My husband and I are currently renting in Lake Forest - any idea that best time to buy? Lease is up in July.

Asked by Sherry Wright, Lake Forest, CA Mon Jan 14, 2008

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Hi, , Virginia
Thu Mar 27, 2008
renting is cheaper
save your money
if this takes 5 years to bottom
you will have a very nice down payment
or maybe you pay cash
housing prices not expected to go up anytime soon
in my opinion you are making a very good decision by renting now


good luck
3 votes
Sandra Carli…, Agent, Newport Beach, CA
Mon Jun 2, 2008
Markus - (You must be a Gladiator fan...?)

I wanted to clear up your comment about whether most people can afford to pay $3,500 per month.

Many people can, but not all. The median annual income you stated is simply a median number, not an average income for the area or particular buyers in that area. This number is taken by looking at the income of a group. The median is the middle number where half earn more and half earn less. It is not an average income based on sales price.

Let's say that a certain number of people live in a community.

One Couple earns $180,000 and bought this year. .

Another couple makes $120,000 per year and bought their home 6 years ago.

Mr. Single Buyer who wants to live in a certain area earns $75,000 per year.

Mr. Renter makes $65,000 per year.

Retired Couple have owned their home for 20+ years and are on fixed income of about $30,000 per year. They already own their home free and clear or close to it.

Looking at these five sets of people gives us the "median" income of $75,000. Half make more, half make less. You have 4 of the five sets of people who can afford to live where they are assuming they haven't amassed a pile of debt. Mr. Renter may be perfectly happy renting since he can live in a different neighborhood than his income would allow him to buy in.

You are correct about the market taking until 2010 to recover in the majority of areas. The real question is whether it is better to buy now (in the dip also called a buyers market), or after the market recovers and interest rates are higher and prices are up...
2 votes
Jacqueline W…, Agent, Irvine, CA
Fri May 30, 2008
I just finished reading all the answers below and....WOW! If this was the market of 4 years ago, you would still be receiving a mixed bag of answers to your question....the negative people would be saying "no" "Sellers are too greedy" "The bubble is coming" ..... the positive people would be saying "yes" "CA is a great place to invest" "Buy now".

There are 441 homes for sale in Lake Forest plus another 169 that are currently in escrow. 43 of those for sale are bank-owned and 184 are noted as short sales. There have been 45 closed sales since the beginning of May 2008 and a total of 238 sold so far in 2008.

My response.....the best time to buy is when you are financially ready and you find a home you love.

Good luck!
2 votes
Analyze The…, Both Buyer And Seller, South Dakota
Sun Mar 23, 2008

Notice how ALL of the realtor's answers are all EMOTIONALLY driven?

None of them present facts. Take a look at this chart from Credit Suisse -… - The chart says a lot. It's amazing how the market ran up given the mortgage tsunami that's coming. This is a mainstream financial institution--Credit Suisse--producing those numbers, not me. It looks like the whole thing will take 5 years to play out.

Also, check for data not emotions:
------------ (12/13/2007 - most posts)
The bubble was due to:
1. Lax lending practices
2. Above normal appreciation
3. Strong economy
4. Low unemployment levels
5. Low inventories
Is it realistic to expect that the same set of circumstances will return when we hit the bottom?
In my opinion the scenario is likely to be:
1. No easy money to be had, 20% down is the norm
2. Appreciation is flat
3. Economy is just digging itself out of a recession
4. Unemployment levels are shaky, construction, real estate, and mortgage workers are just starting to find jobs again
5. Average inventories (at best)
These are not the right set of circumstances for any kind of bounce at all. The market will follow need, rather than greed, and prices will be in line to incomes, long before we see any kind of bubble again.
2 votes
Oc Buyer, Home Buyer, CDM
Mon Jun 9, 2008

Not everyone is meant to buy. Homeownership has historically been in the 60% range. 1/3 of the population is never going to own. $75K may be the median income, but that's not a lot of money for this area. On that income, someone can afford to start with a condo in LF. Earning $75K/yr does not entitle someone to step right into a SFR, especially if they have credit card debt.

There are plenty of SFR's in LF in the $450K range, which is not a $3,500 mortgage payment. $430K purchase price, 10% down, 30 yr fixed at 5.875 equals $2287. Add in $361/mo for property taxes and another $70 for insurance and you're looking at PITI of $2,718/mo. Factor in $558/mo tax savings and we're talking $2,168/mo to own a home that we'd pay $2,200 or more per month to rent. Oh, and every payment is taking over $400/mo off the principal.

I know these figures pretty well since we closed escrow last month. I'd say it was a pretty good time for us to buy and it may be for others as well.
1 vote
Markus Areli…, Home Buyer, Lake Forest, CA
Fri May 30, 2008

Notice how realtors in the area would like nothing better than for you to buy a home even when the single family home market is obviously tanking and may not recover until 2010. This "get in now while you still can" message is inappropriate and wrong. In my mind, Realtors and their paid NAR organization have been completely discredited. Got to and see concrete example after example why. Why homebuyers and sellers should listen to realtors anymore is beyond comprehension.
The reason why so many people are distressed right now in OC is because they bought into realtor lies (to earn their sales commissions) that real estate in OC never goes down and chose to overextended themselves with questionable loan products in order to "get in" because prices were going threw the roof.

The answer to your question is not about whether prices will go up in the future or even go down. It's about month-to-month affordability of a home mortgage, your current debt position (student loans, auto loans, credit card debt) and your current household budget. Can you afford a $3,500 house payment per month? That's about what you'll pay if you want a 3+ bed, 2.5 bath single family home here with a fixed rate mortgage. If you're like most people in Lake Forest and your income resides close to the median of $75K per anum (and you have credit card debt coming out of your ears) this kind of mortgage payment is completely out of line with reality. Realtors and mortgage lenders have sugar-coated the facts for years because they could get away with it. Home prices are still not in alignment with fundamentals in OC. Current single family home prices are out of wack with real family incomes - and have been since 1999. The only way to overcome this sad reality was to create loan products that threw out conventional principles of lending and placed underqualified people into homes they had no business purchasing, while Reators cheerleaded from the sidelines. Thanks to their short-sightedness and greed, we'll all be paying more taxes in the future to bail out banks, mortgage lenders and ignorant homebuyers.
The market is undergoing a slow correction in OC. My advice to you is to review your budget carefully and determine what you can afford. Avoid the advice of realtors as much as possible. Find a good mortgage lender you can trust. I'd be especially concerned about adjustable rate mortgages because rates are already at record lows, the economy is in dire straights and the US dollar has crashed. There's only one way for rates to go in the future. Up!
Good luck, because you and any other on the fence home buyers right now are going to seriously need it.
1 vote
Marco, Home Buyer, oarnge county
Thu May 8, 2008
Read the OC Register. The market is bad. Homes are not selling. Open houses are a waste of time according to several real estate agent. Some real estate agents are in denial and in shock. The market will be better when home owners stop asking over halg a million dollars for house that have no ac, 1100 square feet. The sellers and the real estate agents are the ones to blame . So real estate agents stop telling lies. Tell ur sellers thier homes are over priced and the sucker buyers are running low. So for those of you smart buyers make low offers and expect to laugh when they counter 50k higher. Oh! and be prepared to pay for others mistakes the bank wants 15 to 20% down and in some cases PMI. the funny part is they will ask even if you have a credit score of 750 plus and have a solid stable job and thousands in the bank. Go figure.
1 vote
Analyze The…, Both Buyer And Seller, South Dakota
Sun Mar 23, 2008

Take a look at four possible scenarios for southern California housing at this web site:…
1 vote
Newportfiji, , Long Beach, CA
Thu Mar 20, 2008
I would suggest you strongly consider alternatives before buying in this real estate bubble.

Although the realtors on this site will attack me for the following comment, in my opinion this would be a terrible time to buy, unless you must buy now (because of a 1031 exchange, for example). Inventory has increased, sales transaction volume has slowed dramatically, lending standards have tightened (pulling thousands of non-qualified buyers from the market), notices of defaults and foreclosures are increasing substantially, the economy is slowing (looking more and more like a recession) and literally thousands of high paying mortgage and other real estate related jobs have been lost in Southern California over the past year. All of these things will put downward pressure on pricing for some time to come.

The reality is that prices will almost certainly be lower next year, likely lower in 2009 and possibly even lower in 2010. Real estate cycles take many years to play out and we are at the very beginning of a down cycle. I disagree with many realtors who say that it does not matter what price you pay if you are looking to hold on for the property for 5 to 10 to 15 years. Let's say you buy now for $1,000,000 and prices drop 20% (actually, Forbes in a recent article estimated a 26% anticipated decrease from June '07 prices by 2010 for Los Angeles and Orange counties) over the next couple of years. You would have lost $200K in future equity by having not waited. Additionally, you would have to service the $200K by paying property taxes and interest on the $200K. Unlike a stock, when you buy at the wrong time, you need to service your hasty decision through increased property taxes and interest.

I have an MA in Economics from USC and have been in the real estate business for 15 years. In my opinion, this real estate bubble will take many years to play out. The previous down cycle was from 1990-1996 and values dropped approximately 20 - 25% in nominal pricing (40 - 45% in real numbers when factoring inflation). The 82 -85 down cycle was a bit shorter. However, that was a period of higher inflation which masked much of the decrease in real prices.

With cash in hand, time is your ally. Unlike stocks which are very subject to dramatic short term fluctuations, real estate is illiquid and cycles move slowly. If you are paying attention, you likely will not miss the change as prices tend to remain flat for an extended period flowing stability in the home market. Clues will be increasing transaction volume and a closer cost ratio in comparing the costs of renting versus owning. Simply stated, following a down cycle, people are generally more conservative in real estate purchases so prices will not likely rebound quickly.

Despite what the spin doctors at the NAR and realtors would like the public to believe – it is NOT always a good time to buy.

With that said, if you have sufficient assets, you may not care about whether your home decreases substantially in value and there are benefits from home ownership. But, in my opinion, there are ample rental opportunities to wait out the deflating real estate bubble.

Best of luck, and if you want an objective opinion, don't waste your time listening to cheerleading realtors, who have a self interest in being overly optimistic about the real estate market.

1 vote
David Baker, Agent, Phoenix, AZ
Mon Jan 14, 2008
The best time to buy, is:
1. when the home fits your needs
2. the payment/price fit your criteria
There really is no perfect time and timing the market is probably impossible. Buy when you find what you are looking for and the price fits your comfort leverl
1 vote
Marietta Phi…, Agent, Mission Viejo, CA
Wed Apr 27, 2011
Hi Sherry:
Now is the time to start looking. Interest rates are really low and home prices are still low. Can you give me an idea of what you are looking for?

Marietta Philpott
0 votes
Markus Areli…, Home Buyer, Lake Forest, CA
Tue Jun 3, 2008
You are correct for correcting me about the median versus the average.

The latest data (2007) I have on average or mean annual income for Orange County is here:…
Source: According to the US Dept of Commerce, Bureau of Economic Analysis

OC's average annual income is a whopping $46,872 per anum. It wasn't my intention to uncover more damning evidence that OC home prices are (still) completely out of whack, but thank you. :)

While perusing the single family home prices in Orange County, particularly Lake Forest, I think I like the median income numbers for OC a whole lot better.
0 votes
Dick Hamer, , 92691
Wed May 7, 2008
Although I'm well aware there are many doomsayers who lack faith in the Orange County housing market, I find reason to be optimistic about both its desirability as a place to own your own home, and the inevitable resurgence of the market here.

Buyer activity is definitely heating up in south Orange County, with weekend traffic at Open Houses seeming to be getting stronger each week now. Both purchase offers and pending sales are on the increase, with more homes receiving multiple offers and selling in very few days on market.

In some ways, it's feeling like the "old days" of 2003 - 2006, when inventory was very low and demand very high. The difference now is that while overall inventory is considerably higher than before, the lower-end, detached home market is in a more affordable price range, and many more buyers are coming out of the woodwork, having been patiently waiting for a couple of years to see opportunity-time come their way.

It's paying off for many of them with great deals on homes that are in the neighborhood of 30% off from their peak prices. Typically, today's market realities also mean that these buyers are qualifying for their loans with realistic down payments and loan guidelines that make sense, rather than the sub-prime and stated income products that helped to cause all kinds of havoc for all concerned. We're in a healthier mode loan-wise, meaning these buyers are not likely to be losing their homes to foreclosure in the coming years.

As this process unfolds, taking inventory off the market, much of which is "distress property", we are working our way through this inevitable and necessary part of the cycle that has been so much in evidence for the past 2 years or so. Although there is certainly more of the "distress" inventory to hit the market, as this process keeps working and more buyers return to the market, pricing is firming up and the "bottom of the market" is being defined. This creates more confidence in buyers, in turn creating more showings, more offers, more sales and ultimately, a return to a more balanced and healthy market for all. It's inevitable, and it's just a matter of time before we will be looking back on this in a different light. And that's when many folks will be saying "that's when I should have bought a home" again.
0 votes
Ken Watson, , 92630
Thu Mar 27, 2008
This may or may not be the best time for your to buy. Every buyer has a unique situation. Yours may show that it is a good time or it may show that it is not. I am a Certified Mortgage Planning Specialist (CPMS). I try to view each potential buyers situation through their own eyes. I have counceled may clients to continue to rent, if thier circumstances dictate that, until they are ready. The key is to work with a CMPS BEFORE looking at Real Estate or making any buying decisions. A CMPS will analyze your credit, income and asset position as well as many other determing factors. The market as a whole is favorable to buyers in general, but it may not be favorable to your situation. The worst thing you could do is jump onto a bad situation because the "market" is good. Please consult with a CMPS prior to making any decisions. If you like I am located in Lake Forest and will be glad to meet with you at your home to assist you in any decision you make. My consultation and advice is free to you.
0 votes
Javi, , Downey, CA
Wed Mar 5, 2008
You think inventory of homes on the market is high? wait til later this year...... more and more homeowner will fall into default. I say another 20 to 30% lower from here. Just watch the market and ask your landlord to extend your lease for six month if needed.
0 votes
Devin Doherty, Agent, Laguna Hills, CA
Tue Mar 4, 2008
Check out this article by Time Magazine, Then Give the Doherty Team a call. There are some GREAT deals right now in the market. Be sure to realize the impact of interest rates on your decision to buy or wait.
All the Best,

Devin Doherty
0 votes
Sara Bussiere, , 92083
Mon Mar 3, 2008
Hi Sherry,
In a "normal" market, much of the buying activity occurs during certain times of year. Typically from late Feb to the end of June is the busiest time with regards to buyers looking at property and making offers. This slows down beginning in July through about the end of September and then picks up again in early October to about the end of November. Therefore, you will usually have "more buying competition" during those busy buying times. However, this year, the market is very soft and inventory is high. That is, you have a good selection of homes to choose from, so right now, your timing is very good. Keep in mind that you may spend some time looking for a home, making an offer, and the escrow period is usually from 30 to 60 days. Therefore, if you need to be out of your rental home in early July, then you might want to start looking within the next 30 days or so, to give youself enough time to find the right house.
With regards to the increase in the conforming loan limits, it is true that they are going up effective July 1, 2008. What that means, is that if you need a loan larger than $417,000, then you might want to want to fund your loan until after July 1. At this time we do not know what the interest rates will be, but historically, Jumbo loans (those over the conforming loan limit) have been about 1% higher than the conforming loans. We think the new conforming loan limit may be around $729,000.
Taking all this into account, if you want to move around July 1, and do not need a loan larger than $417,000, then you should start looking fairly soon. If you need a larger loan, you may want to talk to a lender about how you time your move and still take advantage of the larger loan limits.

I hope this helps you. If you need more information, or have other questions, please feel free to call or e-mail me.
Good luck,
Barry Bussiere
Pacific Strand Real Estate
Web Reference:
0 votes
Sandra Carli…, Agent, Newport Beach, CA
Mon Mar 3, 2008
Sherry, I wanted to revisit your question because of the new conforming loan limit changes that are going into effect as soon as HUD publishes the median prices of areas. You could save up to 1% on your interest rate if your loan will now fall into a conforming loan program instead of Jumbo. This window will closed the last day in December so you might want to speak with a lender and see what the payment difference will be if you fell in the jumbo category prior to this change.

I recommend talking to Nate Lindsey if you don't already have a lender. (714) 394-0506 You can find out more about him on my blog. See the web reference below.
Web Reference:
0 votes
Tom Pelton, , Yorba Linda, CA
Sat Jan 26, 2008
You want to buy when there is maximum inventory of homes to choose from AND when you have time. So, I'd say get started looking right away. There is a great selection of homes so you don't have to settle for a home without features your really want. Also, if you start now, you'll be in a better position to negotiate since you have lots of time and lots to choose from. Who knows, you might get lucky and time the market perfectly too. But don't ask us agents, we're the worst at timing the market because we THINK we know it.
Web Reference:
0 votes
Sandra Carli…, Agent, Newport Beach, CA
Thu Jan 24, 2008
The best time to buy will depend on which city and neighborhood you want to buy in. Do you want to stay in Lake Forest? Each market is local and even each neighborhood can be behaving differently. I have seen some neighborhoods depreciating while others are up 15% and they are right next to each other!

Feel free to call me and let's lay out the data to see what is really going on where you want to live.
(949) 278-4807
Web Reference:
0 votes
Robert van d…, Agent, Fountain Valley, CA
Mon Jan 14, 2008
Hello Sherry,

They are all right. There is no predicting the future of where and when the this market will end. I would suggest, when you are ready to buy, to put an offer in at where you believe the price will be in the coming 4-5 months from then. At least then you can soften the blow if the market continues beyond your purchase date.

Best of luck and if you'd like to view the trends for current listed prices, you can view over 60,000 OC listings on my website.

Best regards,

Robert M. van der Goes
0 votes
Tiffany Muel…, Agent, Yorba Linda, CA
Mon Jan 14, 2008

If we only had a crystal ball, right!!? But truthfully, it is a great time to buy. The market is by far a buyers market right now, giving you the opportunity to really have great negotiating power with sellers. Whether it is a short sale, foreclosure, a bank owned property, or just a seller that needs to sell, you are in a fantastic position to get a great deal.

I would encourage you to start having an agent send you things over the next several months in order to see what is available, as well as to keep you in touch with what the market is doing. While I think many of us would agree that the market is going to continue to go down for a while, we still don't know exactly how long that will be, and with that said, when the buyers find out that the market has hit "rock bottom" and prices start to come back up, the sellers will now that same information and will be less willing to negotiate those great prices. This is why it is important as a buyer to always be aware of where the market seems to be leading.

I think by April or May you will be in a good position to find something for a great price. Please let me know if I can help you further or if you would like me to send you some things to take a look at based on criteria that you and your husband will be looking for when you do go to purchase your home. You can also access my website( noted in the web references below) and look at any homes on the MLS that match what you are looking for.

Please feel free to call or email me with any other questions or comments you might have. Good Luck!


Tiffany Mueller
Prudential California Realty
0 votes
Amanda Wheel…, , Irvine, CA
Mon Jan 14, 2008
Hello Sherry. That's a great question! In this market, any time is a good time to be a buyer. The inventory of homes is very high, which means that there are many more sellers than buyers. Thus in order to sell their home, sellers have to realistic about the value of their home. Otherwise, as a buyer, you will simply choose to purchase the home that is priced at market value.

Also, because the inventory is so high right now, there are opportunities to purchase a home below market value. If you purchase the home from a seller who needs to sell it right away, as opposed to having it sit on the market for 6 months or more, you can purchase a home thousands or tens of thousands of dollars below its market value.

Since your lease is up in July, I would start looking for a home sometime around March. I would allow plenty of time to see all of the homes you may be interested in purchasing and at least 30 days (preferably 45 days) for the escrow process.

I hope this helps! If I can be of further assistance, please don't hesitate to contact me directly.

Warmest Regards,
~Amanda Wheeland
Real Estate Broker & Lawyer
0 votes
Tisza Major-…, Agent, Upland, CA
Mon Jan 14, 2008
Hi Sherry,

Thanks for asking this question. No one can tell you what things will be like 6 months from now with any real guarantee. What we can tell you is that traditionally July is a busy month for home buyers and home sellers. That means that although more homes are traditionally available then, more buyer's are looking so the competition is usually a bit stiffer.

Of course in the current market "competition" is a relative thing. I would suggest that you align yourself with a Realtor now and start looking as there is a plethora of options currently available and what you might pay to get out of your lease (which sometimes only requires asking) may wind up being less than what you might pay to buy then.

Also, starting to learn about the market and what your dollar will buy earlier rather than later is always a good idea. You might also want to contact a lender (or several to start interviewing them to see who you want to work with) to find out what you will need when the time comes for you to buy.

Another thing to consider is whether you and your husband are thinking about buying a distressed property (short sale or foreclosure) as these transactions can take additional time and having the time at your disposal would be a benefit to you both.

If you want any additional assistance, please feel free to get in touch with me.

Take care and have a wonderful day!

Tisza Major-Posner, Realtor, Keller Williams (909) 837-8922
Web Reference:
0 votes
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