Relocating to S. Cali!

[kpaske]

You guys are absolutely right - it would be ideal to move down to the area and get established before picking a house and neighborhood. However, in my case, I know that I plan to stay in the area for a good long time, and financially, I really need to get out of renting and into buying. If I buy something decent to stay in for five years or so, I can always upgrade later. The key is finding something that my family and I can live in for that timeframe. I've got about 8 months to make a good decision, and with a few weekend jaunts down there, I think it's possible. That's why I'm asking for your good advice!

That KBhomes site looks great! How can they offer custom built, new homes for so much less than the going rate for preowned houses in the area? Do houses in new neighborhoods typically go for much less than established neighborhoods? What about options and such? I couldn't find anywhere on the site where they spelled out specifically what that base price includes and what is considered an option. Does it include all the appliances and everything you need to make the house livable?

I'll also check out the North County Times and San Diego Union sites to see what they have to offer.

Thanks everyone for all your helpful advice!!

[WyrreJ]

FWIW, the editors at the Economist think we are on the verge of a housing bubble-burst. They base their analysis primarily on the ratio of rental pricing versus home purchase costs. They liken rents to share dividends and purchases to buying the shares and say that the "P/E" ratio is sky-high because rents are so low compared to prices, just waiting for an external event to trigger a collapse and that some markets in other countries have already begun collapsing.

So... instead buying, you might consider renting for a couple of years to see where things are going. Which should have the side effect of making the higher-priced areas more affordable for now.

[kpaske]

Wyrrej -

Yeah, I've heard predictions like that for a while now. It seems to me that property values will inevitably stop rising so quickly. Will they begin to drop? I tend to think that they won't, but maybe that's just my optomistic side talking. Who knows, I'm no ecomistic. Did you mean other "counties"? If so, I'm curious what counties have falling prices?

Unfortunately I've never been very good at timing my investments, and I certainly don't want to commit myself to a high mortgage if prices are about to drop (but can anyone *really* predict that? Like I said, I've been hearing that about Southern California for years and prices have only continued to rise). But sometimes waiting isn't the best answer either... I've been dumping good money after bad into rent for way too long. As long as I get into something that doesn't fall in value, I'll be much better off than I am right now.

From the research I've been doing, I will most likely buy something in the suburbs. If I have to commute a little bit further to get a house at a reasonable price, so be it. And if there *is* a housing bubble burst, I think it's the greatly overpriced coastal properties close to the cities that will feel it the most. From what I'm seeing, there are some reasonable deals about 90 minutes out. If only I can find a job that telecommutes I'll be all set!!

[WyrreJ]

Nope - countries, like Australia where average selling prices in Sydney have dropped ~17% over the last year. According to their calculations, the market in the US is about 30% overvalued compared to long-term norms.

They have one of the articles about it online in the free portion of their website (not sure how long it will remain there) -
http://economist.com/displaystory.cfm?story_id=3722894

[kpaske]

Yeah, that article definitely makes some good points, although it doesn't really get specific about what markets are so overvalued. I suspect, from the examples, that they are talking about the coastal and big city properties, which are way out of my price range anyway (the example house was $800K!). It just doesn't make sense to me to purchase a 2 BR 1.5 Bath house with no yard in the city for $450k when I can go 45 minutes or an hour out into the suburbs and get a 4 or 5 bedroom house on a 1/4 acre lot for less money. Although I'd like to live 10 minutes from my workplace (like I do now), I grew up near Washington, DC, so I'm accustomed to a 45 minute commute.

Considering the economic factor, that makes it all the more important that I get into something I'm really going to like because I might have to live there longer than 5 years to build up some decent equity and capital gains.

[cascabel3]

Los Angeles will first experience a plateau in real estate prices, then take the proverbial dip as there will be foreclosures due to a large amount of interest-only variable loans which many will find they can not afford anymore as interest rises and principals will be added, hence flooding the market with sales or even foreclosures. The real estate cycle is usually 8-9 years. If you buy today, you are buying at the top but get a 6% fixed rate and five years from now your loan will appear a bargain. If you purchase for 350k now, it may dip to ~$300k in the next 5 years. Ten to fifteen years from now this will double again...I have no doubt since population growth is still by far outpacing new construction. The damand for housing/ rental or sales will be high as a metropolis such as the LA basin will continue to grow. Trying to time the market, be it real estate or stocks; is always tricky. Investors say that when you are ready to buy....you buy! Since your plan is long term, you will not loose but only gain owning a home in SoCa. Say you did want to leave the area, with a ~6% loan on your home you could break even just renting it. My advice, get a fixed rate, don't be fooled by low two year or five year fixed rates. A 2% increase in your loan will add significantly to your mortgage payment. A friend of mine wanted to wait for prices to come down, that was five years ago and prices have more than doubled in some areas. Her idea of waiting means now that she will never afford a house. If you are going to live there and raise a family....BUY!!!!

[kpaske]

Investors say that when you are ready to buy....you buy!

I think this is fairly sound advice in any market... Whether the market is up or down, I think the key is being sure that you are getting a fair value at that particular time.

I think I've thoroughly convinced myself that I need to buy instead of rent, so I just need to find a job that will support my expensive taste in housing location...

Has anyone ever actually got a job through sites like monster.com, or is good old fashioned networking still the best way to find a job? I saw a bunch of decent sounding positions on monster.com, but I wonder if it's a waste of time to send out resumes without a foot in the door. I've never known anyone to find a job this way...