BL, Home Buyer in 92708

Thoughts about buying a home in the Huntington Beach and Fountain Valley area

Asked by BL, 92708 Fri Sep 26, 2008

given the continuous financial/mortgage debacle? After the recent WAMU takeover, I'm having doubts about buying right now and think waiting until summer may have huge advantages...more inventory at cheaper prices? any thoughts on this, thank you.

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I agree that we will will most likely see lower prices in the coming year. With the credit crisis escalating recently, and a possibility of falling further into recession, a major concern needs to be not only price, but carrying costs associated with purchasing property. I don't know that we will see interest rates skyrocket, but if they go up even 1 percent, that makes qualifying for a loan harder, and the costs rise significantly.

Regardless of the passage of the rescue bill, we will see Foreclosure inventory swell in the coming months. The big question that cannot be answered yet is how long will it take for all of the REO properties to be liquidated. Areas like Huntington Beach and Fountain Valley are fairing much better than areas like Anaheim and Santa Ana, because of their desirability.

Really, two risks exist for you right now If you know you want to purchase a home in the next year. The first risk is if you buy today, you will probably lose some value of that home. How much is open to speculation, but the reality is nobody has the answer. The second risk is that if you don't secure a home loan today, at todays low rates, there is a possibility it will be much harder to qualify for one, and the costs of that loan could be much higer.

Which one of these scenarios would hurt you the most? Regardless of whether you buy today or wait, we know that getting rid of debt, saving up a lot of cash, and having a great credit score are the keys to getting a home loan. If you don't have those now, I would work on that.

Also, find a great lender who has been in the business for more than 10 years. They might be hard to find, but they know whats going on and can give you even better advice.

Good Luck,

Jeremy Lehman
Century 21 Beachside
Jeremy@LehmanHomes.net
http://www.LehmanHomes.net
Web Reference: http://www.LehmanHomes.net
1 vote Thank Flag Link Fri Sep 26, 2008
realistically.. prices are going back to 99-2000 levels.. incomes CANNOT support current prices and the now infamous "option ARMs" have barely begun to reset.. just wait.. you didn't specify if you were looking for a condo or a single family home.. there are some great deals on condos in the low 200 range all over OC.. i would personally wait until early 2009 but start scouting neighborhoods now.. waiting until summer isn't the best idea as that's when the market usually heats up and you'll be facing stiffer competition. With a six figure down payment, great credit, and great income, you should be easily able to qualify for a mortgage. If rates go up and prices drop, it should be a wash or you might have to pay down your rate (pay more points) to get the same rate currently available. Keep in mind that most current available programs allow for "streamline" refinances in the future if rates drop.. while values might bottom out and climb again, buying with a higher than "normal" rate doesn't mean you're stuck with it forever. If you find your dream home, I would make an aggressive offer and wait and see. Finding the right house at the right time is priceless. You sound like you're ready to move.. you just need the right place
1 vote Thank Flag Link Fri Sep 26, 2008
While you may be right about prices and inventory next summer, It is entirely possible that interest rates will have gone through the roof - if you can get a loan at all. A LOT depends on passage of the rescue package now under consideration. One think for sure is there are already a lot fewer institutions writing loans which means less competition and higher prices (Interest rates) for those loans.

Whatever you decide to do - wait or buy now - I would be happy to help you find a property that best suits your needs and help you determine its value when compared to the market as it is today. I wish I had a magic ball and could predict what the market will be like next summer but I don't think anyone can do that.

Bill Godwin
949-606-5669
Bill@BillMGodwin.com
Web Reference: http://www.BillMGodwin.com
1 vote Thank Flag Link Fri Sep 26, 2008
Thank you very much George, and thanks for posting the links, the chart you linked is the same chart I was looking at. I'll let ya know how it all goes, you've all been very helpful.
0 votes Thank Flag Link Sun Sep 28, 2008
It's all about personal timing after all.. good luck with your search and let us know if you find your dream home!
0 votes Thank Flag Link Sun Sep 28, 2008
George, you appear to be very smart and logical man and I appreciate your input. I think you're right about the home prices and I wish I could wait longer but I need to get my fam into a home soon. One thing I learned is if you really want the house, you gotta make a move cause there's a lot of buyers on the sidelines. Thank you for your enlightenment.
0 votes Thank Flag Link Sun Sep 28, 2008
I personally think that the CA price/income ratio needs to be under 5 before prices settle down. That means that house prices would have to come down by about half from 2006-2007. In many areas of CA, this has already happened. If anyone wants to see an income/price chart, here it is:

http://bp3.blogger.com/_pMscxxELHEg/SGEvq-VRRXI/AAAAAAAACMQ/…

an article on the OC Register website in regards to Huntington Beach house prices:

http://mortgage.freedomblogging.com/2008/09/25/huntington-be…
0 votes Thank Flag Link Sun Sep 28, 2008
Thanks everyone for the advice, I'm totally ready to buy a home right now and have everything I need in hand. I started having second thoughts after all the emerging chaos in the financial/lending markets but I know buying a home is for quality of life for the fam, not to make money unless you're an investor. The reason I waited this long is I guess I realized I didn't want to be a statistic by buying too high and being house poor. But I do believe, houses in my two areas have dropped to the 2004 levels which is a huge discount to the 3 years after, and finally affordable.

On a side note, I was doing some research on home price to income ratios and historically (chart was from 1980 to 2007) homes in the LA area have fluctuated from about 4 to 51/2 times price to income, which is much higher than the national average of about 3, based on the chart that looks like a sine wave. Starting in about 2003, the chart starts going almost straight up and for the first time since 1980, the ratio goes above 6, the line continues past 8 in about 2005, then past 10 in late 2006. The chart stops at the 10 mark (2007), but man does this sure look like the peak of a bell shaped curve. If the chart continued into late 2008, I believe the line would be back down to around 7-8ish, still high I think based on wages and economic conditions. Anyway, thats just my 2 cents fwiw.
0 votes Thank Flag Link Sun Sep 28, 2008
No one has a crystal ball however the 2 areas you are inquiring about are in HIGH demand contrary to popular belief. Personally, I think Fountain Valley is in more demand then Huntington Beach. There are many many people who have the down payment and pre-approval letter handy and they are out making offers. Of course no one knows what will happen next year. You can view all the bank owned homes by price here http://www.socaloceanviews.com/professional1.shtml.
0 votes Thank Flag Link Sat Sep 27, 2008
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