Housing market question?

Question

I'm looking to buy because I can't afford to rent anymore. The lower rent areas are the worst. (Noisy and rowdy) In trying to look for the more quieter areas I find more affordable homes.

I'm in the Lakewood area of southern California. I spoke to an individual that says the forecast is bad because their expecting homes to drop even more, because there will be double foreclosures in the next 6 months.

In addition, the rate just jumped to 7%. When would it be smart to buy? Should I just wait?

Answer 1

If you cant afford to rent, you definitely can't afford to own. You will have to pay taxes, mortgage, insurance, maintenance and repairs. The first phase of foreclosures is happening now, the second phase is adjustable rate mortgages, which will reset next March, in bulk. Interest rates are rising, but home prices are falling. the Case Schilling Report stated home prices are down 16% nationally. In some areas, prices have fallen more than that-I read to expect 40% before this is all over. Talk to a mortgage broker, and see what you qualify for. If you pay 30% less for a home next year, wouldn't paying a higher interest rate be a good trade off? Get qualified for a mortgage, than start to go house shopping with a realtor. Don't be in a hurry. When you find the right place at the right price, buy it! Good luck.

Answer 2

I just did a quick run of your numbers and I'm getting lower figures.

First interest rates are around 6.5% and even when I run it with 3% down and mortgage insurance I get $1790/mo all in.

Most areas in S. California are not considered declining anymore.  You can always offer $200K for a home and see what they say.  Then your payment will be even less.

Bottom line is you've got to live somewhere, and markets trend.  We might  not be at the bottom, but do you plan to live in this house for at least 5 years?  If yes, you could get your money out of the property, at least, live somewhere more to your liking and get a good tax deduction while you're doing everything else.

I suggest you get a competing quote for your mortgage, if you're gonna pursue this.

Feel free to contact me if you need further advice.