Home Buying in Tustin>Question Details

Jennifer, Home Buyer in Orange County, VT

I am looking to buy a home in Orange County, but am in no rush. Do you think the prices will go down in the?

Asked by Jennifer, Orange County, VT Sat May 31, 2008

next several months or few years? When will be the best time to buy?

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Answers

82
Jennifer,
I'd be patient. Lending standards have been tightening. Mortgage rates are going to be going up in the future, and there will be more foreclosures hitting the market in OC in 2008 and 2009 due to the adjusting rates of unconventional loan products that were used between 2004-2007 to fuel this crazy home market in the first place.

The best time to buy a home here is probably when your income will enable you to purchase the home comfortably and securely without cotton candy loan products. When we continue to observe 3 bedroom, 2.5 bath single family homes built in 1980 still priced at $650K on the advice of local OC Realtors, while median wages in the county are $75K per anum - well, you know something is still very, very wrong here. I recommend focusing on affordability first, i.e. can you consistently afford a fixed rate mortgage for the home you wish to purchase? How does this mortgage payment fit with your current monthly expenditures, debts, savings plan, etc.? Talk to a lender you trust and consult with your financial planner as well. Consider your risks.

If we subtract just some of the insane and irresponsible lending products and practices, and introduce to consumers full MLS listings info, no listing blocks, home sales history, and days-on-market information for free, what would happen?. Might the real estate market start to normalize, become more efficient and perhaps more affordable?

With respect to the housing market crash in OC, one way to end all the pain right now would be for all homes to be priced-to-market. Until that "priced-to-market" happens, we'll continue to see the equivalent of Granny Smith apples being sold at $50 a piece and we'll continue to see homesellers, realtors and banks squabbling as to whether the band-aid will hurt when you tear it off.

I think Eric and John are really on to something in their posts below. There might be some good realtors out there that you can rely on to be straight with you and who might say "you know what, now may not be the best time to buy a home". I've never heard a realtor say this. EVER! My opinion is that realtors across the nation have lost their "trusted advisor" status in the industry for good this time.
5 votes Thank Flag Link Mon Jun 2, 2008
Here comes the disinformation (sometimes known as lying).

I will be keeping an eye on my wallet, Jennifer...

6 percent regardless of the home price...sheesh, and the internet is rendering them less useful every day.
5 votes Thank Flag Link Sun Jun 1, 2008
Clearly, Eric is the most knowledgeable/truthful person in this thread. Everything he said, I could not agree with more. Especially that new technology (this site for example) is rendering real estate agents less and less relevant every day. Take a look at what's happening right now in this discussion tread. A bunch of "Real Estate Pros" with vested interest, jump all over a guy who tells it like it is. Someone who says "Finding the bottom is impossible," which is the most truthful answer you'll find. I see a lot of desperation here, and it's not coming from Eric.

*Of course, I am speaking generally about real estate agents. Not all real estate agents are unethical liars, just as not all lawyers are. But if my money is involved, I'll stay clear of advice from both.

I am not a pro, but I will make a bold and outlandish statement and say: I think the real estate market still has some falling to do.
4 votes Thank Flag Link Sun Jun 1, 2008
Nope.

I do want to see agents and other middlemen re-employed in real work that actually benefits someone. And I have cheerfully bought and sold 8 homes working with numerous fine real estate agents.

They are just no longer necessary ... their work has been destroyed by a new technology.
4 votes Thank Flag Link Sun Jun 1, 2008
Jennifer,
I believe most of the Real Estate Pros that have answered you question, have professed to not being able to predict the future and as Eric pointed out there are many issues in the world today that can have an effect on the value of your home. Eric is one of those who lose sight of the fact that a home is purchased in order to provide shelter for you family - hopefully in a nice neighborhood with good schools and roads that make getting to and from work easy. If it provides the room and comforts you find necessary for you lifestyle then it has done its job. A home is not a stock certificate designed to make you money as an investment tool. The recent bull market in home prices has caused many people to draw a false analogy between the stock market and the housing market. No one ever said it was your inalienable right to make money on your home.
If you need to move because of a job change, a change in marital status, new children in the family, children going off to college or an aging parent needing to move in - and this is why 80% of real estate transactions get made - then find a Real Estate professional who will assist you in analyzing the merits of what is on the market now and making the best selection. We can only show you the relative merits of all the homes on the market now - we can't measure them against some future conditions that we can't predict.

Bill M Godwin
First Team Real Estate
949-606-5669
Bill@BillMGodwin.com
Web Reference: http://www.BillMGodwin.com
4 votes Thank Flag Link Sun Jun 1, 2008
Jennifer,

Though I am just a buyer, but the amount of time I have spent looking at properties for last few months and reading articles/opinions/facts i the internet, I am definite that the real estate market in OC has still to fall..I believe all the realtors will quote the increase in sales in april in OC, but don't be fooled by that. That is just the false bottom and things will get much worse during the later part of this year. I have been looking at houses in OC and since January I have seen a vast difference in the price..take extra care while taking your decision..best of luck
3 votes Thank Flag Link Mon Jun 2, 2008
Eric - Again, until computers grow legs, have ESP, knock on doors & talk to people, my information will never be a click away. A good Realtor knows which homes use to be on the market and are still available, are currently on the market and which ones will be coming on the market in their particular neighborhoods. Computers can only report what people enter into it.

Markus - Let me try and end this confusion for you.

Imagine real estate inventory as a triangle. Lower priced homes on the bottom, the highest priced homes on the top. This same inventory triangle is also the buyer pool. There are more lower priced homes than higher priced ones and more buyers able to purchase in the lower range than the upper range.

Does it cost more or less money to advertise and market a home at the top or bottom of the triangle? It costs more money (costs are always a consideration in the pricing of any product) to find the fewer buyers for a higher priced property than it does for a lower one which is why commissions are set at a percentage of the sale price. Our costs in marketing (for buyers and sellers) go up and down depending on where the property falls in the triangle and how hard we have to work to find that one buyer who is willing to purchase that home. Our legal liability, dollar wise also moves up and down according to this triangle.

And yes, I said marketing for buyers. You guys (and gals) don't just walk into our doors and choose us. We have to market, spend time doing Open Houses, get listings so you call on our signs etc... (All of which have a cost associated with it.) You won't call if you don't know us, just like any business.

There are also less sales available the further up you move up on the triangle. Where an agent working in a mid to low area might sell 20 homes a year because the volume of sales is greater, an agent working the high end might only sell 2-4 per year since the volume is lower. It's easier to fish when the lake is stocked...

Why not take an hourly rate? Most people won't pay as they go, this model has been tried before and it didn't stick. Most buyers choose to pay the commissions or "cost of a buyers agent" through escrow as a portion of the sales price so that this amount can be financed into their loan. That's why, when someone pays all cash for a home or has a substantial downpayment, they write a separate check for commissions. It lowers their tax rate a bit since it isn't tacked on to the sales price.

Commissions are the costs paid for marketing and advertising. Period. Everytime you click on a property on any of these sites, including this one you are receiving the benefit of commissions that someone else paid. That is what keeps all of these sites up and running and full of data.

Your job as a buyer is to find an agent that also adds the VALUE of helping you gain knowledge about the market, having the home inspected, deciphering the disclosures and helping you structure your offer so that you and your deposit are protected during the discovery period of escrow while still getting accepted. You agent should also be able to point you to great lenders, home inspectors etc... all of which save you more than the commission spent.

I had a client that bought a home for $515,000 in Costa Mesa recently. He was going to use a friend of his who was a lender. I asked him to double check with my lender before he closed on his home. My lender was able to save him $500 per month on his payment ($6,000 per year). He is pretty happy with that service.

I will use this buyer's situation to show you how the commission is broken down on the buy side of a typical purchase.

The seller was offering 2.5% - $12,875
Take 6% right off the top of that which goes into the marketing and advertising pot for my company on every sale made, buy or sell side - $12,102.50
My split of that is 80% or $9,682. This is the amount I would receive from this sale. I am responsible for taxes, insurance and anything else associated with earning money in the U.S. Take that out to the tune of about $2,420.50 and that leaves me with about $7,261.50.

Out of that remaining $7,000 or so dollars, comes my actual costs. Gas driving him to see the homes, time spent calling the neighborhood, previewing property that matches what he wanted, networking with other agents about what they have coming on the market, sending him properties on a regular basis, etc...

I worked with this particular buyer for 3 years before he found what he wanted and was comfortable buying. He would have paid substantially more if I worked at an hourly rate.

I hope that helps you to understand why real estate agents are paid the way they are.
Web Reference: http://www.CoastalOC.com
2 votes Thank Flag Link Thu Jun 5, 2008
"What I am getting from this thread is: The torches are out and burning for Realtors by a small mob of dirt throwers who speak in generalities and NO specifics. "

I'd be happy to talk in specifics. Kurt, I think you are a slimly and unethical salesperson, and it would be unwise to call your number and ask for real estate advice. Welcome to the internet.
2 votes Thank Flag Link Mon Jun 2, 2008
Kurt at Century probably told potential buyers 4 years ago what a great move they were making.
~~~~~~~~~~~~~~
Kurt and any other realtor could probably have told buyers 4 years ago that prices were bound to come down and they wouldn't have listened. 4 years ago buyers were falling all over themselves to buy, and there was no stopping them. Buyers who were not really qualified to buy anything, and buyers who had money but put down 5 % thinking they'd keep their high paying jobs and are now trying to sell for way more than anyone is willing to pay. Obviously we have another anonymous poster with an agenda who would really like houses to be free and every real estate agent to be unemployed. Of course he would like to keep his own job, which he probably gets paid regularly for, and get one of those free houses for himself so he can flip it a couple of years hence.
2 votes Thank Flag Link Sun Jun 1, 2008
Hi Jennifer........

It seems that Eric in Chicago is more inclined to filibuster ....make political rants.......and stereotype people than to discuss real estate.........he seems intent on slander.

His comment on loans is a clear example of Eric's disinformation campaign......LOANS are between BUYER and LENDER.........Realtors don't make loans.....That is Real Estate 101!!!

I feel my role as a professional is to provide you with all the current data so you can make a an informed decision based on facts......

Like my buyer clients... I feel Eric could benefit from that kind of advice.

Jennifer........If you would like your questions answered...shoot me a quick Email to:
kurt.century21@yahoo.com

Official OC Home Search.com is a great way to check what is on the market in Orange County......
http://www.officialochomesearch.com

FREE TO USE

Warm regards,

Kurt Steinhebel ** Century 21 Orange County ** 714-718-7156
kurt.century21@yahoo.com
2 votes Thank Flag Link Sun Jun 1, 2008
HI Jennifer,

Please remember in all of this that the "Real Estate Professionals" who are answering your question have an interest themselves in seeing the market conditions turn around. Heck, I've even seen some of these people tell real lies to real people with real consequences. For example:

Kurt at Century probably told potential buyers 4 years ago what a great move they were making. Some of those people are now virtually homeless, having purchased Adjustable Rate Mortgages at 4 percent that are resetting now at higher rates. Or maybe they were helped into a nice balloon mortgage; maybe trees do in fact grow all the way to the sky.

Many of the poor folks whose homes we are about to steal got their advice from these same pro's.

Don't listen to them. They know nothing, and even if they do, they lie.

Trust yourself.

Finding the bottom is impossible, for you or for a person with her PhD from MIT in finance.

With energy costs soaring, interest rates rising, US competitiveness in the world damaged, a war in Iraq draining our public funds, and many other factors beyond the consideration of simple minded pro's, there is just no way to know.

Like taking a risk? Can you afford a risk?

That's what this real estate market is...even in vaunted Orange County.

Oh, did I mention you can't trust Realtors?

Eric Gates
Just a guy who used to publish college textbooks on real estate and finance for McGraw-Hill
2 votes Thank Flag Link Sun Jun 1, 2008
Jr- apparently it's easy to take someone's post out of context! Since you and Beverly are so bullish on home prices, keep/put your money in the housing market. I'll wait and buy cheaper...something tells me housing hasn't fallen far enough yet.
~~~~~~~~~~~~

Bullish on home prices? You must be mistaking me for someone else. They're going down more. But I do see some real steals. If I had extra cash right now, I'd be buying and renting them out.
1 vote Thank Flag Link Fri Oct 22, 2010
Now, correct me if I'm wrong, but if your service is "FREE" to buyers, that means you represent the seller (as does any listing realtor).

Therefore the service of a realtor representing a seller is not "FREE". The buyer faces a cost unless he has a buyer's agent (which of course the seller pays) because your interest is in getting the seller the highest price possible (to the potential detriment of the buyer). Any buyer's agent will have a conflict of interest in that the commission depends on the sale price. Notwithstanding the buyer's agent's fiduciary duty to the buyer, they can easily slide out of a claim of not representing the buyer. I'm not saying all buyer's agents don't fully represent the buyer, however, some may not do so fully due to their sel interest. Oh and don't respond about the regulatory/licensing powers of the state realty board!

JR: If we represent the buyer or the seller, it doesn't matter. The commission comes out of the pot of money the buyer puts on the table, which then belongs to the seller. Who pays the agent when the house sells for less than the seller owes? Hmm???
1 vote Thank Flag Link Thu Oct 21, 2010
John: A bunch of "Real Estate Pros" with vested interest, jump all over a guy who tells it like it is.

JR: Aw, John, that's cuz YOU agree with him. :)

John: Someone who says "Finding the bottom is impossible," which is the most truthful answer you'll find.

JR: I'm glad you think I'm truthful then. That's what I think, too. :)
1 vote Thank Flag Link Thu Oct 21, 2010
Jennifer:
It seems to me that you are looking for economic predictions from salespeople (predictions that the highest paid economists in the nation cannot answer, at that).
Brokers and their salespeople negotiate the sale of real estate. They are not economic forecasters, and cannot be relied upon to predict when prices or interest rates have bottomed-out, or when they will rise. I have an MS in Economics, and this still applies to me as well.
You could become a very rich person, indeed, if you could generally find out the kind of answers you seek.
Having said that, however, it is clear that interest rates are abnormally low, and interest is a very large part of the cost of owning a home.
It is also clear that homes are leading indicators of inflation. Unless the economy goes into a deflationary spiral (causing REAL financial "blood in the streets"), the incredible amounts of "funny money" that the feds have ginned-up will likely cause rampant inflation at some point. Nominal home prices will go up dramatically (even though this would really be a debasement of the currency, and not a real value increase in the homes… it will feel like a rise in value, though). Interest rates will follow. Once sellers see that prices are really beginning to rise, then those who can will INSTANTLY raise their prices, and wait for the rising prices to bail them out. Owning a high-priced home with high interest financing may become a "rich man/woman's luxury" for some time.
By the way, I have sold homes to blue-collar buyers where the buyer paid an interest rate of 17%, and the seller paid 17 points (i.e. 17% of the purchase price) to get the (VA) loan for the buyer, with the inflation rate so high that it STILL made sense to buy, because the inflation rate was higher than the interest rate. I have also put sales together with trades of cash, notes, cars, and timeshares when rates rose to 20%+, and financing was essentially unavailable.
In short, you won't know where the bottom WAS, until the bottom is passed, both with house prices and with interest rates.
My guess is that prices will drop some more, and interest rates will rise.
What is YOUR guess?
1 vote Thank Flag Link Tue Oct 19, 2010
There are some very important points being missed here... Jennifer, you really can't get the best answer to your question from anyone "outside your area". Every market is different. VERY different. Some areas recover faster than others and some will remain low long after the national averages rise. I urge you to speak to someone who works in Orange County Vermont. Stop reading the papers that report broad spectrum surveys (unless your area is named). Only a local realtor can share the trends of your market.

Also, do yourself a favor and don't listen to all the "armchair quarterbacks" who profess to know all about the market and that Realtor "pro's" are only out for a commission. It is true however, that we like to be paid for our services - but we deserve it just as much as any other profession. We work hard for our money and protect the interest of our clients. It is also important to note that the services of a Realtor are FREE to buyers! Yes that's right! Buyers DO NOT pay anything for the services of a Realtor. Our commission is paid by the seller who has hired us to sell their home. (Did you know THAT Juhnny Marr???)
1 vote Thank Flag Link Sat Oct 16, 2010
Jennifer:

Short of having a crystal ball my answer to you is - Ask a 'local realtor' who works your specific market. They will be able to follow trends for the area and let you know what has been happening. In my area in California for instance, the lower end market has firmed up due to aggressive investors. Demand for this lower priced supply has created a sight increase from last year. That being said, it doesn't hold true for the mid range or high priced real estate. In any case - you must speak to someone in your area who can show you what to expect in your price range - in your desired neighborhoods.

As for ERIC - YOU ARE AN IDIOT! A buyer or seller representing him/herself in a transaction "has a fool for a client". This is true in every profession. There are so many things that can go wrong - and it will cost MUCH MORE than the cost of a commission if you make a mistake. Jennifer asked for advice because we work in real estate EVERY DAY - IT'S WHAT WE DO!
1 vote Thank Flag Link Wed Sep 29, 2010
Yes. Will interest rates continue to be this low? No. Will today's rigid borrowing guidelines get harder to get a loan in the future? Yes. Will the cost of borrowing rise? Yes. Are you buying a home for an investment to sell at a profit in the near future, or are you buying a home to live in and enjoy? These are all items to consider in your decision making process. ..... Happy funding, Rudi
Web Reference: http://www.umboc.com
1 vote Thank Flag Link Wed Aug 25, 2010
Hi there Jennifer, that is the million dollar question.There are so many factors that will come into the picture here such as
Location that you are looking to buy.
Price Ranges,
How much of a mortgage you will need.
What will be the Interest rates be for that loan
Levels of Inventory
Levels of Suppy vs demand
Market values
How will the US econony be?

No body is really qualified to give you an accurate answer. People can look into a crystal ball. There may be a few out there who think that they have a crystal ball.
General rule of economics would tell you to buy low and sell high.
There are homes selling now contrary to what you may think if they are in alignment. If you give me a city or Zip code I can pull up all the market data for you to show you activity levels.
Some ecomomicts predict a further drop and some predict 7% interst rate by end of 2008 so this could all nullify the best time to buy scenario. There are some amazing buys out there for savvy buyers.
Ask yourself is it better to buy when less people are bying than then everyone is buying?? Why?

If you would like some real time market information on OC or any particular city you are considering feel free to drop me a line and I can help you.

KInd Regards
Michael Barron
Real Estate Consultant
michael-barron@scbglobal.net
1 vote Thank Flag Link Sat Jun 7, 2008
Hi Marcus

I just bought a 4 bedroom home in Lake Forest that I would be happy to lease to you for $2,400 a month. If you would be interested in paying my mortgage for me, let me know. I would greatly appreciate it. Thanks
1 vote Thank Flag Link Wed Jun 4, 2008
Not for ever.

Your information will eventually be available with a few mouse clicks. Bet on it.
1 vote Thank Flag Link Tue Jun 3, 2008
I don't knock on doors. I click. It's really hard work, but I am up to it.
1 vote Thank Flag Link Tue Jun 3, 2008
Markus - Just because you are uninterested in where the fees go doesn't mean that the costs don't exist and doesn't change the fact that it comes out of my pocket year after year. It doesn't change the fact that I have to go out and find, through marketing $$$ and elbow grease, these listings that you think you should have for free (which you do have access to for free because we Realtors agreed to put it out there to benefit our clients.)

No one is stopping you from doorknocking the neighborhood you want to buy in for your own inventory... It's what we do everyday, yet you want access to it, unfettered, off of our hardwork, time & expense.

A monopoly? We have at least three different boards that serve Orange County alone . Maybe you could start your own, I'm sure a fourth could find a home here. Then when you've put in 60+ hours a week compiling the information and finding the listings, paying a full time staff at your own expense, you can give it away for free because, after all, your own gas is free, food is free and the mortgage fairy will take care of your house payments for you when you realize that it actually takes work & money to keep this data manageable and current.


Sellers choose to use Realtors because of the incredible marketing tool we created. (The MLS) You don't have to become a member of the board when you get your real estate license. Many agents choose not to because they don't want to pay the fees associated with it.


Who is N.A.R. blocking from listings & websites? Unaltered Information? What exactly is altered? The information in the MLS comes from tax records and sellers...it's not a work of fiction.
Web Reference: http://www.OCBeachBlog.com
1 vote Thank Flag Link Tue Jun 3, 2008
I saw 17 comments, started reading the first one and forgot what the question was by the time I got to the top. Holy Moly!

If I believed everything I read, then I'd be out of a job, burning at the stake and single handedly bringing down the entire written form of land ownership because I chose to help people buy and sell homes. The power we Realtors wield. No one ever told me I controlled price!!!! Where's my cape... ? < $ > ;)

(Not sure what Kurt did to deserve that lashing, but this thread certainly isn't boring!)


Jennifer,

Prices will almost certainly continue to go lower over the next few years in some areas here in Orange County. While there are signs of stabilization in some areas, even slight price increases, further inland isn't one of them.

Make sure you get the market facts for the area and neighborhood you want to buy in. Look at the history, level of inventory, days on market, etc... and buy when you are comfortable. Physically go look at every home in the price range you are considering. If you do, when you see that great deal, there will be no doubt. Every home sale happens either at the top, the bottom or somewhere in between. The most important aspects of buying are location, comfort , your needs & interest rates (loan programs) if you are getting a loan.


Markus - The MLS should be free to consumers? Do you know how the MLS came into existence???

Realtors collectively pay dues every year to have a place (the MLS) to market our client's homes to other real estate agents. It is a marketing tool, which we pay for out of our own pocket, not a free service that everyone is entitled to. If you don't like it, don't use it. It's expensive to maintain a database of that size. We have to pay IT, administration, etc... to keep it up and running smoothly.

As a courtesy, we sell that collective data to outside sources so that consumers can have access to the data (for free!). Out of my pocket, to you, for FREE! Another way to expose our clients home to the market, doing the best job we can for the client by increasing the amount of buyers who can find it.

N.A.R. and C.A.R. as an organization pays thousands of dollars every year to help preserve your ownership rights and to defeat additional taxes that will increase the cost of owning a home. See the Web Reference below.



About the internet - Until a buyers computer grows legs and takes the time to go look at all the inventory, it will only ever be a glorified photo album. The human aspect of the transaction, from talking to a buyer about their concerns to sharing market knowledge from having seen the inventory (such as recent sold listings and their actual condition, etc...) can never be replaced by the internet.

I've bought 5 homes out of state and out of the country and used an agent everytime because I know the value the right agent can bring to the transaction.

I can buy shoes online, but still prefer to go try them on and have the saleperson bring them out along with others that they think I might like... It's service and product knowledge.


http://www.OCBeachBlog.com
1 vote Thank Flag Link Mon Jun 2, 2008
I think prices may come down a little, but I think interest rates are going to go up in the near future. The fed came out two weeks ago and said that they are not going to be offering anymore rate cuts.
Web Reference: http://getprequalified.com
1 vote Thank Flag Link Sat May 31, 2008
Hi Jennifer,
I wish I could give you a definitive answer to your question. But since I can't predict the future, I can only provide you with some market indicaters that I watch. In each of the markets that I monitor the number of active listings has not increased dramatically as is characteristic for this time of year. At the same time the number of Bank owned properties listed has been decreasing. Of the bank owned listings which have sold in the last 30 days nearly 25% ten days or less and many for more than the asking price. That indicates a great demand for the affordable homes. When you see more demand and less supply it general leads to strengthening prices. While prices have gone up yet, it feels as if an equallibrium maybe approaching.
The best time to buy will be when you see a house that meets your needs that can be bought for a price that is within your budget. Work with an experienced full time agent and you can negotiate your way into a great deal now.

Bill M Godwin
First Team Real Estate
949-606-5669
Bill@BillMGodwin.com
Web Reference: http://www.billmgodwin.com
1 vote Thank Flag Link Sat May 31, 2008
Well, Terry, as a matter of fact, I do...

Here's something that people should do for the next 1-2 years: Rent, get more liquid at the next fake stock market rally, go short on the SPX if it gets back to 1350, close the short after a 10-20% gain, conserve cash for a steep market drop, go long SPX after it drops by 25-30%, and after you make 30-40% from timing the market, even better when you use a 2x SPX product, swoop in and low-ball some desperate seller and see how low he/she is willing to go, put at least 40% down on the house (if you can't pay fully in cash) and either get a 15 year fixed or a 5-10 year ARM.
0 votes Thank Flag Link Mon Jun 6, 2011
Wow!
You have all the answers, don't you?
I suggest you rent for the next 3-5 years, and then you won't have to predict home prices, nor be concerned about rates.. you can just check it out in
0 votes Thank Flag Link Mon Jun 6, 2011
Hey everybody, how's that unemployment rate doing? How about all that debt that the US is taking on? Now that QE2 is ending at the end of the month, continued 9+% unemployment, stagnant wages, a correcting stock market, I'm sure you'll see a 10% appreciation on property prices over the next two years!!

Its a great time to buy because all the RE agents say that you'll never find the bottom! Now the mantra is that even though prices may not go up, mortgage rates are sure to go up so the net cost of buying (your monthly payment) will be higher in the future. Sounds to me like the same trap that car makers try and put people into by tailoring a monthly payment (only $399/mo on a C class lease---please just don't read the fine print)!

Step right up and buy a place and pay 5-6% RE commission when you have to sell. Don't worry, prices are sure to be higher even though there is a declining pool of buyers...
0 votes Thank Flag Link Mon Jun 6, 2011
There is no chrystal ball. When you are looking for the bottom make sure you pay attention to the rates as well. There is a bottom on home prices and there is a bottom on home payment as well. Remember if Mortgage Interest Rates go up 1 point say from 4% to 5% that is a 10% loss in buying power.

Hopefully that makes sence. Good luck in your quest.

Ted
0 votes Thank Flag Link Sun Jun 5, 2011
No one has a crystal ball. It is thought prices will remain similar this year as to last. I would say at this point each purchase is individual and some are better deals than others. OC would be my cboice for air quality among other reasons
Web Reference: http://moveoc.com
0 votes Thank Flag Link Wed Feb 16, 2011
Donald- why is that agents always say its a good time to buy? I'm guessing that if I asked you if it was a good time to buy 6 months from now, you would say it was a "great time to buy".

BTW, I do wish to buy a place in OC or in LA County, but I would only do so when prices are lower...and guess what, most buyers feel the same way!
0 votes Thank Flag Link Wed Feb 16, 2011
Donald- why is that agents always say its a good time to buy? I'm guessing that if I asked you if it was a good time to buy 6 months from now, you would say it was a "great time to buy".

BTW, I do wish to buy a place in OC or in LA County, but I would only do so when prices are lower...and guess what, most buyers feel the same way!
0 votes Thank Flag Link Wed Feb 16, 2011
Good thing you didn't have any extra cash back in Oct J R....I had millions in extra cash...and about 50% was in the stock markets (US and overseas).

Ps. I'm still not touching residential RE with a 10 foot pole. But I'm sure you and Beverly will be quick to jump up and say this is the right time to buy RE (again...sigh).
0 votes Thank Flag Link Wed Feb 16, 2011
Bwahahaha Beverly!!! Hey Jew, how are those prices now? Next year they'll be even lower!!!

Ps. I've done great in the stock market with the money I took out when I sold my house in DC in 2006.

Best Regards,
Johnny Marr
0 votes Thank Flag Link Wed Feb 16, 2011
Prices in Orange Co calif are near the bottom but interest rates are moving up. Good time to buy now.
0 votes Thank Flag Link Wed Feb 16, 2011
It is the opinion of most that the interest rate will go up as much as 1/2%. So depending on what type
of loan you get some might not qualify.
0 votes Thank Flag Link Wed Dec 22, 2010
Bullish Johnny? Get real! We have been trying to EDUCATE you! You are so out of touch it's scary! But perhaps English is your second language - because you don't seem to get what we're saying... I've given up...
0 votes Thank Flag Link Fri Oct 22, 2010
Well Eric - buyers have been searching for property online for years. The technology is a terrific tool for all of us - but it doesn't negate the need for a professional to draw up and negotiate the Purchase Agreement and disclosures. And after all - the Buyer doesn't pay the realtor - the seller does! Conversly, sellers with realtors get 38% MORE for their property than For Sale By Owners do! FSBO's are considered 'garage sale' properties - good for buyer - bad for seller. In fact, investors (who buy and sell MORE real estate than most of us do in a lifetime) ALWAYS use a real estate professional! Because it protects them and their interest in the event of litigation. So if you STILL do it yourself ... BUYER AND SELLER BEWARE! If you are not in the business of performing real estate transactions - don't try it alone. A good realtor will save you thousands of dollars and protect you from liability. Period!
0 votes Thank Flag Link Fri Oct 22, 2010
Jr- apparently it's easy to take someone's post out of context! Since you and Beverly are so bullish on home prices, keep/put your money in the housing market. I'll wait and buy cheaper...something tells me housing hasn't fallen far enough yet.
0 votes Thank Flag Link Fri Oct 22, 2010
inflation, your house is now worth 575,000 after 5 years. Assume that you paid off about 10,000 in principal per year. Your loan balance is now 350,000, and you are able to sell the house for 575,000. In nominal terms, you have made 75,000. In real terms, you have made nearly 60,000 since 15,000 will be eaten up for inflation on your 100,000 down payment.
~~~~~~~~~~~~~

Just think! You could have been renting all that time, then after 5 years you'd just have LOST $100,000.
0 votes Thank Flag Link Thu Oct 21, 2010
Markus - I am disappointed you don't fully understand why we are, where we are, in the real estate market....and how we got here! We DID NOT arrive where we are because of Realtors. The lenders and mortagage brokers were offering to lend money to ANYBODY with a Social Security Number! My 8 year old son was receiving mail offering to loan him money. Lots of people took them up on these offers and bought homes. The Realtors did not "strong arm" them into making these purchases! Nor did they negotiate the terms of those CRAZY LOANS! Realtors were not the problem (with their 6% commission...) they were merely performing a service upon request.

Although I realize - like with any profession - there are some useless realtors out there. But bellieve me - they aren't making any money and aren't doing any deals. A good Realtor -worth their salt - can save a buyer OR seller thousands of dollars - and also protect them from liability issues. The 6% commission is eagerly paid by investors (who by the way, have bought and sold more homes than most people do in a lifetime). So why would investors (who clearly know how the real estate game is played) bother to use a Realtor? Well, to put it simply - they want a professional to "cover their ass" and make problems go away. And that's what a good Realtor will do. That's what I do.
0 votes Thank Flag Link Thu Oct 21, 2010
Eric - Other than to identify property (which has been available now for years) I am anxious to know how technology can assist you - and protect your interest - when buying or selling real estate? Because as I see it - that is all it can do! Just show you whats out there! And smart buyers have been doing that for a long time now. BUT they still need an agent - and find an experienced one - who is familiar with the Residental Purchase Agreement and escrow proceddures - so that they can guide and advise you through the process. And the services of a Realtor are FREE to a buyer! So why wouldn't you protect yourself from possibile liability? Now in some states (but NOT California - where I am) attorney's are also used to complete a transaction. So clearly legal issues can loom. BUYER BEWARE!
0 votes Thank Flag Link Thu Oct 21, 2010
Yes Johnny - let me correct you - because your are wrong.... and obviously in need of a professional in this area. You are so unaware it is laughable.

The services of a Realtor are FREE to buyers. A buyers agent is paid by the seller. The seller's agent - or listing agent - is HIRED by the seller to perform a service. TO SELL THE HOME. For which he contracts to pay an agent representing the buyer as well as the agent listing the home. Each agent has a fiduiary reponsibility to the party they represent in the transaction. I would go in to dual agency - but that would really confuse you.

In any case you need not worry about it. You've got your own way of handling it. Good Luck!
0 votes Thank Flag Link Thu Oct 21, 2010
Beverly- one more thing: a couple of posts below you said "I said that the service of a Realtor is FREE to Buyers. Period!"

Now, correct me if I'm wrong, but if your service is "FREE" to buyers, that means you represent the seller (as does any listing realtor).

Therefore the service of a realtor representing a seller is not "FREE". The buyer faces a cost unless he has a buyer's agent (which of course the seller pays) because your interest is in getting the seller the highest price possible (to the potential detriment of the buyer). Any buyer's agent will have a conflict of interest in that the commission depends on the sale price. Notwithstanding the buyer's agent's fiduciary duty to the buyer, they can easily slide out of a claim of not representing the buyer. I'm not saying all buyer's agents don't fully represent the buyer, however, some may not do so fully due to their sel interest. Oh and don't respond about the regulatory/licensing powers of the state realty board!
0 votes Thank Flag Link Wed Oct 20, 2010
Beverly- I do represent myself in court (but only in criminal cases)...how did you know? Oh, and I'm my own tax advisor too! I also like to fly myself in a private plane without having a pilot's license.

Ps. All I said to any buyer, is be aware that your home has to rise, in real terms, by a minimum of 8% (assuming a RT transaction on the house) just to break even. Oh and sometimes, it is better to be lucky than good and sometimes its even better to be both.
0 votes Thank Flag Link Wed Oct 20, 2010
Well I guess I deal with SMARTER buyers than you - because I've yet to meet anyone who wasn't aware of closing costs. And to that end - I don't remember stating I neglect to let my buyers know about them... But in any case I wasn't looking for your business - OR approval for that matter.

You are just another one of those "I know everything about everything" personality types - and I'll bet the story about "buying your "condo" is still dinnertable conversation for all who will listen. And "selling" anything in 2005-06 for "the highest price that neighborhood ever saw" - well, that happened all over the country my friend. You didn't do anything AMAZING. What you did do was take a huge risk by representing yourself in real estate transactions without a license. FOOLISH! You have assumed all the risk and were apparently very LUCKY - but certainly NOT SMART. Are you representing yourself in court too?
0 votes Thank Flag Link Wed Oct 20, 2010
Terry makes a couple of salient points.

One exception I'll take with his points is that in the US, people are levered in their homes due to taking out a mortgage. So, when a home's price rises, that lever is based on their down payment percentage. But as many have seen that works both ways. Suppose you have 3% inflation annually (and for the sake of argument, lets say it amounts to 15% in 5 years since we won't compound anything), a current purchase of 500,000, and a 100,000 down payment. Lets leave out closing costs, annual property taxes, maintenance costs, improvement costs, etc for now.

If the price rises equal to inflation, your house is now worth 575,000 after 5 years. Assume that you paid off about 10,000 in principal per year. Your loan balance is now 350,000, and you are able to sell the house for 575,000. In nominal terms, you have made 75,000. In real terms, you have made nearly 60,000 since 15,000 will be eaten up for inflation on your 100,000 down payment.

Now, lets take out 8% for your round trip buy/sell costs (46,000), property taxes at 2% per year (57,500 for 5 years), maintenance costs and improvement costs (5,000 at 1,000/year). That's 98,500. Hey, what happened to my profit?

Now, one would assume that one would save some money by buying over renting right? But you are 38,500 in the hole and that's with an annual price rise of 3%! So now, we look at rent costs versus mortgage interest costs: assume you paid 6% of the beginning home price in rent (30,000 in year one escalating by 3% each year, same as house price increase). You would pay roughly 160,000 over 5 years in rent. Sounds like a lot right and an awful waste of money right? Well, the interest only portio of your mortgage at a rate of 4.5% would be about 97,500. You need to add 38,500 to that. Now, since you had 100,000 in the house as a down payment, you lost interest on that money. Lets say you had put that in government securities yielding 3% so you could have made 15,000 over the 5 years.

After owning instead of renting for 5 years, and assuming that 3% increase, you make a grand total of $9,000 over 5 yeras by buying.

Now, what do I think (and I have a M.A. in Econ)? I don't think prices will go up 3% per year. I think they'll continue to go down for the next two years. I think unemployment will remain above 9% for the next 18 months. I think you'll see some inflation, 3-5% over the next 12-18 months due to a cheaper dollar but it won't be there in housing prices. I also think that the stock market will likely take a hit at some point after the election, which will also have a negative impact on housing.

In conclusion, it is my contention that, if your goal is to make money on your house, it is generally better to rent. If your goal is to absolutely make sure you break even, then waiting for 12 months may be wise.
0 votes Thank Flag Link Wed Oct 20, 2010
Oh Beverly, I see you are showing off your intellectual clout again!

I never said I was against a realtor's commission. I merely stated that any buyer would be wise, when buying a house, to take into account all the potential costs. That's called making a sound business decision, and those costs include the closing costs associated with buying, including any taxes, and include the costs when selling a home (not to mention property taxes, maintenance costs, insurance for the structure, etc).

Of course, since you apparently don't advise your clients to consider all the costs, If I were a buyer, you would be the last RE agent I would use.

Finally, I bought my first place, a condo, in Arlington, VA in 1991 at an auction (recession remember). Great deal, no RE agent. I sold my place without an agent for a 75% profit, and at the time, at the highest price for the same size unit. I immediately bought a larger condo in the same building (through an agent representing the builder who was selling units that he had held/rented) and sold it subsequently (through the same agent), for 50% more, and as she had the buyer (so she got both sides of the transaction, on both deals). Then, in 2002, I bought a house, no agent, at the going market price where both the seller and I reviewed the recent comps and agreed on a price of 3% less. That way, I saved 3% and he received 3% more due to no realtor commission.

I sold that house (closed March 2006) with an agent, made a 50% profit, and to this day, its the highest price ever received in that neighborhood, absolutely and on a PSF basis.

I've had company provided housing in Asia since Jan 2006. So, don't worry about me Beverly, I'm doing fine and at some point, like other vulture buyers, I'll be back to buy a house when I feel the time is right. But, again, no need for you to hold your breath waiting for me as a client!
0 votes Thank Flag Link Wed Oct 20, 2010
To answer your next silly question "Johnny Marr"... If you were paying attention... I said that the service of a Realtor is FREE to Buyers. Period! NOT ALL BUYERS HAVE SOMETHING TO SELL. And if your were a Realtor - and worked in MY industry - you would know that. Now as for the Buyers who need to sell (and here again IF you worked in MY industry you would know this...) it is always adviseable to SELL before attempting to purchase. Contingent offers have little clout and you could end up losing the home you chose anyway. SELL FIRST. You can be contingent upon "finding" a replacement home - but always sell first.... And finally - that 6% you are so worried about Mr. Marr is money well spent - especially if you WANT/NEED your home sold. Only 2% of For Sale By Owners actually sell. Did you know that Mr. Marr? So most sellers will eventually need a Realtor to make the sale happen anyway. And if they did so with a Realtor in the first place - they also end up with 38% MORE for their home than what the For Sale By Owners get. Where's your precious 6% now? Oh ya.... you traded it in for a 38% reduction in price - because FBSO's are considered (by Buyers) to be the Garage Sales of house hunting. Good luck getting what your home is worth!
AND THAT'S WHY YOU NEED A REALTOR!
0 votes Thank Flag Link Wed Oct 20, 2010
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