Getting married in September 2007. When should we buy?

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Submitted by jimmyle on April 9, 2007 - 11:03am

I am a first-time home buyer and need some advice. I and my fiancée are getting married in September 2007. Our combined income is about $120K with $70K in cash and we are planning to buy a house in Mira Mesa in the range of $470K-$540K. Early in 2006, we were talking about buying a 1300 square feet home but now the recent price drop has enabled us to look at 1500-2000 square feet homes. It would be nice if we could buy a home before the wedding. However, many people we talked to told us to wait until the Fall 2007 where the prices could be 5-10% lower than now. Do you agree with this? I checked zillow.com and see a small price increase for the median price in Mira Mesa from February to March and I worry a little bit.
Thanks for your advice
Jimmy

Submitted by deadzone on April 9, 2007 - 11:12am.

If you pay $470K-$540K to live in Mira Mesa you are a fool. Don't even consider buying anywhere until at least end of 2008, then re-evaluate the market.

Submitted by gn on April 9, 2007 - 11:53am.

Jimmy,

The median price is the mid-point of all sales transactions for a particular month. The median price reflects what people spend.

Take your scenario, when home prices drop, you still plan to spend the same amount of money (getting a bigger house). You did not plan to spend less. Your behavior is very typical of middle class folks.

This is why the median price does not reflect the market price. This is why it can go up while the "real home price" is going down.

I agree with deadzone about waiting until end of 2008.

Submitted by recordsclerk on April 9, 2007 - 11:44am.

There is too much downward pressure on pricing right now. I would wait as long as you can. It's nice to own a home before, or when you marry, but now is not a good time to buy.

Submitted by jimmyle on April 9, 2007 - 1:13pm.

gn,
Thanks for the info, I didn’t even think about it but it makes sense now, people are basically max out on the loans to get bigger houses so the median price might not reflect the actual market price. Price per square foot should be a better indication of the market price but I am not sure if this information is available anywhere.
Recently I saw a house that was purchased for $660K in 2005 and was listed for $549K in March 2007. We were tempted to put in an offer of $530K but then we held back because we weren’t sure if the timing was right. It was really difficult not to pull the trigger because this attractive house was suddenly within my reach. Some body bought it but I am not sure how much they paid for it.
Hopefully we can wait for the market to bottom out in 2008.
Thanks,
Jimmy

Submitted by lendingbubbleco... on April 9, 2007 - 1:16pm.

I once heard that the original purchase price of many homes in Mira Mesa was around $15,000. Does anyone know whether that is true or not?

(It would have been many years ago of course.)

Submitted by gn on April 9, 2007 - 1:31pm.

Jimmy,

Price per square foot can be tricky to interpret as well.

Let's suppose that, in a certain neighborhood you have houses ranging from 2000 - 3000 sq feet. The price of the 3000 sq ft homes are not 50% higher than the 2000 sq ft homes.

So, the price/sq ft of the larger homes will be lower, even though it's in the same neighborhood.

One of the best ways to gauge the direction of prices is to look at what the builders are doing. Builders are very savvy & adjust their prices to the market's realities.

>> We were tempted to put in an offer of $530K ...
>> It was really difficult not to pull the trigger ...

Most people "operate on recent memories". Using recent memory, that house may seem like a bargain. When put into perspective, that house is way overpriced.

Submitted by NeetaT on April 9, 2007 - 1:33pm.

September 2009

Submitted by SD Realtor on April 9, 2007 - 1:55pm.

Jimmy -

In any secular trend like the one we are in, you will always see small rally points. Expect the secular trend down to continue for several years, and within that trend you will see rally points, more often then not in the spring. Don't panic. If you can, try to buy later in the season, such as late summer or fall. If you are really smart push the purchase off for a few years. I do feel Mira Mesa will take it on the chin pretty hard in this downturn.

SD Realtor

Submitted by farbet on April 9, 2007 - 1:59pm.

If you must buy the offer 25% less than the asking prices. Don't be shy about it either. Then you will be in the ballpark area as they drop.
If the Realtor is hi falutin arrogant bastard take a hike.

Submitted by an on April 9, 2007 - 2:09pm.

I see Mira Mesa getting hit the hardest so far, compare to surrounding areas. I hope it will get hit even harder in the next couple of years since that's where I plan to buy my first home. Since MM are mostly all resale, I see a big range in prices. Some are desperate while others are wishful. But it's still far from where I'd consider as reasonable.

Submitted by jimmyle on April 9, 2007 - 2:27pm.

asianautica,

Where are you planning to buy in MM? I like the Sorrento Valley/Calle Critobal area but these newer homes are still out of my reach with the 1800-2000 sq ft ones going for $600K-$650K. If they go down an additional 15% then I will be able to get them. If prices stay where they are then I will buy near Rancho Santa Fe and Mira Mesa Blvd.

Submitted by an on April 9, 2007 - 2:35pm.

jimmyle, I like the Sorrento Valley / Calle Cristobal area too. I agree on your assessment of the current price, but I think they will drop to the 400s when it's all said and done. I'm actually looking for cheaper than that since it's going to be my starter home. I'm looking for around 1200-1500sq-ft between Camino Santa Fe and Parkdale. Those house when is all said and done I think will be in the low 300k range.

Submitted by exeunt on April 9, 2007 - 3:13pm.

buy now,
before you get married

that way,
when you get divorced, you'll be in better shape

Submitted by an on April 9, 2007 - 3:34pm.

haha, if that's the thinking, then might as well not get married. That way, you don't have to pay for those expensive divorces.

Submitted by kev374 on April 9, 2007 - 4:17pm.

If you ask me *REALLY* bad idea to buy right now. Wait at least 2 more years. Until then rent a nice place for HALF the cost and add the money saved to your downpayment amount and also reap interest on the 70k cash you have now.

If you buy now you're going to get burned as we are definitely at the very top of the market and it has a long way to go down. You will lose your 70k and perhaps you will be upside down for a long time to come.

BTW, Zillow is so inaccurate it can be safely IGNORED for all practical purposes ;-)

Submitted by SD Realtor on April 9, 2007 - 4:43pm.

Jimmy -

I actually lived (rented) off of Calle Cristobal the past 1.5 years. In fact the place I rented is now on the market and NO WAY would I pay the prices they were asking. Not even 10-15% lower. asianautica has done an extensive amount of researching listings in mm and sorrento valley and has keen insights in the area there. As someone who used to live there and still works in Sorrento Valley I know it well also. Try to hold off if you can. I think some serious future foreclosure activity will happen. There is already CURRENT forelosure activity there right now.

SD Realtor

Submitted by patb on April 9, 2007 - 4:46pm.

i would watch the real estate roller coaster video before
you even consider a purchase in real estate in the bubble zone

Submitted by LookoutBelow on April 9, 2007 - 5:42pm.

A double whammy !

Marriage AND a house purchase at the top of the market ?.....god bless you ! you got balls man 

Here's some of my favorites...

1: Theyre not making anymore real estate ! 

2: Real estate wont ever go down in value ! 

3: Divorce ?...Ha ! thats for other people... We love each other

 

Submitted by an on April 9, 2007 - 6:52pm.

I agree with SD Realtor, hold off if you can. Things will get much worse before it gets better. I've also seeing a lot of NOD all over MM in all price range. So, hang in there, good time will come.

Submitted by Nancy_s soothsayer on April 9, 2007 - 6:53pm.

I could add some more favorite myths about San Diego.

4. America's Finest City -- yes, enjoy it now because the water still flows through the Colorado river. But with the Global Warming, water wars will ensue. That Colorado water will turn into a trickle and drought will turn the America's Finest City to America's Brownest and Driest City. Soon, the Navy ships would be rationing desalinated water.

Submitted by waiting hawk on April 9, 2007 - 7:20pm.

Hello Jim check this out, after we got married in late 05 we almost bought a house in April of 06. Check out one of my very first post on this website. As of now I’m very grateful that I didn’t and glad to still be renting and extremely happy that I sold my last property in that same month.

http://piggington.com/buying_a_house

ps.. back then I said I had only 50k and now it’s well over 100k.. I had been gaining while the market has been dropping. It definitely was a win win for me.

Does my first post in that link seem familiar?

ps 2. that was the same point I started up my site forsakencraft.

Back then I did not know much at all, but now I’m so confident that we are moving from here and renting another place (where I live sucks) and we will hit close to the bottom of this cycle.

Submitted by jimmyle on April 9, 2007 - 8:58pm.

Thank you everyone for your advice,
I think I will wait until September and then make my decision from there.
By the way, I like the following house, but it is way overpriced. Hopefully a house like this will be around $500K in one or two years.
http://yahoo.prudentialcaliforniarealtyo...

Submitted by temeculaguy on April 9, 2007 - 9:03pm.

One thing you need to consider is that after you get married, it is possible you may have children in the next few years (I don't know your ages and life goals, so I'm guessing here). While your income will go up, could you make that mortgage of over 400k on your income alone? Would it be a 30yr fixed? In 1992 I bought a house for exactly 3x my income alone (wife worked at the time of purchase and made about the same)and by the time I had my first kid a few years later the debt on the house was 2x my income alone and I remember being pretty cash strapped when she decided to "take a year or two off work."

Just something to consider, I feel terrible for those who are starting out in today's market.

Submitted by jimmyle on April 9, 2007 - 9:18pm.

I make about $75K and my fiancee makes about $50K. There is no way I can afford a home if she doesn't work. None of my friends can buy anything without their spouses' income (we are around 30 yrs old). I remember my uncles bought homes on their Engineering salaries in the 90s. I think it will never be like that again.
We plan to have children immediately but luckily my to be mother-in-law is in Mira Mesa and she wants to baby sit the kids. She loves kids. That is why I have to buy in Mira Mesa.

Submitted by an on April 9, 2007 - 10:20pm.

I think that house should be in the low $400k, not $500k. But that's just me. That house is over priced compare to the other houses around that area. Here are some example:
This house:
1641 sq-ft listing @ $648k.

Other houses:
7144 BLAKSTAD CT., SD - Mira Mesa, CA 92126
1984 sq-ft listing @ $600k for over 70 days w/ no buyer.

7745 PRAIRIE SHADOW ROAD, SD - Mira Mesa, CA 92126
1826 sq-ft listing @ $625k for over 60 days w/ no buyer.

11845 GEHRING CT, SD - Mira Mesa, CA 92126
2102 sq-ft listing @ $645k for over 30 days w/ no buyer. This house is down the street from the house you posted. So location is almost identical.

Submitted by deadzone on April 9, 2007 - 10:40pm.

Why do you "think it will never be like that again"? That is an illogical statement. The main purpose of this site is that we belive IT WILL BE THAT WAY AGAIN. The current prices are NOT based on peoples real income. It is a scam that was enabled by the loose lending. As we speak this pyramid scheme is unravelling. The subprime lenders are dead. One of the prime lenders, American Home Mortgage just announced a disatrous earnings warning. In the big picture this unprecedented rise in home prices will be but a blip.

When it is all finished, absolutely you will be able to buy a house in San Diego on an engineers salary.

Submitted by temeculaguy on April 9, 2007 - 11:09pm.

Deadzone is right. You can read all the graphs and talk to as many experts as you like but your situation is the true "canary in the coal mine." When educated young professionals with decent jobs can't buy a modest home in a modest area, there's nowhere to go but down. It's not like you are looking for a premium area or a coastal area. When the white collar workers can't live in the blue collar neighborhoods the writing is on the walls. I don't know your wife-to-be but my wife in 1991 just had to have that new house with the white washed oak cabinets. In Jan 1992 we closed escrow. I was upside down until 1998 and could have bought my exact house on another street in 1995 or 1996 for just over half of what I paid. At an auction of a repo (I was outbid by 17k in trying to aquire my first rental, damn those sealed bid fha repos). But she had to have it and just like any young husband, happy wife/happy life I thought. I have lots of excuses (I was young, there was no internet, I was raised in the 80's and houses always went up in value as far back as I could remember). I even paid a retired couple to sit in line for three days so I could get the one I wanted when the phase was released. You aren't going to get a big house in Carlsbad for 300k but you will get one in Mira Mesa for that. Rent Karate Kid at blockbuster and listen to Mr. Myagi, "patience grasshopper."

Submitted by SD Realtor on April 9, 2007 - 11:29pm.

Jimmy I would agree with asianautica as well. I cannot say how far down the market will drop although Mira Mesa has a high probability of getting whacked hard. I do think that the pricing on the house you focussed on can go down much further. Try to hang loose if you can. Your deal will come. As a father with a few new kids, I cannot tell you how nice it is to have a mother in law to help out, ours lives with us... So I see why you need to be near yours.

SD Realtor

Submitted by jimmyle on April 10, 2007 - 12:17am.

asianautica,

I hope you are right. It would be nice to buy a house like that under $500K.

There was another Blackstad house listed for $549K (1800+ sq ft). We checked it out but didn't like it because the back yard fence got knocked down, the bathrooms and kitchens needed replacement). Bedrooms have laminated woods (bad idea). Stairs were squeaky. The owner seemed depressed when we talked to him. Anyway, it went into foreclosure today.

Submitted by gn on April 10, 2007 - 10:21am.

Here's an idea:

Why not rent a house (similar the house you want to buy) in Mira Mesa. That way, you can be close to your mother-in-law & live in a nice house.

If you think renting is expensive (giving $ to landlord every month & forgo the tax deduction), buying is even more expensive (huge loss of equity).

Here's the math (rough estimate):

500k house = 70k down payment + 430k loan

430k loan = $2500 payment (30-year fixed mortgage)
Property tax = $500
Insurance = $50

Before tax cost: ~$3000/month
After tax cost: ~$2400/month

Rent cost: ~$2500/month

Bear in mind, if you spend $2500/month on rent in MM, you'll probably get a better house than the house on 11902 Thomas Hayes Lane. Where as, if you spend $500k on a house, you'll get a worse house than 11902 Thomas Hayes Lane.

On top of that, you'll own a depreciating asset.

In an earlier post, someone said:

"back then I said I had only 50k and now it’s well over 100k.. I had been gaining while the market has been dropping. It definitely was a win win for me."

Right on! I'm in a similar situation (renting & waiting). Definitely win win !

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