Comments on: Time to Buy……or Hide?

By: brenda.keener

brenda.keener — Sun, 21 Sep 2008 05:17:03 +0000

Employment is a serious concern for all of us – I think Janis has the best idea, which is to make a list of trend setting industries and then try and crack into one. We have to find the “radio broadcasting” sector of this depression.

By: MDAccount

MDAccount — Sun, 21 Sep 2008 01:33:14 +0000

I agree that, in most parts of the bay area, prices are still too high in comparison with rents. That’s why I’m buying in Vallejo, where the housing crash hit first and hit hard. The median home price is about $275K these days.

I’m also concerned about employment six months from now, which is why A) I’ve got a six month reserve of living expenses and B) the mortgage will be low enough that friends and family would be able to assist if the situation became completely dire.

Finally, I’m talking with a friend about moving into any house I purchase, just to allow both of us to save cash.

I do not think things are going to be as bad as in the ’30s (I don’t see 25% unemployment coming), but I think we’re going to suffer some lean years.

Janis, I think you’re right to target certain industries. It could well be that tremendous growth in a specific sector (alternative energy, for example) could re-invigorate the economy. Let’s hope so, anyway!

By: Janis Mara

Janis Mara — Sat, 20 Sep 2008 19:34:34 +0000

MDAccount, I think you have nailed it. Rents will always go up in the long run, but a 30-year fixed mortgage is just that – fixed.

Paul, I’m totally with you. Last week’s events will change the world, and most particularly, our world. Essentially, the second great depression in the U.S. began last week. I’ve been making a list of industries – health care, green-related such as solar – that I believe will continue to do well, in the interest of job-hunting.

And, GREAT post, Brenda.

By: paul

paul — Sat, 20 Sep 2008 19:25:40 +0000

I guess my biggest concern isn’t so much the interest rates nor how low home prices will go, it’s will I have a job in the next 6 months? I wondering what kind of trickling affect this will have. None of this will matter if I can no longer make mortgage payments

By: Laurel

Laurel — Sat, 20 Sep 2008 15:59:02 +0000

Hmm..we’re looking for our first house too–but it seems that buying will cost us just about double what our rent does now–and for a house not as big with a smaller yard. Its tough, but I’m sick of renting.

By: brenda.keener

brenda.keener — Sat, 20 Sep 2008 15:36:53 +0000

MD – you have a solid strategy and I agree, go ahead and buy! SW – if you look at the South Bay geographically, much of it is the San Jose area and is considerably down from prior years.

By: sw

sw — Sat, 20 Sep 2008 15:34:06 +0000

“Prices have dropped below even the wildest expectations of potential buyers” Uh, no. In all but the most undesirable areas mortgage payments are still far higher than rent on a comparable house. This bust will not be over until that is no longer true.

By: MDAccount

MDAccount — Sat, 20 Sep 2008 06:58:17 +0000

I’m one of those searching for my first home. One of my benchmarks from the beginning has been that the monthly cost of ownership (PITI) must be LOWER than my current rent, without factoring in the additional tax savings.

In this market it is possible, and I see it primarily as locking in a lifetime fixed rent, and secondarily as an investment that might eventually bring gains. I know that there are additional costs of ownership — repairs, maintenance, etc. — but I also won’t take the plunge without an emergency fund equal to six months rent in the bank.

If I meet those goals, I think buying is still the best way to go.