Help - Considering San Elijo Hills.

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Submitted by h82rent on February 18, 2007 - 9:17pm

VERY long time reader, infrequent poster. For the past 2 years or so, I’ve logged onto this site just about every day. I know most of the login names and personalities. I’ve been both entertained and educated.

I have been searching homes in SD, watching the prices tumble for a bit. But today, I was inclined to go check out a home in SEH. I have to say that I enjoyed the community very much, and am familiar with the surrounding areas, which I like as well. I could definitely see myself owning there – maybe for 5 years or so, maybe more?

As much as I don’t want to divulge my financial situation, I will, so that we can have a more meaningful discussion. By mid-March, I expect to have about $100k that I could put down on a home. I have most of that right now, but a bonus will push me to about that level. I have a decent amount in 401k, which I could draw from (and pay myself back) so I could come up with a 20% downpayment.

I am looking at a SEH home that is currently asking $530k-$560k. I know the current owners paid $525k in 2004 for it. They say it’s a pre-forclosure/shortsale. As you can tell, I would need to borrow from my 401k to get a 20% downpayment.

I currently rent a nice (but very small) place in La Jolla (in condo hell) for $1300/mo. I have been very patient up to now. But you know, I’m in my mid-30’s, worked my a$$ off my whole life, obtained a couple degrees and have earned a decent income (not outrageous, but quite decent). And I’m sick of living like this. I want to own my own place that I can be proud of. I want to own a place that someone with a good education and a good position should be able to enjoy. I'm a homebody at heart, and would be very happy in a nice place.

So what do people think? Come on, lay it on me. I know people on this site don’t hold back.

Also, to all those realtors out there... does anyone know the area well? Should I come in with a low offer – maybe $500k? Should I represent myself through ZipRealty or something? Does anyone want to represent me (SD Realtor)? I have about four or five friends that could, but I’d rather go with someone that really knows the area, has even more experience, and would be willing to work with me on costs – obviously if I’m dipping into 401k, I’m not necessarily lighting cigars with hundred dollar bills. Not even singles.

Thanks for all comments. Positive and negative. I'm thick-skinned. Thanks everyone.

Submitted by PerryChase on February 19, 2007 - 12:20am.

You sound like a single professional. I assume you have no wife or family. You're renting in La Jolla/UTC so I assume that you work around that area as well.

Don't buy in SEH because:

1. The commute will be a nightmare.
2. SEH will become foreclosure central and prices have a ways to drop.
3. HOA/Mellos Roos are high.
4. SEH is really a "low-brow" neighborhood desguised as "high-brow." Not worth the money in my view.

Rent a nice house for $2500 so you can get used to the payments (interest that would be out-the-window anyway if you bought) and enjoy it. Get familiar with different neighborhoods for the next 4-5 years. At that time you'll find a better environment to buy.

I recommend you buy an older house near your place of work. Choose a place without HOA or Mello Roos and use the savings to fix-up the house nicely before you move in.

Don't buy at SEH. You'll regret it.

Submitted by greekfire on February 19, 2007 - 12:47am.

Just judging by your tone it would seem that your heart and smarts tell you to sit tight and continue renting, but the materialistic libido part is saying, "Hey, your an accomplished professional and you deserve to be a homeowner."

These are the same impulses that drive many to purchase luxury sports cars (generalization), the degenerate gambler to lay down $2000 on Duke, and what drove many to buy at or just before the housing bubble's peak. It is simply not a sound investment, no matter if you have itchy feet or not.

It is not your fault that the time when you are finally able to afford a decent home just so happens to come during the recent aftermath of the largest housing bubble EVER. Similar homes that you are looking at were worth half of what they are no more than a few years ago.

I have talked with many professionals like yourself, some even more established, and ALL of them say that they would not be able to afford a home at these prices. Even they know this situation is fubar, the only thing is that they are on the winning side of things...only temporarily, however.

If you were planning on living there for 10-20 years, I might say go for it if you can deal with knowing that prices are likely to drop or stagnate for at least another 3 years or so. Otherwise, do the prudent thing and continue renting. Maybe consider moving up to a nicer property or community. You'd be surprised. To tell others, "I'm renting right now," sounds so much smarter than it used to.

Submitted by sdcellar on February 19, 2007 - 12:50am.

Perry pretty much nailed it, so I don't have much to add, but I am curious. You say you've been patient, but now you sound like you're done with that and ready to buy. Why?

I mean, sure, prices are better now than when you first started following things, but they've got more to give. You say you're ready to commit to a place for 5 years or more, but do you really mean that? You better, because there's an outstanding chance that you won't be able to sell it for what you paid for it for a number of years to come. You think you feel trapped in a condo/apartment...

Even worse, consider the possibility that you'll see the $100K you worked so hard to earn get slowly eaten away if prices continue their downward slide (and there's really nothing to indicate that they won't).

If it's a nicer house you want, do like Perry says, check out what's out there, maybe pay a little bit more in rent, and let that $100K work for you for a while.

Submitted by sdrealtor on February 19, 2007 - 12:51am.

Ditto everything Perry said except the part about SEH being Low Brow. I say Mid Brow is more accurate.

Submitted by booter1 on February 19, 2007 - 7:48am.

Best areas for families in North County Coastal?

I am considering a job offer which would cause us to relocate to North County Coastal from the Chicago area.
Have four children ages 8 thru 15 years old. My wife is a native Californian and would like to be closer to family.
We lived in Laguna Niguel 15 years ago but realize how much everything has changed.

We are not planning to buy although financially secure.
Our intent is to find an large home to rent(2-3 year lease)
(5/3 3500 sq ft.)in North County Coastal that would be close to a private school we are considering in Solana Beach.

I don't need to commute downtown but would need to go to the airport periodically but have quite a bit of flexibility regarding when I go to the airport.

Any thoughts from the group on areas to look at?
In looking at Craigslist, backpage, etc. It seems like Olivenhain, parts of Encinitas, etc might fit but I don't know the actual areas that well.

Would welcome any thoughts from the group. Thanks!

Submitted by h82rent on February 19, 2007 - 9:52am.

PerryChase, your assumptions are correct.

I work by the 163/15/52 intersections. But my hours are flexible, and I regularly drive all over Southern CA (between LA and SD mostly).

sdcellar, why now? Great question. I guess I haven't found a neighborhood I liked, in an area I liked, and be able to get into it (even though I would have to borrow into 401k - which I always advise people not to do).

It should be a warning flag to me... I consider myself to be quite finacially savvy.

As I said, I've been reading this forum for a long time, and have felt like chiming in so many times, but haven't. I will more often now. The thing I like about it, no matter what bakgrounds and personalities we have, it seems like there are some decent thinkers on the board.

So, thanks for the support and feedback. Man, it's like a support group for rehabbing buyers or potential buyers!

I might just sit tight for this summer and watch more, but we'll see.

I'd welcome any other thoughts.

Submitted by juice (not verified) on February 19, 2007 - 10:00am.

booter1:

South Carlsbad has an area called Aviara that is very nice, not far from the ocean, near the Bataquitos Lagoon and not too far from the I5 freeway. Not sure how much you want to spend, but here are two sample homes for rent in there. I have seen others in that area renting from 2700-4000. I have family that actually live a block or two away from the second listing, on Mimosa and it is a very nice community. As proof, the Four Seasons Aviara is a 1/2 mile away, LaCosta Resort is about a mile down the road. In the event that you would consider public schools, you can't go wrong with the elementary and middle schools that are a few blocks away either.

http://sandiego.craigslist.org/apa/27907...

http://sandiego.craigslist.org/apa/27754...

Submitted by CardiffBaseball on February 19, 2007 - 12:46pm.

I second the Encinitas/Olivenhain idea. Coming from the Midwest, Olivenhain might have more appeal, unless you were quite urban. More land, horses out roaming...

Nothing wrong with Aviara either.

I also think in terms of bang for the buck eastern Encinitas isn't bad. (east of el camino real, I am west). I might head that way when the kids are a little older and they won't have to move into new schools. It's still close enough to the beach that it's maybe 5 minutes more than what it takes me yet there seems to be a bigger homes relative to the square footage.

Submitted by kicksavedave on February 20, 2007 - 11:42am.

H82rent.... think about it this way. You borrow $50K from your 401K... buy a nice place which you are happy in... but you sit and watch the property value drop by, oh, lets say, about $50K. How would that make you feel? It would make me go insane, personally. Like saving up $50K over how many years, then simply lighting it on fire. And if the numbers are more like $100K, then ugh, I can't even imagine. How long did it take you to get that money INTO that 401K? It could be gone in 6 months...

If you wait it out a little longer, you might easily be able to preserve that precious savings/retirement money, and still get the house you want in a neighborhood you like.

Submitted by BubbleNinja on February 20, 2007 - 12:12pm.

Long time lurker, first time poster.

I'm with Perry on this one. Rent a house. Why are your only two options buy (and lose big time) or rent a crappy condo? Rent a house for 2500 or less and revel in your smugness as prices continue to drop. I just relocated to San Diego (from Phoenix) in October and have now just started to look for rentals (have free corporate housing till April). You can get a lot of house for 2500 bucks in areas that would be a lot closer to where you work then SEH. Craigslist is your friend.

- BubbleNinja

Submitted by Raybyrnes on February 20, 2007 - 8:48pm.

BubbleNinja,

Obviously everyone is working with incomplete information but I would say the idea of increasing my rent to get use to the payments is out. If you are renting continue to ave so you ahve more for the Downpayment. As for tapping the 401K, clearly a mistake. Pay the PMI which is now dedeuctible let the 401K ride, consider reducing contribution to the company match, and wait to build some equity on the home. Once you have the equity reappraise and drop the PMI. I have been though SEH. They did a very nice job with the community. Lot more building to take place so supply and demand might keep prices form appreciating.

As all other sposters noted, consider the single family home in areas outside the Mello Roos zone. Clearly you lose the luster of that new community prestige but the 300 a month you save will make it feel worth while. You can think of that additional 300 that you put into the Roth or 401Z as a blessing in the long run.

Submitted by ariffe22 on January 18, 2009 - 5:56pm.

I was reading through this old thread and wonder if h82rent followed the advice and counsel of the group or pulled the trigger in SEH. Seems like so much has come down in SEH since these postings.

Submitted by h82rent on January 18, 2009 - 6:34pm.

I did NOT buy that place, and I'm still renting. Still would like to buy, but I'm going to see how Obama effects things, what the economy does (or doesn't!), how bad unemployment gets, etc. The earliest will be late-2009, but I'm thinking it will be more like 2010.

And I'm not going to buy in SEH at all, after considering traffic, and realizing how high HOA and mello roos are... forget it.

Submitted by LAAFTERHOURS on January 18, 2009 - 6:51pm.

4 bedroom 2500 sq foot homes have broken through the 500k price point and are making it further down into the mid 4s in SEH. If this person is looking at it for his family, long term home, it could be had for under 3K on a 30 yr fixed.

Thats getting close to what you could rent the place for. Just heard the sports club is in process. Also heard they are working on completion of the commercial spaces in the towncenter.

Submitted by sdnerd on January 18, 2009 - 8:45pm.

If you have to borrow from your 401K to get the 20% down, do not buy. Seriously.

When you have 20% down, AND at least 6-12 months salary in cash as an emergency fund then consider it. Look at the world economy right now!

Sounds like you are almost there now, so if you saved up the rest of this year you'd probably be in good shape. Plus, as mentioned prices are only going one direction right now.

Now, for those saying go rent $2,500 for a couple years. That's $30,000 a year in rent. In 3 years is the house you are looking at going to lose $90,000 in value?

I'd say suck it up at least 1 more year where you are at now, save up, then strike. Your goal here is really to stay employed, and get the majority of the price corrections taken care of before the rent costs vs. price declines cross.

Just my .02.

Submitted by sdduuuude on January 18, 2009 - 11:52pm.

When I was in my early 30's, I was not a homeowner either, and just before I hit 30 was the time when I stopped renting condos or apartments and rented a nice house with a roomate. That is what I would suggest.

Rent a house in a neighborhood you like, and if you can deal with it, get a roommate.

Perry said rent a house for $2500. With a roommate, I'd go for a $3K place and split it. Without a roommate, I'd go with a $2K place, but then again I live in Clairemont so I'm cheap.

If you live in UTC condo hell and like SEH, our tastes are totally opposite so I won't give you any advice on where to rent, but find a house.

Also - take the difference between your rent and your expected house payment (financed at price less 20%. Include insur and prop tax in the house payment) and put it in the bank. This will help you build up your down payment, let prices fall, and get you used to paying a house payment every month. I think you may soon find you don't like it and will rediscover the joy of renting.

If after a year of that you don't miss the extra cash, you may well be ready to buy.

If you can live with a roommmate, you may be closer to a purchase than you think. As a single guy, you can own the house and rent out a room. Just a thought.

The more your rent, the longer it will take you to save the down payment, but you will have a nicer place so it won't be that bad.

If you do rent a house, use real estate resources to determine the financial status of the homeowner, and when the house was purchased so you don't get run out by a foreclosure or other forced sale.

Borrowing some money from your 401K wouldn't be a bad idea if you already had the 20%, but since you are trying to borrow the down payment from your 401K, it is a terrible idea.

Bortrowing to buy places they think they "deserve" is what gets people into financial trouble. Deal with the reality of your situation not with the fantasy of your expectations.

You don't have to own to improve your living situation.

Submitted by sdduuuude on January 18, 2009 - 11:50pm.

This just came to mind:

new poster: "Hi. My name is h82rent and I'm an Iwannownahouseaholilic."

ALL: "Hi, h82rent"

.
.
.

Submitted by SD Realtor on January 19, 2009 - 12:28am.

h82rent sounds like you made a good decision to hold off. Time is on your side.

Submitted by DWCAP on January 19, 2009 - 2:51am.

Everyone please note that this thread started almost exactly 2 years ago.

Weird how little things change. Weird how differnt things can be.

Submitted by barnaby33 on January 19, 2009 - 8:57am.

Its like a good old fashioned freak out, financially of course. sdduuude's suggestion makes sense to me. I'm just too cheap to pay that much rent.
Josh

Submitted by sdrealtor on January 19, 2009 - 11:57am.

Cmon Josh, you're not cheap. You dont drink the 2 buck chuck. Why live in the 2 buck chuckhouse? You dont need to go whole hog like sdduuude said but get yourself a nice place to live. Life's to short to drink cheap wine or live in a crappy place.

sdr

Submitted by BGinRB on January 19, 2009 - 2:02pm.

Ah, "life is short"...

I still remember my grandpa's last words "I only regret two things: not having granite countertops in my kitchen and not watching enough TV on my 52'' plasma."

Submitted by sdrealtor on January 19, 2009 - 2:58pm.

Thats funny. I have neither.

Submitted by urbanrealtor on January 19, 2009 - 11:40pm.

sdrealtor wrote:
Thats funny. I have neither.

Dude I was drinking the 2buck chuck when reading your post.

Snob.

Submitted by sdduuuude on January 19, 2009 - 11:48pm.

Sad lot you are when my crappy little Clairemont house is "whole hog."

Submitted by sdrealtor on January 20, 2009 - 7:45am.

sdduuuude
Wasnt referring to your home just what you said about renting a house for $3K. JOsh can upgrade his temporary abode for much less and live somewhere nice to spare himself the pain of a crappy rental.

Submitted by urbanrealtor on January 20, 2009 - 3:49pm.

What about the 2buck chuck?

Submitted by sdduuuude on January 21, 2009 - 12:44am.

I know. I know. Just havin' fun.

I'd drink 2 buck chuck if it weren't so damn pricey.

Submitted by lenore on April 23, 2009 - 9:52am.

I'm just starting to think about buying a condo (can't afford a house) and was interested in SEH. I work at the university, so the commute would be perfect for me, and it seems like a pretty nice place now that things have gotten built up a bit--grocery store, cafe, parks, etc. I've read a few threads now about the prices dropping, but all the threads are old...

Does anyone (who has been paying attention longer than I have) know if things have bottomed out there, or will it keep dropping? Is it worth it for the neighborhood? Is the mello roos (I just looked up what that means the other day) bad enough to make it worth avoiding SEH altogether?

I don't necessarily have my heart set on a condo in SEH, it's just one of the places I'm looking at. I'm curious what others think of the area and the value of the homes.

Submitted by sdrealtor on April 23, 2009 - 10:03am.

You will get lots of opinions but very nice townhomes of good size are now under 300 and even some close to the mid 200's. That would seem to be just about as low as they could go. Perhaps there is some downside left but there doesnt seem like there could be alot left.

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