A big help to me in understanding the economy as a whole and analyzing the data has been through: http://bigpicture.typepad.com/
That site is my main goto to understand what's happening in the market.
I used http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html to help determine if we should rent or buy. We currently pay $1195 rent with a budget of about $250,000 for a townhouse. So according to the calculator, we're actually better off renting. However, we rent an apartment where we don't have W/D hookups and the garage is one car that's detached. In addition, we have a neighbor above us with three young boys (loud :) ). I don't mind it too much though. . .
The noise in our neighborhood is fairly loud. We're surrounded by two very noisy apartment complexes, less than 1,000 feet to a main freeway and railroad tracks. The racial makeup is majority Hispanic, which explains the two taco trucks that sit on our street, and the loud music we hear just about every morning.
So if I were to compare the $250,000 townhouse with a comparable rentable property of about $1500/month in a better neighborhood, we end up working out ahead.
I'll be getting a 5.95% APR loan through CalVet (thank you Air Force).
I've been looking off and on since about March. But it's definitely morphed as time went on.
Recently, we looked at about 4 townhouses. One was a short sale. . . but there was water damage, and the current residents were highly undesirable. . . not to mention a very flakey selling agent. Not worth the hassle.
The other three were much better. The main one I like is located in Anaheim. The amount I'm offering is based off of these detailed email. I think it may help you in determining what price you should aim for. I have very specific criteria, and time is in our favor.
$212,650 is what I'm willing to offer. Please let me know if there are any major holes in my logic:
- My target day to "close" any house sale will be in the January - February 2009 range based off of this chart (http://calculatedrisk.blogspot.com/2008/08/july-existing-home-sales-record.html) when sales are typically the lowest of the year. This is to ensure that there will be less buyers and more sellers.
- With no major reason that's pointing toward a "bottom" anytime soon, I'll be pricing according to my projections of what the house will price at in the Jan-Feb '09 range. In fact, high gas prices, higher commodity prices, rising unemployment, the US's continual involvement in Iraq & Afganistan, and the continuing failures of major financial instruments of Fannie Mae, Freddie Mac, Bear Stears, Lehman Brothers, AIG, Indie Mac bank, point toward the economy becoming weaker rather than hitting any sort of "bottom" within the next couple of years.
- I am pricing VERY aggressively because I would rather risk losing the house than pay more than I need to. We're not in any hurry to move out, and at our cerrent rent, moving up to a town house is a luxurious upgrade in both quality and cost/month based off of this calculator: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
- Based off of the data at http://www.trulia.com/real_estate/Anaheim-California/, this is the data I have extrapolated to project future housing prices for 3 bedroom houses/condos in the city of Anaheim. I made up the numbers for Sep'07 & Dec'07 because they weren't available on the site.
Aug'07 median house prices for Anaheim have declined on average, 9.12%/quarter for 3 bedroom houses in the Anaheim area. This is probably based off of listing prices and not actual sale prices. Taking this 9.12% out to my Dec-Feb'08 quarter takes the original $245,000 that would be reasonable in Sep'08 to the price I project it to be at in Feb'08, which brings me to $222,650.
If you have the trends for actual sale prices for this time period, that would be more accurate in determining the actual trajectory of median sale price for 3 bedroom condos/townhouses/houses that could help me in determining a more accurate price.
- From a preliminary list of improvements that will be needed, the total cost would be about $10,000 for these improvements:
|Ventilated Range Hood||399||0||100||39||538|
|Carpet (4 Rooms)||2,000||2,000||4,000|
|Bath Faucet Repair||80||100||180|
|Refinish Wood Stairs||1,000|
- So from the $222,650 projection, minus the $10,000 minimum improvements that I saw at first glance, the price of initial offer would be $212,650.