Foreclosure in Walnut Creek>Question Details

Clarence, Other/Just Looking in Denver, CO

Buy or rent on the market?

Asked by Clarence, Denver, CO Wed Sep 5, 2007

Relocating to the area for 18 months to 3 years max. Home purchase price of 800- 1.1 mil. Do you think the market will rebound enough to get back the purchase price or better in that time? Assume the relocating company will cover all purchase and selling costs.

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Hi Clarence:

Coming late to reply to your question. My personal suggestion is to buy rather than rent; especially since you have the relocating company who will cover all your purchase and selling costs.

I noticed that you mentioned selling cost. Do you have to sell your house somewhere else before you can buy? If so, where is the house located and how is the market there? This might be a factor in determining what you want and can do.

Also, what buying cost? Will they pay points to buy down the rate? We did exactly the same 10 years ago and bought in Marin. Moving from Indiana at the time, the price here in Marin seemed astronomical; but my husband’s company paid for closing costs and a couple points to buy down the rate. We also did not have to sell our house, so we got to bump another buyer who had a contingent release clause. It was the best investment we had made.

You asked which area might be a nice are to buy, and I have to ask you to consider Marin; where pretty much the whole county is great for families and kids and the housing price will hold.

With a price range of $800K to $1.1M, you should be able to get some nice houses here. We are rated by Forbes as having the best schools for the money http://www.sylviasellsmarin.com/Forbes+Rates+Marin+Schools+B… We have great schools, communities, outdoors, parks and recreations, wonderful weather, and all in all, a winning situation for your family.

On top of all, Marin is also a place where the value of your house will hold and have pretty much held. The main reason, other than all the benefits above, is that there is a scarce in land (a lot of protected open space, national shorelines, and such) and because of the proximity to the city (which attracts buyers from the city to here - There is an influx of young families with good incomes that move form the city to here) Supply and Demand dictates that the price will hold or go up.

If you go further north in Marin, the price will be less than Southern Marin and the weather sunnier. So, keep this in mind... Let me know if you need more details.

On the loan, a mortgage broker suggested that people might want to look into splititng the loan to two parts, one first, conforming loan, and the 2nd, a 7 year fix, in her example. Knowing that you might move after 3 years, this could be a good option. With no prepayment penalty, and sounds like you are very dicipline and conservative in your borrowing practice; you will probably use the interesting saving to pay additional against he principal payment, which is also great.

Best,
Sylvia
1 vote Thank Flag Link Thu Sep 6, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
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Clarence, since you are only going to be in the area for 3 years max, I think buying may not make the most economical sense. The way it looks right now, prices will continue to go down for at least the next 18 - 24 months. There are also a lot of people who do not qualify for loans anymore even with good credit scores. We really don't know what will happen with the lending industry over the next few years, but I am sure we won't go back to giving a loan to anybody with a pulse. Even if we assume that houses will increase in value again after 2 years (and that's a big IF), you'd only have 1 year to get back to how much you paid for a house. Of course, I am assuming you not buying a bargain. If you can get something that's a real steal, you may want to jump on it, especially since the relo company will pay for the buying/selling cost.
Since you have three children, looking at this strictly from an economical point of view might not be realistic. You want to be in a great school district and you want a nice house. While landlords may not tell you that they are not renting their nice house to a family with 3 kids, I would venture to say that finding a rental that will meet your needs might pose some challenges. I hope you do not take offense to that. I am just pointing out what I think may be an obstacle. If I were you, I'd buy knowing that you may not get all your money back.
Web Reference: http://www.go2kw.com
1 vote Thank Flag Link Wed Sep 5, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
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Buy or Rent to own. Our government gives us tax breaks for owning property, not renting. That's usually worth 10-15 cents on every dollar you spend on interest.
1 vote Thank Flag Link Wed Sep 5, 2007
Thanks for all the input. Turns out we are staying in Denver. Company though it was a better financial move to relocate people to this market and not in CA.
0 votes Thank Flag Link Sat May 3, 2008
If you have extra money, ths is the time to buy. You're going to get incentives and deals right now that are better than a short sale or foreclosure.
0 votes Thank Flag Link Fri May 2, 2008
you will lose money if you are going to sell in 3 yrs. cost of taxes, maintaining home and paying realtor 6% when selling will deplete any small gains over the the next 3 yrs. Most likely homes will lose value in Marin, as in every part of the country for the next few years. Renting gives you the flexibility to move whenever and the opportunity to save a lot of money, especially if you fall under the AMT for tax purposes.
0 votes Thank Flag Link Fri May 2, 2008
Walnut Creek area has been holding fairly steady with some exceptions. Depending on your loan terms will depend upon your ability to regain that which was put out in the beginning. I would think having your lender work with you on a short term loan, 15 yrs vs 30 yrs would definitely put odds in your favor.
Walnut Creek, Lafayette, Orinda have easy access to the freeways, great schools and very popular in terms of resales. With the relocating company covering your actual costs to purchase and sell I think you will do fine.
Web Reference: http://www.TerryOsburn.com
0 votes Thank Flag Link Thu Nov 15, 2007
Since you have some time to work on this, you should apply and get prequalified at a reputable lender to secure your 15 year mortgage plan. There is no substitute for you to come into the East Bay and see and "experience" the neighborhoods. You already know that schools are key-- favoring Walnut Creek, Alamo and Lafayette-- considering your job location. One key tactic you should employ if you buy a home is using seller credits to buy down your rate and your closing costs. You could conceivably buy a $1.0 million home for $900k in terms of closing costs and ongoing monthly payments. And since you are entering a buyer's market, you can negotiate hard and greatly increase your chances for avoiding losses.
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0 votes Thank Flag Link Wed Oct 17, 2007
Clarence,
Lafayette, Moraga, Orinda, and then Walnut Creek are your best bets for schools for your children. The even better part is that all four of those locations are a straight shot from Hwy 24/680 north to Hwy 4. Aside from the brief delays from the Benecia Bridge traffic, you are pretty much going in the opposite direction of all other major traffic. And most importantly property values in these areas hold...
0 votes Thank Flag Link Wed Sep 12, 2007
From Brentwood, Hi Clarence and family.
I have served a great number of relo families into brentwood this summer. There are huge homes at great deals. Knowing the market and fellow agents here and walnut creek. This is the time to buy in my opinion with a 3 year return on investment will look quite nice. (the home in just the right neighborhood).
These same goals are on my clients minds who plan to move back to their hometowns!
0 votes Thank Flag Link Mon Sep 10, 2007
Presently we have a house to sell in Denver. Very nice area, still rising prices, however the sale times are higher than we would like. We are not buying until we have a contract here, at which point we have an equity pay-out.

The relo company will pay a point on the loan, all costs associated with mortgage insurance, taxes, fees etc. They pay all the selling costs here.

Our loan philosophy is take the lowest interest rate (on any type of loan, so far that has been 5 year arms), pay it down at a 15 year rate. Our next move will most likely be to a lower cost of living area and we have the best chance of owning the home outright then.

It looks like Marin may be too far commuting for the job in Concord or Oakland Airport. We have gotten used to being relatively close to work. Hour commutes are not very attractive. What would that be like from Marin?
0 votes Thank Flag Link Thu Sep 6, 2007
Clarence, I would also have to suggest to buy. If your purchase or selling costs are covered, it would seem to me that you only stand to win on this one. Tax advantages, your expenses covered- seems like a pretty simple answer to me!

Patti Phillips
800-680-9133
0 votes Thank Flag Link Wed Sep 5, 2007
It is hard to predict where the market will go but by not purchasing you could also get priced out of the market or just throw money away by renting. I would say it would be better to purchase. Also, it sounds as if you have assistance from your relocation company with points, closing costs and loan fees.
0 votes Thank Flag Link Wed Sep 5, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
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Clarence-As a realtor and an investor I recommend buying. It's hard to say what will happen in the market, but Walnut Creek is a great community and relatively stable. Your biggest advantage to buying during this peroid of time is taxes.

I sell homes in this area and I can't imagine it plummeting. There are great deals on the market right now, including short sales and foreclosures.

If your relo company is paying purchase and selling costs, I'd go for it.

Cindi
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Wed Sep 5, 2007
Cindi Hagley…, Real Estate Pro in San Ramon, CA
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We have gone over the numbers for buying and renting (tax credits, etc). In a 0 gain market it looks like a $14k advantage to buy- over a 2 year period. Our main concern is with the market turmoil, what is our risk? It seems in the current market a $14k (or more) loss on a home is very possible, if we have to sell because of another relocation. We wouldn't have the option to wait until the market turned better. Our goal is to minimize the risk of a loss (after tax advantages etc).

Also, we will not buy unless we have a 15 year mortgage. We have a life goal that won't be changed due to a relocation. We would buy less house, of superior quality to meet this goal.

I appreciate the input on buying in the right areas. We have both benefited and been burned on this approach. What areas are suggested as "good" areas? I have researched the months of inventory and judge that lower inventory areas are safer areas for a purchase. We are looking at Walnut Creek, Pleasant Hills, Clayton, Lafayette, Alamo, Danville and Martinez. Job is in northern Concord near Hwy 4. Which areas are best? Which areas are we missing? We do have 3 children and always buy in the best school districts for resale value.

Again, the input has been very helpful so far! Keep it coming!

C
0 votes Thank Flag Link Wed Sep 5, 2007
Since you have moved a good number of times and seem well prepared to do it again, I think you can apporach your buy with more flexibility than the typical buyer. That is key to buying well. If you can keep focused on the agenda of buying well in a great neighborhood, then buying could be a very good option.

Based on your additional info, I would recommend buying, but limit your potential purchases to motivated sellers in prime areas only.
0 votes Thank Flag Link Wed Sep 5, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
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Clarence,
You got some great and helpful answers. Make sure that you spend time with your tax adviser and real estate/financial investment planner. The analysis of your tax situation and your future plans plus replies you have already received might give you answers you are looking for. It is not just what market will do (of course it is important as well), but what you want to do and where you want to be financially 5, 10 or 20 years from now. Make sure that adviser you are using is not just a financial planner, but someone with background in both, real estate and financial planning. Good luck.
Web Reference: http://www.cimpler.com
0 votes Thank Flag Link Wed Sep 5, 2007
ARTUR URBANS…, Real Estate Pro in Burlingame, CA
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One more thing to consider, of course, are the tax advantages to buying vs. renting - not sure if you need a tax break, but you should definitely calculate the interest deduction as you crunch your numbers!
0 votes Thank Flag Link Wed Sep 5, 2007
A little more info I can give is yes, we are looking at SFR. Yes, we will have 20%+ down payment, the relo company will pay 1 point, though they have 3 nationally know major lenders we work through. We can negotiate a loss make up- although in our last situation, the total dollar amount they contributed was limited.

I have found a number of rentals that are over 3000sf, in the 3k-4k/month that would meet our needs.

Our history of relocations (this would be #6) has put us in place for about 2 years. I really think 3 would be a stretch.

Thanks for the input so far!
0 votes Thank Flag Link Wed Sep 5, 2007
The housing market in Walnut Creek is still relatively strong. I have some clients that have been looking in the Northgate area, and we have encountered multiple offer situations, and even seen a slight increase in pricing due to the high demand for that area. Based on your price range, I believe you are looking into a SFR vs. a condo. If this is the case, I would suggest purchasing. Though the banks are limiting their financing, as long as you have 5-10% to put down at a minimum, you should be okay to purchase a home. If you need help looking for the right home at the right price, feel free to contact me. I specialize in the Lafayette, Moraga, Orinda, Walnut Creek and even Pleasant Hill area.
0 votes Thank Flag Link Wed Sep 5, 2007
Who can predict the future? Who will be president in 3 years? What will interest rates be in 3 years? With that said....it looks like a good buyers market and therefore time to buy. Perhaps best to rent when the market is at the top. I'd also be surprised if there are many rentals in your price range in that area. Especially ones you'd want to live in. The good news for you is that your buying/selling costs are covered.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Sep 5, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
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You know, its the old maxim: Location, location, location. This is a good buyer's market, and if you buy in a good solid location that isn't getting hit too hard right now, you will mostly do fine buying now, and then selling. Easier to do with assistance from the relo, as Deborah said...and better if you can hold onto it for 3 years rather than 18 months. But if you buy in the right place, your investment is even more assured.
0 votes Thank Flag Link Wed Sep 5, 2007
If not for the relo company, I might say rent if you are looking at 18 months. If 3yrs+, then it becomes debatable. With absolute assurance that the relo package will protect you, I would recommend that you purchase.
0 votes Thank Flag Link Wed Sep 5, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
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