I've been waiting to buy a house for a while. It's expensive in the Bay Area (San Francisco) though.
$750K will get you a dinky 1500sq ft fixer upper in a so so neighborhood. 1BR condo starts at $500K. You gotta shell out a million plus to get something decent.
I've been sitting on my hand watching in amazement as house prices continue to climb upward thinking who can afford the houses at these prices.
But it looks like things are starting to be saner as the supply of houses for sale are beginning to build up - not just here but in alot of places.
I'm willing to bet that in the next 12-18 months, Ben B (the Feds) will raise interest another percent or so. Then house prices will drop 5-10%. The rent/purchase ratio is out of whack for the Bay Area. Something's gotta give in the near future.

so...
what do you guys think? Is this a pause of a upward trend or is this the beginning of a downward trend (I don't think prices will crash in the Bay area)? has the fundamentals of real estate change or are we in a bubble in the Bay area?

 

I think it's time to get out of CA. Oh wait, I did that a year ago and have loved every minute of it. Everything is paid off and we bought a new house that was bigger on a lot larger piece of land.

 

Just remember, rising interest rates also mean reduced buying power for you. So, even if prices in the segment you are interested in drop, it may not be enough to offset your higher mortgage payment. Or it might just be a wash.

I've never been one to try to time the market. Especially not for a long term investment like primary residence. I'm either getting in or getting out. And I don't plan on getting out of not paying rent.

It is a nervous time to be getting in no doubt. But if you are planning to be in your place long term, and have a good downpayment, I feel that any market corrections should not be a problem unless the real doomsday scenarios are realized. It's possible that that will happen but it seems to me that holding out is making a high-stakes bet against a looong trend. IMHO.

 

If you are looking for somewhere that you expect to keep for the long term, then any downward movement in the market in the next 12-18 months (if it happens) is likely to be recouped in the following years.

The only people who really lose a lot when the market goes down are usually the people who have overstretched themselves and can't afford the repayment then are in a position where they HAVE to sell for a lower price than they paid. As long as you don't over-reach, and can keep hold of the place, the risks are not, IMHO, too great.

Please note the value of investments may go down as well as up .... etc. .etc. .etc.

 

I'd rather have high interest & low price than the otherway around.
Although the monthly payment may be the same, if I come upon a large amount of $$, I can just pay the loan off all at once.
the other scenario is that if interest rates drop, I can refinance at a lower rates (voila low rates for a low-priced house). But if your rates are already very low, there's no hope of refinancing.

 

that's what I'm thinking alot of Bay Area people are doing. How can a family making $100K a year afford a place that runs $750K - 1000K?
If interest goes up, all these ARMs gonna have difficulty and may be forced to sell. Even a small percentage will result in further glut of houses for sale.

.

 

That's what happened in the UK about 17~18 years ago ... prices rising rapidly, people stretching themselves to buy as large as possible, then rates went up, prices fell, people couldn't afford the repayments, banks repossessed some properties, sold them on cheap, pushed prices lower, and the market lost something like 30%+ in 6 months .... THAT was a great time to buy

 

There is only one thing wrong with your initial statement, historically rising rates also mean rising demand and, unless the rates are insane, it also means rising prices. The reason for this is that rising rates mean an improving economy and a more positive outlook by the people.

Low rates or falling rates typically mean a weaker economy.

Rising rates means people are more optomistic about raises and increased income which translates into their willingness, nay eagerness, to bet that tomorrow will be better and pushes people to buy NOW not wait because the rates will be higher tomorrow.

Falling rates/weaker economy makes people wait because they are worried about their future and also because prices/rates will be better tomorrow.

It's counterintuitive I know but historically that is what has happened. It's like the old stock adage of buying low and selling high. It makes sense except that when you are buying low it means the market is cratering and people are selling because they don't know if or when it will recover.

Even when rates were 16-18% during Jimmy Carter's administration it was tough to keep up with the demand.

I'd vote for what someone else said, get out of California. Go someplace sane!

 

I think you are the first person I have ever met that has been so happy in Idaho, ah yes the potatoes, lots and lots of potatoes.

hehe, j/k...sounds like you played your cards right

 

uhhhhmmmm...
no.