditions apply. Once you have sufficient equity in your home, changes in the market don't affect you as much when you move, because you'll be trading one high value home for another or one low value home for another, unless you're moving into or out of a market that deviates from the national trends.

If you can afford to wait, though, and there's no tangible advantage (other than the warm fuzzy feeling of "home ownership"), waiting is not a bad idea. If you're not already saving, put the difference between your current rent and your anticipated home expenses (PITI plus maintenance) into a savings account every month without fail to get used to the payments. If you can do that for a while without hardship, you're ready to buy.

[cliccmade]

If you can afford to rent you can afford to buy. Period.

[Anonymous]

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@cliccmade wrote:

If you can afford to rent you can afford to buy. Period.

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Period? That's a pretty unilateral statement to make without any backup/references. I have direct personal experience that contradicts your statement. Period! You must never have lived in Los Angeles or many of the other large metro areas where renting is cheaper than buying. Also, it's a lot easier (emotionally, logistically) to split a rental with someone to lower housing costs than it is to buy a place with someone you barely know. You could argue that one could buy a place and rent out a room or two, but it's a lot easier being a simple roommate than a roommate/landlord (a lot less risk and responsibility). Especially in LA, tenants have a lot of rights that can make being a landlord very difficult.

Saying "anyone can own a home" (not really any different from "if you can afford to rent, you can afford to buy" because the only real alternative is living on the street or with mom and dad), sounds nice and makes one feel all warm and fuzzy, but it's just not reality and is part of the reason we're in the credit/economic crisis that this country is in. Too many people got credit they shouldn't have gotten to buy homes they really couldn't afford. I'm not saying those people are at fault (at least not completely). I'm sure in many (maybe most) cases, they were "convinced" they could afford it by unscrupulous lenders and real estate agents just out to make a commission. Who can blame them for wanting a house and believing the "professionals" that they could afford it. I should also point out that not all lenders and realtors are to blame either. There are plenty of good ones out there, like the ones who frequent this forum.

(edited to fix typo)

Message Edited by BobSki778 on 09-30-2008 04:59 PM

[Anonymous]

Thanks to everyone thus far for your feedback. Please keep it coming.

[cliccmade]

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BobSki778 wrote:

Period? That's a pretty unilateral statement to make without any backup/references. I have direct personal experience that contradicts your statement. Period! You must never have lived in Los Angeles or many of the other large metro areas where renting is cheaper than buying. Also, it's a lot easier (emotionally, logistically) to split a rental with someone to lower housing costs than it is to buy a place with someone you barely know. You could argue that one could buy a place and rent out a room or two, but it's a lot easier being a simple roommate than a roommate/landlord (a lot less risk and responsibility). Especially in LA, tenants have a lot of rights that can make being a landlord very difficult.

Saying "anyone can own a home" (not really any different from "if you can afford to rent, you can afford to buy" because the only real alternative is living on the street or with mom and dad), sounds nice and makes one feel all warm and fuzzy, but it's just not reality and is part of the reason we're in the credit/economic crisis that this country is in. Too many people got credit they shouldn't have gotten to buy homes they really couldn't afford. I'm not saying those people are at fault (at least not completely). I'm sure in many (maybe most) cases, they were "convinced" they could afford it by unscrupulous lenders and real estate agents just out to make a commission. Who can blame them for wanting a house and believing the "professionals" that they could afford it. I should also point out that not all lenders and realtors are to blame either. There are plenty of good ones out there, like the ones who frequent this forum.

(edited to fix typo)

Message Edited by BobSki778 on 09-30-2008 04:59 PM

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The truth is anyone CAN home a home and as I stated if you are blowing away your money in rent you might as well be blowing it away while owning.

Very simple logic.

If I pay 1000 renting and if I can the same 1000 owning why wouldn't I do it?

If your moving around your either in college or still wet behind the ears and if that is the case then yea owning might not be for you!

But for families living in 2 and 3 bedroom apartments paying 800 to 1000 to a landlord wake up and smell the coffee.

You should not be renting you should be owing.

Theres a credit crisist because lender A told tommy boy hey your paying 1000 in rent let me get you a mortgage for 1500 to 2000. And when Tommy boy questioned it he said hey you can pay this and if you can't you will be able to refinance in a few years and you'll be alright. A year went by and Tommy boy seen his payment double from the 1500 to 2000 to 3500 to 4000. Tommy boy got hustled. End of story!

If Tommy boy took a mortgage for that 1000 and continued to pay that 1000 he wouldnt be in any trouble. This is what people have to realise. People cannot allow you and others like you to continue to scare them away from homeownership.

Period.

[Anonymous]

Two or three bedroom apartments at $800 to $1000 per month.....Seriously please tell me where that is?!?!

I moved to Austin (from Las Vegas) because of a cheaper cost of living, but a $160K mortgage will cost me $1400 per month.......my apartment costs me $750.

..No one tried to scare those buyers now facing foreclosure from buying...instead they were convinced to stretch the almighty dollar on false hopes that equity would rise.

In most places the rent in comparison to Mortgage costs don't exist in the same bracket...

Good lord I wish they did!!!!

Message Edited by 1111mel on 10-01-2008 12:12 AM

[cliccmade]

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1111mel wrote:
Two or three bedroom apartments at $800 to $1000 per month.....Seriously please tell me where that is?!?!

I moved to Austin (from Las Vegas) because of a cheaper cost of living, but a $160K mortgage will cost me $1400 per month.......my apartment costs me $750.

..No one tried to scare those buyers now facing foreclosure from buying...instead they were convinced to stretch the almighty dollar on false hopes that equity would rise.

In most places the rent in comparison to Mortgage costs don't exist in the same bracket...

Good lord I wish they did!!!!

Message Edited by 1111mel on 10-01-2008 12:12 AM

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Currently closing on a 165k mortgage my payment with everything will be 1169, so why are you paying 1400?

Whats your rate? Mine 6.625

[Anonymous]

Taxes are $4,500 a year, Insurance is $1,000 and then Mortgage Insurance.