Lately I've been reading the Irvine Housing Blog a lot, which is grimly fascinating. (Interesting that they have too-bearish trolls, who say "that place is only worth $170,000!" when there's pretty much no way the place will go that low absent heavy artillery fire, but few or no "real estate is actually undervalued!" trolls. I think there was more realtor heckling in the early days of the blog.)
Along the same lines, look at this LA house (in Atwater, which I know nothing about other than that it is next to Silverlake, and I gather less desirable) on Craigslist. It is being offered for rent at $2600 per month, and for sale at...$650,000!! The online mortgage calculator I tried gives me a monthly cost of about $5,000 for that price, including a low tax but nothing for repairs/maintenance. Unclear how much the initial downpayment was meant to be in that scenario; strangely the online mortgage calculators don't seem to have a box for that information. Surely it's very relevant to the costs?
In any case, looks like there's still plenty of adjusting to do. We're considering moving back to the states in June 2009, hence the interest. You might think I have better things to do than try to find comparable properties on the rent/sale pages of LA and DC Craigslist and compare their monthly costs, but you would be wrong, because I'm sick. I mean, I'm physically ill; I don't think my morbid preoccupation with falling house prices is that bad. There are going to be lots of financially strapped people in this mess, but things are really looking up for first-time homebuyers.
UPDATE: I imagine things are also looking up for people who bought their house some time ago, have lots of equity in it due to price increases and never having taken out a home equity line of credit, and can now re-finance at super-low rates. (Wonders whether anyone is actually in this position...) Hey, mom, what's your interest rate?
jholbo-at-mac-dot-com
I hear you. One not-so-minor reason for us hovering on the brink of civilization is that we're waiting for the DC housing market to cool down. Houses there will never be cheap but it should be possible to find a decent house for a 5-person-family for under $400,000 at some point, no?
Otherwise, we'll just move to, you know, another second-tier-country, and wait some more. (And save some more.)
Get well soon!
(BTW, try yourmortgagecalculator.com for a calculator with down payment.)
Posted by: claudia | January 24, 2008 at 08:39 PM
thanks claudia! yeah, dc-area home prices are seriously insane. I was driving down north capitol street towards union station with my brother last year and saying, yeah, I love that style of dc-house with the rounded tower section and stuff, but this neighborhood is way too dicey for me (for non-dc people, the only business for a while along this particular stretch are heavily fortified liquor stores, and this is also where they greyhound bus station is, invariably located in the asshole of every city in america. as you get closer to downtown it improves.) he was like, those houses cost $700,000. !!!?
Posted by: belle waring | January 24, 2008 at 09:07 PM
"I imagine things are also looking up for people who bought their house some time ago, have lots of equity in it due to price increases and never having taken out a home equity line of credit, and can now re-finance at super-low rates."
I don't think that rates are actually as low now as they were a few years ago. I would guess that everyone in this position refinanced sometime then.
I moved from L.A. to a New England college town, and the mortgage on my house (with a 30-year fixed etc.) is about half of what rent on a two-bedroom apartment in L.A. used to be. So it depends on where you're moving, obviously. The real killer now is health insurance costs, which are up to something like $1100/month for family coverage. But with an academic job of some sort, you probably don't have to pay those.
Posted by: Rich Puchalsky | January 24, 2008 at 09:22 PM
I guess I didn't really have my eye on mortgage rates until recently. I was thinking this bernanke desperation ploy was pushing us down to new lows? oh, looking at past averages it does seem like someone would have done this in 2003/4.
Posted by: belle waring | January 24, 2008 at 09:54 PM
also, I don't want to move to any of the places that are affordable, sadly. I've come to terms with the fact that I can't afford to move to NYC, but that's as far as I can go.
Posted by: belle waring | January 24, 2008 at 10:00 PM
I'm all NYC-centric, but remember it's a big place. No one who doesn't manage a hedge fund can live in downtown Manhattan with a family, but there's a whole lot of interestingly urban Queens neighborhoods that I'd bet you could swing.
Posted by: LizardBreath | January 24, 2008 at 11:35 PM
Is an Irvine housing blog really a good barometer? Irvine is a crazy place; it's a terribly lame place to live, and at the same time everything is terribly expensive. I'm not well versed in real estate values nationally, but when we moved here from Massachusetts, we kept saying, "you want us to pay _what_ to rent _that_?!!?"
And I never use multiple punctuation marks.
Posted by: todd. | January 25, 2008 at 01:03 AM
So, why are you all thinking of moving back to the US in '09? And why think you'd get to pick where to live? Is there a job offer around or something?
Posted by: Matt | January 25, 2008 at 02:00 AM
Irvine! I'm from there, you know.
Posted by: ben wolfson | January 25, 2008 at 04:53 AM
That Silverlake house sounds like a deal to me. Our place is $2600/month rent, and the owner thinks she's going to somehow get $800k+ for it when/if she sells. I'm hoping that we can figure out a way to buy a place for $500k or less.
Posted by: bitchphd | January 25, 2008 at 07:37 AM
you're from irvine, ben? no wonder you've never mentioned it before.
Posted by: belle waring | January 25, 2008 at 01:34 PM
That Silverlake house sounds like a deal to me. Our place is $2600/month rent, and the owner thinks she's going to somehow get $800k+ for it when/if she sells. I'm hoping that we can figure out a way to buy a place for $500k or less.
I just expatriated myself and my family to, um, what must be the most expensive city in the world, and I'm figuring out what where to live right now. Seeing 7 houses / flats tomorrow etc. It's worth mentioning that the relationship between rent and purchase price is exactly the same as what Bitch just named. Uncannily, exactly, the same.
And of course it does feel like an insane ratio. But on the other hand, it sucks to feel like you're dumping that much cash per year into the toilet of rent payments.
My sense is that things may well even out or take a bit of a dip in the next few years, yes, but desirable places in world cities like parts of LA, NYC, where I live now are always going to be in very high demand over the long haul. Everyone needs to live in these places now, for one reason or another, and that's not going to stop. Rather, it's likely to intensify over the next decades.
Or maybe I'm just telling myself that. I just remember, right after 9/11, everyone talking about a dip in the NYC real estate market. But all that happened was that all those who'd been standing on the sidelines waiting for dip got their mortgage-pre-approval papers and headed out to do battle, stabilizing the prices.
So, you might well be screwed if you live in the Phoenix or Atlanta suburbs or whatever. But it's hard to imagine the well of buyers looking for nice places in Park Slope or Silverlake or so forth drying up anytime soon.
One other quick anecdote: when I sold my place in Bklyn back in 2005 (sad day!) we had 4 offers the first day on the market, 3 of which were all cash, no mortgage. This speaks to the exposure, I think, of the super parts of big cities to the mortgage fallout etc.
Posted by: CR | January 26, 2008 at 09:15 AM
When I moved the family to Paris last year I flirted with buying. But ended up paying €1800/mo. for a place it would cost me 3 times as much to buy. The difference is better spent in fromage and Jamin-Puech handbags. Still, while all cities may die, they may take Roman-Imperial epochs to do so. (What I could have bought in Rome in 800 AD...)
Posted by: woof | January 28, 2008 at 07:49 PM
"I just expatriated myself and my family to, um, what must be the most expensive city in the world,"
Hmm that would be where I am, where our 880 sq ft 2.5 bedroom suburban house has just been valued at the equivalent of $900 000. We feel broke. Hell, we are broke.
Posted by: dave heasman | February 03, 2008 at 08:46 AM
I think you should move to Charlottesville. It's much cheaper.
Also, it's near me.
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