Should I buy now or wait?

Question

Hello BP family, I'm brand new to the community and looking forward to do some REI in the near future.  But first I need a primary home in SoCal.  My family relocated to OC for a year now and is not new to the house price comparing to where we from in the Mid-West.  Though we can afford a home in Irvine due to its location for schools and community but we are still hesitating whether we should buy now or wait since the house price is peaking.  I got mix opinions from my friends and coworkers.  But the majority of them said to wait it out.  What do you guys think?  Much appreciations to your inputs.

David Faulkner · Answer

The best time to buy is when you find a great deal. If you find a great deal now, then buy now. If you do not, then wait. One thing is for sure, though, is that great deals do not just fall into your lap, you have to actively search for them.

Joe Homs · Answer

@Brandon Vu  it really sounds like you should sit down with an experienced real estate professional and ask all your questions.  There are a lot of moving parts if you are buying as a principal residence or an investment.  I would be happy to sit down with you and discuss your options.  Cost is only a cup of coffee at my local Starbucks.

Good investing.

Check out photos of my two new flips in progress:

Royce

Santa Barbara

Brandon Vu · Answer

Thank you all for your great opinions and suggestions.   I am buying a home and it makes sense regardless of FMV if you buy to keep.  However, I still would like to start low rather than high.  The interest rates are nice but I couldn't pass the thought of the high house price.  So I am thinking to rather sacrifice the rate knowing that I could have a chance of refinancing than, buying at overpriced.  How do you know if it is a great deal?

Nathan Emmert · Answer

Are you buying an investment or a home?  A house can be either.

If you're buying a place to live that you expect to appreciate and create net wealth, you're making an investment.  From an investment point of view, it may make sense to wait.

If you're buying a home, does it matter what the FMV for it is for the next 10 years?  If you never sell the property you never "realize" the loss.  It goes up, it goes down, it doesn't really matter.  You've locked in a 30 year mortgage at almost no interest, secured a place to live at a relatively fixed cost, and provided a stable atmosphere to begin making memories that turn a house into a home.  If you're looking for that there's no time like the present.

Frankly, market timing is darn near impossible.  To say prices are peaking or a recession is looming is silly.  If they were that easy to predict #1 they wouldn't happen (interventions would prevent them) and #2 there'd be a LOT more rich people as billions would be available for those that could market time.

Chris Boulas · Answer

Hi Brandon - nice to meet you. I'm in Irvine as well. The decision my wife and I have made on this same topic was to wait. I've ran the amortization data comparing the cost differential of buying now at a low interest rate versus paying a higher rate in the future with a lower home price. Based on my input criterion, my results suggested it'd be better to wait, but I'd encourage you to run some of the same numbers as your input variables will differ and could net you a different result. However, @Alice Ham is right about most rules not applying here. The Irvine/Newport markets typically withstand drawdowns very well, much better than other cities. I'm not a speculative investor so I didn't factor that in!

Alice Ham · Answer

@Brandon Vu Hi Brandon, welcome to BP. I think you will find that most real estate rules don't apply in Southern CA and especially in highly sought after communities like Irvine.  There's no better time to buy than now, especially with the low-interest rates. Irvine has the benefit of some of the best schools and community programs, and it is always in demand for those very reasons. The rental market has been super hot here the last two years.  Also, it's one of the last few OC cities that still has room for growth.  It's powered by a huge business sector and builders are in a mad rush to build, especially with the development of the Great Park. Feel free to PM me if you need any additional info. I live and work in Irvine :)

Keino Chichester · Answer

@Brandon Vu

There's a saying that goes; the best time to plant a tree is 20 years ago. The second best time is NOW.

I believe if you purchase your house as if it's an investment property (purchase it according to market rent) It doesn't really matter if the price drops, you could be under water if the market crashes but your payments will be the same if the loan term is fixed. Thus, any rents you collect will have a positive cash flow which would only get better over time since you live in a pretty stable market. In most cashes, it's cheaper to buy than to rent especially when its a 2-4 unit property. You can spend a few years paying rent and waiting for a good time. Or you can buy now and get paid while building equity via principle recapture.

good luck!

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