We are currently "renters." Some say that word with such disdain, and I guess I can see why many renters have earned themselves a bad rap with the "why take care of it, it's not mine mentality." Our current neighbors are such snobs that they will not even acknowledge me when I say, "Hey, how's it going?" They should be so lucky to have renters like us who do care about the house we are renting and keeping it up. We don't want our house, rental or not, looking bad. Anyway, they're probably just bitter because they have a house on the market that they cannot sell and owe, or are invested in, more than it's worth. Heh.My wife and I have always been homeowners until our decision to move back to California. Now we are renting for the time being, saving more money, and waiting to see what the market does. Everyone has an opinion about what to do. My wife was having lunch with some friends recently, and one said, after mentioning they had taken a $50,000 (translation...$100,000) hit on their house, "oh the market is definitely going up in 2008." Others say that this is a "great time to buy." Hope springs eternal I suppose, but why would one buy now when the market hasn't even hit bottom yet?
My advice to someone looking to buy right now is plan on buying a house that you would enjoy being in for the next several years. I also like peahippo's advice left in my comments on another post:
If past housing bubbles are any indication (and they certainly are), then California's housing bubble is deflating, with losses being absorbed step by step, from one buyer to another on the way down like good little soldiers. Don't march into the machine guns like those morons. The bubble should bottom out around 2011 nationwide, but recent bailout actions in the Congress and especially the CA legislature will probably push that out to 2013 in CA itself. In the meantime, you have some fairly good properties that you can rent from the loss-takers (i.e. homedebtors), who will still be fairly grateful you'll be around to pay the rent to keep their mortgage-payment losses to a minimum. Rent, enjoy, and save money for your 20% down.
9 comments:
Why 2011?
Northeast starts up hot again in 2009. Nationwide in 2010. But it's short lived and falls flat for the long hall.
Some of the really hard hit areas see nothing for 20 to 30 years.
I posted this on IAFF, $10 says he'll show up at the place.
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I read about you in the paper. My name is Lucy Coldwater.
You can use a loft I rent. It's vacant until next month. You can use it until the 28th. You must be out by then! No funny business! No games! No Parties!
It's fully furnished. You just need some sheets for the bed.
I work all the time so it's hard to catch me. However, you can pick up keys from me at work. I'll take a quick break to show you the place (it's nearby).
Aangela's Florist
51 RAILWAY PARADE
KOGARAH NSW 2217
SYDNEY AUSTRALIA
After Thursday, I'm traveling until the 28th, so don't bother showing up.
Also, I'll keep your passport at the shop. When you return the key, Mel will check the place, if it's undamaged he'll give it back.
Just came across your blog and was curious when you had departed CA? Where you went? And, when you came back?
I was born and raised in northern CA and moved to the Phoenix, AZ area in summer 2004 and am still here. I have considered CA as a possible place to go back to if there is a significant correction in home valuations in the coming years.
b4freedom,
Did Casey ever contact you about your offer? Just curious...
Not that I'm aware of...
But, he never approved it to be posted either...
I used 2011 as a 5-year rundown from 2006 much like the last two bubbles endured. Of course, since "All real estate is loco!", the peak of the national bubble varied from place to place. Heck, in the Carolinas, it might still be expanding.
Baaahstin started to decrease its rate of increase in 2004, but I find it specious to predict it will start to "hot up" again in 2009. The area is losing jobs and population and that doesn't make for a good run-up environment. I'll stick with my 2011 prediction for Baaahstin. (Heck, I used to live there. I watched home prices in Brookline quietly collapse after the '90 boom went bust. 30% haircuts were common for the properties I surveyed.)
I sincerely believe we're in the dip between two maxima ... the first being the actual market peak (2005 to 2007, depending on which area in the US), and the second being the "false peak" that follows from 6 to 18 months later. The false peak exists since people refuse to even admit there was a bubble, and some fraction of such a population will jump in as a group, creating a "recovery bubble" or "false recovery". In short, they grasp all available methods and try to reflate again. A lot of even more desperate moves take place during that period.
Government interference (like bailouts and coverings) only lengthens the time of the dip and enables the 2nd peak (in cases when the dip turns out to be a flattening, before the final plunge). We can clearly see governments making efforts to intervene, thus the dip will become longer, and the 2nd peak must form. Hence: my prediction of a 2-yr extension to 2013.
We renters are going to have some problems with the "accidental landlords" that will result from this period from 2005 to 2013. We may as well get used to submitting landlords to credit checks, and keeping a periodic eye on how current they are keeping their mortgage. Once a problem arises ("problem" = landlord stops paying his mortgage), you should escrow your rent and prepare to move. No, scratch that. Add a rider to the lease agreement that says if the landlord fails to pay his 2nd mortgage payment in a row, you will summarily escrow the rent FOR THE LENDER TO POSSESS. That oughta make the landlord think twice about collecting free rent from you!
We may as well get used to submitting landlords to credit checks, and keeping a periodic eye on how current they are keeping their mortgage.
I'm not a renter. But, I couldn't agree more. I personally know way too many "landlords" that are struggling to get by on their shame real estate deals. This includes friends and family who all thought they found gold after reading overpriced infomercial self-study courses. On the flip side, my bro-in-law interned at a Law office for a few months. He spent most of his time doing legal paperwork for banks and brokers. Most often they had deadbeat landlords with soon to be evicted and extremely upset tenants who always paid on time. He said that they'd often offer around $5k to tenants to leave the properties within a week. It often worked.
I am a local plumber here in stanislaus county. I have noticed that the housing market has been over in flated for the last three to four years here. Why is everyone so suprised?!?!?! I mean I was born and raised in the city I live in and 10 years ago making 50,000 a year you could afford most houses in this town. Now you cant even afford to own a mobile home. Mobile homes out in the country sell for 260,000 thousand and thats just with a tiny bit of land. I'm finally glad what I have been preaching for the last few years is coming to pass. Its pretty scary when you have to make a 100,000 and your wife has to work too. Just to afford a home. Thats why you see kids like the ones in the picture with all the cop cars...Parents cant afford to raise there kids for the last 10 years...I love USA.
And if al-Qaeda does a nuclear 9/11 in a major city, never mind 2011-2013; all bets are off.
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