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Thread: Need some advice about my house situation

  1. #1
    Elite Member DeadDwarf's Avatar
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    Smile Need some advice about my house situation

    Background info, kind of long, but I am a bit excited!

    My husband and I own a "track house" that we bought from the estate from a dead family member. It was a slight fixer upper, but it was a great price- way lower than it's appraisal.

    The house is 3 bedrooms, 2 and a half bath. It is about 1,650 sq ft and has a very small backyard that is pretty much a large concrete patio. There is no front yard at all, just a driveway- and there's traffic behind and to the side of our house, not safe for kids outside of our yard. The bedrooms are a good size, but the "living spaces" are small (apartment sized kitchen, small living room ) and we feel a bit crowded with just us and the baby. We plan to have another baby next year. We have talked about possibly having 3 kids total.

    We live in southern California and the prices are dropping like crazy and foreclosures are popping up everywhere in our area (2 just on our street). We have no plans to sell our house- we plan to either live in it or use it as a rental. We have updated the house (spent about $30,000) since it is 20 years old, we also paid off our mortgage last year. We didn't get a penny from anyone to do this all.

    Our dream is to move to a bigger house with an actual backyard. We never thought it would happen now that we have started a family. We kind of accepted that this is where we would stay forever since we won't be able to afford the houses here.

    My husband's grandparents made a lot of money by building up a business in Los Angeles. They sold it and have been passing down the family's inheiritance down to their children only (my mother in law and her 2 siblings). My mother in law has a large amount of money from investments and family money, she is divorced and has no other children other than my husband. She has him on all her docs as the sole heir to her entire life savings (and even more when his grandmother passes away).

    She told us yesterday that she plans to give us up to $100,000 to put down on a new house so we can move when the house prices have hit bottom. She wants us to keep our house in the family for our kids/retirement income, so we will rent our current house and use that money to cover our new mortgage (we would have to pay insurance and property taxes out of pocket). She pretty much said it would be an early inheritance for him since she knows we are getting cramped with our new family.

    Needless to say we are shocked, but very happy! My parents have never offered to help us with anything and we never expected anyone from my husband's family to help us out. His mother said she had to struggle with a young family and doesn't want her son's family to struggle too.

    Now it's a waiting game, I have read articles where they say experts expect the housing market to hit bottom around 2010, but it could be a little later. It's nerve wrecking not knowing how low the prices will go, because if they don't go a lot lower than the current prices, then it doesn't make it worth it for us to move from our current home. I am hoping the houses that are appraised at $450,000 (standard 4 bedroom homes) now will be $250,000 to $300,000 in 2 to 3 years. We could wait longer than 3 years if needed since we already have a home to live in.

    Has anyone watched the market to buy a house at a lower price? Has anyone here bought when the market was bad? Anyone ever been a situation similar to ours?

    We have awesome credit (750), an income to afford $200k-$300k priced house , a moderate amount of savings in the bank and a huge down payment (thanks to mother in law). I am hoping we will still be able to get a loan when the market is crap.

    Any stories, tips or advice? Thanks!

  2. #2
    Elite Member McJag's Avatar
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    I know property prices in your are are far greater than ours-for 250,000 right now you could get over 3,000 sq ft. I don't know enough about your specific area. I would make friends with some agents or former agents that know your area. I am not that convinced that prices will continue to fall. Still, your Mom in law sounds like an angel! How generous of her!
    I have read where the best houses are sold before they ever get on the market. You need a pipe line!
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    The heat may be out of the market and prices may fall slightly as a result but they won't necessarily fall a huge amount, especially if you are looking at a nice area with good local amenities (schools, shops, transport, etc). As usual, location is EVERYTHING and it's better to go for a fixer upper if necessary on a great block of land than a palatial McMansion in a tiny block in a development of a million other McMansions. If your new house is going to be your family home for the next 20 years or so it's more important to find something that ticks all the right boxes and that you will enjoy living in. The investment potential is really a secondary issue. If you are looking to make a short term killing don't do it with the family home. If you are happy to go for the longer haul and 'cash in' when you retire you will be absolutely fine, especially if you don't have a mortgage or other debts at that time.

    Once you've decided specifically where you want to live and what your house must have then go and talk to local realtors and let them know you are cash buyers and ready to move. They often have properties 'off the books' waiting for the right buyer to come along. As for valuations, I don't know if you have them in the US but an independent valuer (NOT a realtor) will be able to give you an objective opinion on what something is worth.

    Get something with as much land as possible - God isn't making any more land - and if you need to fix up or renovate that can be part of the fun in making a house a home that perfectly suits your family's needs now and in the future.

    And yes, if you don't need to sell it (thanks Grandma!) keep the house you already have and rent it out. It's a useful source of income and is an accumulating asset.
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    A real estate agent might sound like a good person to ask, but they have a vested interest in trying to get you to buy a house. That's how they make their money. Take what they say with a grain of salt, and get lots of opinions.

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    Elite Member Belinda's Avatar
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    you have a wonderful MIL! Mr Gogo works in the mortgage industry and from what he's seen doesn't think things will turn around for at least another 12-18 mos but it's hard to say for certain. No one can predict where the bottom is. Your best bet is to keep an eye on the neighborhood(s) you are interested in, keep track of the comps and when you see them start to go up it might be a good time to make an offer. It's great that you don't have to sell. Good luck!

  6. #6
    Elite Member DeadDwarf's Avatar
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    Thanks all! There are some nice houses around my house (where I would like to stay) and they are going for $350,000 to $400,000. It would be great if they dropped another $50,000 in the next two years.

    I really wish I could get a house with land (land here is up to an acre). But unless I live on the outskirts of the city, I will have to be satisfied with a backyard that is smaller. If we lived on the outskirts then it would take 15-25 minutes to get to a freeway, and that is way too far around here, especially around rush hour.

    I was thinking about a fixer upper too, if prices don't go down far enough we could go that route. Our house now is all fixed up, so it would be a little overwhelming to fix another house all over again. It's a lot of work, but I will do it if we have to. We would like to live in the next house until our kids are grown, possibly longer, who knows.

    I'm going to keep an eye on the houses in our part of the city and wait till the prices get in our range. If it's in a few years that is okay since we will have more time to build up our savings for home improvements.

    Thanks for all the advice. And my mother in law is pretty generous and great, nearly 7 years ago she hated me, but now she is like a mom to me. Who would have guessed!

  7. #7
    Elite Member louiswinthorpe111's Avatar
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    ^^What'd you do to get her to change her tune?

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    Elite Member Penny Lane's Avatar
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    Quote Originally Posted by McJag View Post
    I know property prices in your are are far greater than ours-for 250,000 right now you could get over 3,000 sq ft. I don't know enough about your specific area. I would make friends with some agents or former agents that know your area. I am not that convinced that prices will continue to fall. Still, your Mom in law sounds like an angel! How generous of her!
    I have read where the best houses are sold before they ever get on the market. You need a pipe line!
    Dont mean to hijack with my random response but, yea, McJag I know... the cost of living in Texas is so cheap, I'm shocked when I hear that $500,000 for 2,000 square feet is the going rate in some big cities. I consider my house pretty big and it's in a historic part of the city... the former mayor lives in one house down street and the current one lives in a house down another... 2,300 square feet... and it's been appraised at just under $120,000.

  9. #9
    Elite Member DeadDwarf's Avatar
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    Quote Originally Posted by louiswinthorpe111 View Post
    ^^What'd you do to get her to change her tune?
    Not much. I just was always respectful to her and tried to be nice. She had big problems with letting go of her son. Even though she pissed me off, I let it go because I knew she was lashing out on me because of her own pain.

    Over time she has really warmed up to me. I figured if it never happened everything would be fine with me, but it's nice that our relationship is good because my mother is a crappy mom.

    We told my mother in law recently that we named her in our will to be our daughter's guardian if anything ever happened to us. She started bawling and said, "This means so much to me because it tells me how you feel about me. I know we had a rough start, but things are okay and I am happy with you being in our family." (Then my husband started crying, which made me cry and then the baby cried because she didn't know what was going on. LOL)

    Quote Originally Posted by stylejunkiex View Post
    Dont mean to hijack with my random response but, yea, McJag I know... the cost of living in Texas is so cheap, I'm shocked when I hear that $500,000 for 2,000 square feet is the going rate in some big cities. I consider my house pretty big and it's in a historic part of the city... the former mayor lives in one house down street and the current one lives in a house down another... 2,300 square feet... and it's been appraised at just under $120,000.
    You're lucky! I would love to live in an old house with so much history!

  10. #10
    Hit By Ban Bus! AliceInWonderland's Avatar
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    wait another 2 years to buy DD until then keep looking; you have a lot of room to be picky and get what you really want! and congrats to you guys; thats a big relief i'm sure!

    p.s. u know we live in the same region and i work in Real Estate (i dont know why but i do! ) FYI....

    hold out and be choosey and decide ur likes and dislikes in everything! u have time dear
    Last edited by AliceInWonderland; July 9th, 2008 at 04:12 PM.

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    Elite Member sluce's Avatar
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    I've been told that the bottom will be regional. In my area of PA the average 2000 sq ft home is still over 500k. It has dropped but not as much as it has in other parts of the country. I like buying properties in my area that are fixer uppers. I have flipped several homes. Right now I am buying but do it knowing I will not be flipping them right away. My adviser said buy now because at most it will drop maybe another 3-4%. Then once it starts to climb back up it will not be a fast climb as it was in past years.

    Check with advisers in your area who have been watching the trends. Use a financial adviser not a realtor who needs you to buy now so they can feed their kids - LOL.

    Best advice is to have fun!!

  12. #12
    Elite Member Rica's Avatar
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    You should wait until things are a little cheaper, but on that same note, if you find a home you absolutely love and HAVE to have, go for it. Having something you really desire is worth the extra money.

  13. #13
    Elite Member DeadDwarf's Avatar
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    Quote Originally Posted by AliceInWonderland View Post
    wait another 2 years to buy DD until then keep looking; you have a lot of room to be picky and get what you really want! and congrats to you guys; thats a big relief i'm sure!

    p.s. u know we live in the same region and i work in Real Estate (i dont know why but i do! ) FYI....

    hold out and be choosey and decide ur likes and dislikes in everything! u have time dear
    Thanks! I worked in real estate in 2002 and 2003, it was fun. That's when prices started skyrocketing around here. I got my salesperson's license and then changed careers because I was worried about not having a steady paycheck. Oh well!

    Quote Originally Posted by sluce View Post
    I've been told that the bottom will be regional. In my area of PA the average 2000 sq ft home is still over 500k. It has dropped but not as much as it has in other parts of the country. I like buying properties in my area that are fixer uppers. I have flipped several homes. Right now I am buying but do it knowing I will not be flipping them right away. My adviser said buy now because at most it will drop maybe another 3-4%. Then once it starts to climb back up it will not be a fast climb as it was in past years.

    Check with advisers in your area who have been watching the trends. Use a financial adviser not a realtor who needs you to buy now so they can feed their kids - LOL.

    Best advice is to have fun!!
    Very cool! I watch those house flipping shows and think how cool it would be to do that. It's smart you are holding on to them for the time being, you will make money when the market rebounds.

    And yes, I will look into a financial adviser. I briefly spoke to one and he said to invest in crude oil pipes stocks and wait to buy a house in a few years. We will see!


    Quote Originally Posted by Rica View Post
    You should wait until things are a little cheaper, but on that same note, if you find a home you absolutely love and HAVE to have, go for it. Having something you really desire is worth the extra money.
    Yep, totally agree. But I am also avoiding looking too much because I am worried about falling in love with something and not being able to afford it!





    OH! And this cute house on our street is for sale. Just to show you how the prices have dropped: it's 1100 sq ft, 3 bedroom/2 baths, 1/4 of an acre, nicely landscaped and maintained. It does need to be updated (kitchen, baths, painting), but it is cute and in good shape.

    The owners bought it in Dec of 2005 for $465,000!!!

    It is listed for only $210,000. It's been on the market for 6 weeks with no offers. The owners are desperate to sell it. Can you imagine a loss of $255,000 in 2.5 years?

    OUCH!!!!!!!!!!!!!!!

    But it gives me hope that a bigger and more updated house will be in my price range one day!!!!

  14. #14
    Hit By Ban Bus! AliceInWonderland's Avatar
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    oh thats a plus too that you have experience DD

    thats a great relief though; im really happy for your guys! being able to afford a house or not is a huge stress otherwise...

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