Market Conditions in Orange>Question Details

Erin, Home Buyer in Orange County, CA

Is this a good time to buy in Orange, CA?

Asked by Erin, Orange County, CA Wed Sep 26, 2007

I just made an offer (which was accepted) on a condo in Orange, California. It was listed initially at $385,000 in April 2007, and then dropped to $360,000 in August. I initially offered $315,000, and we ended up meeting at $335,000. I plan to put $50,000 down. Comparable units in the same complex (which was constructed in 1980) sold last year for $419,000, $414,000, 380,000, and $360,000. The seller purchased it in 1999 for $138,000 (with a $120,000 mortgage). I thought I had gotten a good price, but now I'm starting to get very nervous, and am thinking of backing out because of all the negative housing news. Should I back out and rent somewhere until late 2008, early 2009 when housing prices in LA/Orange County are predicted to bottom out?

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Answers

18
That depends on your plans. How long do you plan on staying in the property? I think most would consider a purchase in Orange Country a good investment in the long term. If you are only planning to live in the condo in the short term, there is a chance that the value of the property could go down and not recover by the time you sell.
1 vote Thank Flag Link Wed Sep 26, 2007
hi Erin. Congratulations on your offer. I have written a four part blog about whether it is the right time to buy. You'll find some useful information and points at the link I reference below. Good luck!
0 votes Thank Flag Link Fri Oct 1, 2010
Having noticed the date of this question< I wonder what Erin did! We now see it is early 2009 and we haven't got to the bottom yet! I sure hope we are close!.
0 votes Thank Flag Link Fri Mar 6, 2009
I would wait the market out unless you can get a minimum 20%-30% discount on current comparable property (sold in the last 30-60 days) Don't even consider what the prices were any further back than that.

A second wave of Alt-A loan defaults are scheduled to hit through 2011.

There are many great deals available, be selective.

Good Luck!
0 votes Thank Flag Link Fri Mar 6, 2009
Hello Erin!

Trying to time the bottom of the market is much like trying to catch a chicken let loose in the yard.

By the time the train leaves the station MANY ARE GOING TO BE LEFT BEHIND.

The bottom of a market is a LENGTH of time not a POINT in time.

Many wiseacres in this forum have lost EVERYTHING in their 401Ks yet continue on with their investment brokers??? Go figure.

Homes are not stocks...........rationalizing them as such LEAD US TO THIS MESS!

What about good neighborhood to live in?? a good school district??

What about LIKING where I live and building a future??

These things have real value ...yet are now lost in the homebuying conversation.

If you would like to discuss the many specifics about the advantages of buying now........Email me.

Kurt Steinhebel
Century 21 ** Orange County
kurt.century21@yahoo.com
FORECLOSURE EXPERT



If you are not working with a foreclosure expert.......... you may want to rethink your entire strategy.
0 votes Thank Flag Link Fri Mar 6, 2009
Not everyone is flipping houses, my friend. Some people actually live in their houses long term. They call them HOMES.

Realtors can be a big help when buying or selling homes and most of them charge MUCH less than a total of 6%.

I'm not a realtor by the way, and although I have a real estate license, I am not actively helping homeowners buy or sell real estate so I have no ulterior motive here. (See website)
Web Reference: http://www.socalsky.com/
0 votes Thank Flag Link Fri Mar 6, 2009
"Let's revisit this in 5 or 10 years and see if I'm right. "

What a great investment. Who has 10 years to live in a house waiting around for it to go up by 6% so they can pay thier Realtor?
0 votes Thank Flag Link Fri Mar 6, 2009
Hi Eager Buyer,

I didn't tell her renting was a bad idea. I told her Orange County is considered a good long term buy but that it wouldn't be a good idea to buy at that point if she wanted to sell in the next couple of years. I think there's a good chance value here will recover. Let's revisit this in 5 or 10 years and see if I'm right.

With the market continuing to decline in most areas, buyers should obtain an independent appraisal to help them make sure they don't overpay for their home. Sad to say, but we've all realized by now that bank appraisers can be biased sometimes and inflate values. Get your own appraisal!
Web Reference: http://www.socalsky.com/
0 votes Thank Flag Link Fri Mar 6, 2009
"Should I back out and rent somewhere until late 2008, early 2009 when housing prices in LA/Orange County are predicted to bottom out?"

I really hope you did this.

Every Pro on here told you that was a bad idea. They were wrong.
0 votes Thank Flag Link Fri Mar 6, 2009
Hi Erin,

We are in a similar situation in Costa Mesa. 5 weeks ago when we were negotiating price it seemed like a great deal, but since then I've been feeling that we may have been able to find a better deal in Dec '08 or Jan '09. But, as we've talked about it, we've decided to just go through with it even if we may have been able to spend $10K less or gotten a better house for the price we're paying. The main reasons behind our decision to go through with it is that we intend to hold the property for a long time. We want to move in two years to a house we bought in Paso, but we are so ready for own house now. I'm sick of growing tomatoes in containers and we really want to live in a place that feels like it's ours. In two years we will rent it out and we expect that it will help fund our retirement.
0 votes Thank Flag Link Sun Apr 27, 2008
Hi there Erin. You might want to ask yourself how long do you plan on living in the Condo in Orange.
If you are plannng to live there for a few years it will be a wise investment to buy. Ask someone you know who bought a home 7-10 years ago were they sad that they bought when they did?
Then if you were to fast forward to 5-7 years from now and ask yourself the same question , if you buy today would be happy in 7 years or so. I bet the seller of the condo you are considering to buy was happy he bought when he did. I always ask my cleints this question and it really helps them with this decision.
What % do they think that the price will drop this year. another 5% maybe , so I would make an offer at 5 % less than asking price and secure todays low Interest rates. If rates went up even 1/4% this will nullify the price adjustment on your montly payment. If you would like exact numbers for your situation please feeel free to contact me . I specialize in Orange and Tustin Area.
E mail: michael-barron@sbcglobal.net
0 votes Thank Flag Link Sun Apr 27, 2008
Asking whether it's a good time to buy propety on this site is like asking a barber whether you need a haircut. Having said that, I find myself in a similar situation. In my case I'm buying a 4-plex in Orange County. It is indeed very gut wrenching buying property in the middle of a seemingly real estate collapse. But I analyzed my situation, it will help out tremendously in my tax deductibles, so I'm going for it. In your situation, if you're paying a typical rental of $1200-1300 a month, you are actually subsidizing your landlord a 30 year mortage of roughly $220,000, plus approximately $300 tax savings per month. Do your math, the answer is in the numbers.
0 votes Thank Flag Link Mon Jan 28, 2008
Hello Erin,

All the answers you have received so far are pretty right on the mark. The questions of how long you want to own, your tax situation (needing a tax shelter or not), exactly where, etc. all come into substatial play while we try and answer your question.

One of the main questions is, have you removed your contingencies from your offer? If so, then you have to factor in losing your deposit in to the equation.

I would advise a thorough discussion with your agent or Realtor, TODAY to clear up any doubt you might have and so they can better answer your questions with better knowledge of your circumstance.

Best regards,

Robert M. van der Goes
vandergoesRE@aol.com
0 votes Thank Flag Link Mon Jan 14, 2008
Hi Erin!

A few things to think about.........

1) Housing is a good lomg-term investment.....it's not a day trading activity in any way.

2) Owning a home isn't just about an investment.....It's also about building community, creating a place of your own, and taking part in the American dream.

3) Homes are different than stocks....Most people stay in their home for about 6 years....they buy for the long haul.....not buy and then dump six months later.

4) It is IMPOSSIBLE to time any market. Right now, interest rates are favorable and buyers have lots of great homes to choose from.

5) Conventional loans are available, rates are reasonable, and FHA-insures mortgage applications have been rising as low and moderate income buyers seek alternatives to sub-prime loans.

6) 2/3 of metropolitan areas across the country are showing modest price gains, and the national median homw price in August showed a slight increase.

7) The average homeowner has seen an increase of 50% in value over the past 5 years. Prices are projected to rise about 2% next year, and in coming years home price appreciation should return to historical averages, around 6%.

8) You need a Realtor that is passionate about helping people get into homes and expanding homeownership opportunities.

I love helping people navigate the real estate market in Orange County California.

Please contact me directly @ 714-718-7156 or kurt.century21@yahoo.com

I look forward to answering your questions!

Kurt Steinhebel ** Century 21 Superstars ** Orange County ** California
0 votes Thank Flag Link Tue Oct 30, 2007
Hello Erin, so what you are saying is you want to start buying when everybody else wants to buy...is that correct? The smart investors like yourself are starting to buy now and until the 2nd quarter of next year. Once summer 2008 rolls around and the market has hit bottom, its going to get crazy and you'll find youself bidding up prices of homes.
0 votes Thank Flag Link Sun Oct 21, 2007
We do not have a crystal ball that will tell us how the market will be in the future. And do not believe what the media says. You may have purchased your condo at a good price, but you'll have to wait a few years to realize that. Another suggestion is renting out your condo and let it pay for itself, while you rent elsewhere. Just beware of the hardships that go with being a landlord, the issues tenants may present (repairs to damages tenants may make, clogged toilets and pipes, collecting the rent, etc.). I specialize in Orange County real estate. If you have any questions, please feel free to email me at: Sundowner2007@yahoo.com
0 votes Thank Flag Link Sat Oct 20, 2007
No one knows which way the market will go! I agree that it depends upon what your needs are at this time. It sounds like you probably got a good deal. I cannot say for sure because I am not looking at the comps. If you plan to stay there for 2 or 3 years it may pay off.

If you back out of the deal now you may lose your deposit money. I am in the Studio City area. The market has slowed, but homes and condos are still selling. The median price of a home has actually increased.
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Wed Sep 26, 2007
In a market downturn condos & townhouses get hit very hard. Although it is very tough to time the market I believe that you will probably be able to negotiate a better deal a year from now.
0 votes Thank Flag Link Wed Sep 26, 2007
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