I consider that real estate is unsustainably high in my area (FL east coast). We've been looking to downsize and move further south but are fairly sure that we would eventually lose money on anything we bought right now.

However, I also know a lot of people who are investing in real estate even though they also expect another crash, because next time a lot more may crash than just the housing market, and with real estate at least you have physical property.

My DH recognizes that we'll likely be there long enough for things to be -- at the very least -- not a loss... our agent says that more homes are always coming on the market, and maybe when it's truly the right one I will have no doubts. But in the meantime...yikes prices are high!

well..it depends how existential you go about that, how much you delve into this feeling so to say

at times even me saying "I wouldn't be able to live in such a place" sounds to me myself plainly wrong because come on..we all know we'd live anywhere rather than die, 99% of the time, in conditions that otherwise would seem unbelievable, and not in a good way.

Yet I'm still saying that, right?

We don't choose our times.

There is a great poem about that by a famous Russian poet(about times I mean not about houses)..but my translation skills don't go that far. Main idea-you can't exchange it. It's not a market. You've got what you've got.

Houses are a market though.

So you have this dilemma..you have a market with some more or less based feeling of some control over your decisions, within something that's really you have no control whatsoever..something much bigger than any market out there.

Separate one from another, to some degree at least..you live in a certain time in a certain place and you are you in your unique circumstances for better for worse. You don't have as much control as you think. You do have some though -which allows you to do lots of good things that selfish people don't do. Even if you happen to live in a nice house.

If you are looking for your forever home, then it shouldnt matter if the prices are higher than you think they should be right now. You will be there forever. The market takes years to change back and forth. In most areas we are at the "beginning stages" of a sellers market. Its been happening with bidding wars for about a year and we are just now starting to see the change in the prices being higher. (It happens very slowly and takes time for the appraisals to catch up) Remember its a wash. When you spend more for a home, you're also selling yours for more. Just find the one you want and offer what it takes to get it and what you can afford. A year from now, you're not going to be kicking yourself that you paid a little more than you wanted to. Hopefully, you did that because you love the home.

it shouldnt matter if the prices are higher than you think they should be right now.

I would say that depends on how much higher. For example, although overall property in the county where I am looking is up about 9% year over year, at the price range and in the neighborhood where I am looking actual price increases are averaging over 50% a year for the past couple of years (AirBnB wannabes and sober homes are paying whatever). That's a big difference from paying a few percent over value.

As someone who recently purchased a new home, despite thinking my former home would be our forever home, I think buying a home is far more emotional than it should be. If it were just a matter of making a reasonable investment, then yes, you probably can come up with a formula based on past, current, and predicted market value. I know "experts" tell you not to be emotional, but sometimes you really do fall in love with a home or what it may represent (e.g., joy, security, dreams, serenity, etc.). It may be that you haven't found a home that inspires you to put aside some of your fears/anxiety yet. I can tell you I had much of that same anxiety when we purchased our second home. It was a stretch financially, but we loved the house, the community, its location, the local public school, etc. and all of that reassured me that the investment was worthwhile.

I also want to emphasize how much I relate to kudzu's comments above. It echoes my lived experiences. We were also in our home for the past 12 years before we moved. When the market fell out in 2008 or so, we learned that our very expensive home was only worth 60% of what we had paid in 2005. I was shocked and scared but then my husband pointed out--it doesn't matter as we don't plan to move. We loved the house, our neighbors, our local schools, the community, the proximity to our jobs, etc. The only thing that changed is that we had no equity, so we didn't do any house upgrades.

Lo and behold, 9 years after that crash, our house's value not only recovered, but we also made a tidy profit. More importantly, we had 12 wonderful years of memories in that home and the value really was only a number on a website.

I wish you all the luck, melle!

It's true, maybe I haven't found anything I love enough, yet, to go all in. At any rate, the search will continue

melle-

Good luck in your search. And remember: don't let the perfect be the enemy of the good!

We're selling (listing next month in a hot market) and going to rent until the bubble pops.

I was worried to buy in 2010, because I felt the market here in LA still had room to drop more. It didn't and our house has appreciated about $100K+ per year. Prices are higher than the 2007 peak. Doesn't make a difference as we aren't selling for a while.

Some markets aren't easy to analyze and predict. Some of the fundamentals just don't seem to apply in some areas.

Those that were waiting for the bottom of the bottom, are still waiting, and pretty much priced out of the better LA towns.

chispa-

Exactly. Far better to buy what you like and can afford and jump on it instead of: 1) looking for a bottom that may never come, or 2) having it occur at an inopportune time, or 3) spending years in limbo trying to wait for the perfect time. Besides, bottoms are always much easier to identify a year or two after they have occurred... ;-)

Metropolitan California housing costs are ridiculous. We have watched our kids buy in the LA area, and it is a real challenge. We bought our house, the most expensive we ever owned, in 1978 and raised our family here. We have watched the price quintuple in our development over the years. Prices did dip in the recession, and interest rates have also had an impact on affordability. You can wait for prices and interest rates to go down, but they usually go up, especially prices. Moreover, the bidding wars we have in this area are not for the faint of heart either. I remember one house our son was trying to buy sold at $200,000 above asking price. This was a house priced well under $1 million.

If you live in a HCOLA you may have to distill your list to what is Really important. For me location was first for a number of good reasons. After that I pretty much distilled my wishlist to ballpark square footage, straight stairs instead of winders (which is a big factor in my neighborhood) and a usable basement (also a factor in my neighborhood). Other than that I had to let an awful lot go, or I would have been way out of my price range.

I think people who live in areas where cost of living is more reasonable don't really understand not waiting for the perfect house. I don't think that happens in HCOLA for a lot of people.

A corrollary to this is seen in the Building a Home forum. How many highly customized houses where the owners pick each and every detail appear to be built on acreage in the middle of nowhere? (To my eyes and don't take that as a potshot, I have acreage in the middle of nowhere too, but I would not be able to work in my profession if I lived there).

Now, how many customized houses do you see in the Building a Home forum being built in San Diego? In Fairfield Co, Connecticut? Even in Philadelphia? I don't remember one ever.

Pal that's a good point. But for a long time, my part of CA hasnt been a HCOL area, not like the coast, the Bay, SV, or So Cal. Maybe things are changing.

Even though we're looking more actively now, early next year would be the ideal time to move. So maybe if I can just process and come to terms with market reality while our agent helps us look, I'll be more comfortable with making competetive offers by then. Even though our offers have been pretty good (over asking, no sale of our own home contingencies, fast close etc) we're still losing.

I should stop reading that Home Decorating forum, haha so many there seem to be in their dream home!

I also wanted to respond to Imstillchloecat: we briefly talked about selling, renting, and waiting out the market. DH doesn't like the risk of being a renter, and rents are higher than our mortgage these days. But I'd be open to it, actually.

Adjust your expectations for a new to you home to fit what is actually in your budget. You may now be willing to accept that you can't afford what you want, or you may be willing to stay in the existing home now. But, that's the reality that you have to deal with, and have been shying away from facing for a year or so.

A corrollary to this is seen in the Building a Home forum. How many highly customized houses where the owners pick each and every detail appear to be built on acreage in the middle of nowhere? (To my eyes and don't take that as a potshot, I have acreage in the middle of nowhere too, but I would not be able to work in my profession if I lived there).

Now, how many customized houses do you see in the Building a Home forum being built in San Diego? In Fairfield Co, Connecticut? Even in Philadelphia? I don't remember one ever.

Not downtown San Diego or Philadelphia, but I'm building a 100% custom house in a hot market, downtown HCOLA area of SW Florida. My house is on what started out as a 6100 square foot lot and grew to 9100 square feet when we purchased another 1/2 lot.

And to the OP, 7 years ago, I definitely could have bought or built my house for a lot less than it's costing me to build it now. Just as an example, I bought Emtek door handles 7 years ago for my reno on our condo. I paid something like $45-$50 for a dummy set. That dummy set is now double the price for the exact same thing.

However if you spend all your time waiting for the "right time", you'll watch an awful lot of life go by with you just on the outskirts. Assuming you're putting down at least 20%, you most likely won't get burned. Those who did in the last housing crash were those who put down next to nothing, and then wound up owing more on their mortgages than their house was worth.

Back in 1993 we sold our first house for a loss in the recession back then. However, we had enough equity because we had put down 20% initially, that we were able to buy a larger house (1300 square feet vs 3600 square feet and a 40' x 100' plot vs a 100' x 123' plot) in a much better neighborhood with much better schools. The larger house would have been out of our price range a few years prior to '93.

So even though we "lost" money on our first house, we were still able to buy something much better.

Yep either I need to settle for less or spend what it takes for what I prefer. just disappointed in the timing.

So you are disappointed that your current house has also appreciated in value?

From your statements, it seems that you can afford the type of home you want, but think that it is crazy to pay that much for a home. Is that right?

It is crazy, but those are the prices we pay if we have to live in CA. We are lucky to be able to buy in one of the best towns in the LA area, but what we spent for an average house and small lot, would buy us a real mansion with lots of land in most other parts of the country.

I just tell my kids that when they apply for their first job after college, it should be in a state with better COL and much cheaper real estate. We are only here due to work and plan on moving out of state down the road.

If you don't buy, and don't want to pay rent, than what is the alternative? Stay in your current home? The best investment may be the one you already have.

We were relocated for job reasons in 2013. At that time, the housing market was just coming back. Still, it took 6 months to sell our home. We debated not buying another house after reading more and more about how renting is sometimes the better financial option. We did end up buying, mostly for emotional reasons. When I think of it as an investment, it is if I would have to liquidate, and I generally think about my initial investment in the home. Last month we had to replace a water heater. This month, we put in 20 trees and shrubs in the backyard and laid 9 yards of mulch. I don't know if I'd make those investment costs back. I'm pretty sure those articles on renting stated the same, but I'd rather live in a place where I can transform my backyard to my vision. For that matter, I like living in a place where I have a private backyard (not the case in rentals around here).

For me, too, there are strong emotions tied to a home. Yet I feel like it needs to be treated like an investment AND we need to be savvy or else we're just suckers throwing money away.

I guess it's unlikely to be able to be both, but that's okay. We have a lot of good reasons to move or to stay put, so I'm holding out for the place that feels right. But will I be ready to make a winning offer or will I freeze up over spending that much money, even though we've run the numbers many times over.

Once upon a time I was back in my country and wanted to stay put there. Since our family grew and our starter apartment was too small anyway, I talked my ex into buying a different home telling him that's the best investment we can make.

Well the house was great and I was happy but my ex didn't stay put and neither did his family(us)

So we moved back here, renting our house there.

Several years fast forward, we had different living situations, we weren't married to each other anymore, and each one of us needed a different house here. And neither of us wanted to handle this overseas renting.

Well lo' and behold-it did turn out to be an amazing investment. The prices went up so much that we were able to sell the house, pretty worn out by numerous renters, as is, for the price that was close to triple for what we payed for it. Allowed me, for example, to use my half(after fees and taxes and commission and a little balance that was left on mortgage-very little since it was almost payed off by then) towards 20% down payment for the new house I'm typing from right now, that's also situated in coastal California, quite snobby part of it too as I've learned on these forums lol.

So. I can brag about how smart I was buying that house several years ago, and I was partially smart-it was a nice house. Whatever happened inside, the location, the view, the layout, the square footage, and the bones stayed. I chose a good home, and that was my investment.

Or I can face the truth and say, very frankly, that I did not know s-t when buying that house except that I desperately wanted to stay put, and I knew it's a good house.

I couldn't predict, and did not predict anything that followed. That we'd move, that we'd rent, that not every renters tend to your home like you do, that eventually we'd even decide to sell-it was my place there! didn't think of selling it; that the prices will rise like crazy.

It was all series of unfortunate and fortunate events.

( To me, the most fortunate would be to be with my now-husband in my then-house. Lol. )

Anyway. It could have gone any direction, really. Could been burnt for example. Where'd be my investment now?

You're trying to calculate things, which is understandable thing to do-I'm both very emotional person and a very calculating..person:)

(I don't like the calculating part but it's there, alas)

But the only investment you're really making, or trying to make, is buying a nice house that is good for your family. Buy right.

Then it goes where it goes.

Thanks Aprilneverends -- ultimately that's what I want, something that's good for me and my family. We are hoping to move closer to both our families AND to a place that will be safer for the kids. DH is not having the hang-ups I'm having, and he tends to be pretty conservative. As I continue to look at homes, I will try not to fixate so much on the increased prices.

Someone asked earlier how I felt about out own home appreciating in value. To be honest, I cannot believe it. It is unbelievable to me that someone would pay that much to move here. Our agent said it's pretty much a wash since values have increased across the board. So we'd be trading up for a slightly higher mortgage payment (after selling our place) AND higher taxes/insurance plus all the benefits of a nicer neighborhood and larger home.

None of us know what the future will bring so if you can afford a nice house now that will give you joy, shouldn't you go for it?

I think back to the people my ex and I bought our second house from. The one we bought in 93 on the bigger lot. He was a well known doctor in our town. They had 3 children and he had his office in the house. They never spent a dime on the house because they were always "saving for retirement".

When I asked the wife what was under the threadbare carpet, she didn't know because to quote, "It was there when we moved in." (They had lived there over 30 years. She just threw oriental rugs on top to cover up the threadbare carpet.)

They never updated the electrical, the hvac, or the kitchen. The whole family lived with one full bath upstairs and 1 half bath downstairs. Their living space in the 3600 square foot house consisted of the living room, dining room, small kitchen, and 4 bedrooms upstairs.

When we moved in, we turned the front room, the offices and the 1/2 bath for the patients back to family space so we lived in 3600 square feet. And we pulled up the old carpet to reveal gorgeous oak hardwood flooring.

After the couple sold us the house, they moved to FL and their dream home for their retirement. Unfortunately, the wife got cancer and passed away a year after moving down to their dream home.

Obviously you don't want to buy something that is overpriced for the market. Nor do you want to buy something you'll be struggling to afford to pay for and upkeep, but otherwise, do what will give you joy every day.

I just entered the housing market almost by accident. A very nice widow in my small town essentially showed up on my doorstep and bought my house. It wasn't even listed. I had told a realtor friend to think of me if the appropriate situation ever arose. She thought of me and they showed up on my doorstep with checkbook in hand.

I am losing money by selling the house. I over improved it and added square footage. That's a double whammy. There is a ceiling to what the market will command. We hit the ceiling. We sold because we realized that there were limitations to the house that could never be changed. These limitations were of no concern to the buyer. She needed a house with certain features and our house fit the bill. It might take a long time for an equally qualified all cash buyer to show up wanting to buy my house.

This threw us into the buying market. We looked high and low to find something that would satisfy our somewhat exacting standards. We couldn't find anything and determined that we would have to custom build. This didn't scare us. We've built before and were looking forward to it.

We found some land in an area that was acceptable to us. We planned on renting for the year it would take to complete a custom build. We started looking for rentals. Things certainly have changed since we last rented about 15 years ago. We have excellent credit, needed storage space for a household worth of goods and a fence for two well-behaved dogs. This proved to be almost impossible to find. But, we did find one. The application process was invasive and insulting. But, we had a goal and were willing to put up with it.

Friday morning as I was having breakfast, I took a look at Realtor.com more out of habit than any great interest. A new listing had come on the market. I called the realtor and we got into it first thing. I wrote an offer while standing in the garage. I would normally never do that. But, this home spoke to us. I knew the market. It was a fair price. We wanted it and were willing to take the plunge. Fast forward to the next day. We got the house.

While I have been on the selling side of a bidding war before, I have never been on the buying side. That was interesting.

To the original seller's point, you are simply switching one for the other. I sympathize. It's really hard to take the leap without knowing where you are going. If you find the right one, you won't be prepared to make the deal. Spend some time deciding what it is that you want. Make some effort to understand the market. Then, remember that you have to live somewhere. Education is the key. Prepare yourself before you make the leap. It will make it much easier when you launch.

homechef-

Words of wisdom.

I can identify with your experience. We are very conservative financially, and not prone to big ticket purchases without a lot of rumination. However, 12 years ago we were casually looking at houses to educate ourselves in anticipation of making a move that we thought was a year or two off. In this process we stumbled upon something unique that fit all of our needs: large lot, privacy, architect designed, new enough to need nothing done to it, and move-in ready. We decided within 15 minutes of arriving to put a full price offer in. Then we went home and started a month's worth of 16 hour days to take care of all the little and big things we hadn't bothered to fix yet because we supposedly didn't have to worry about putting our house on the market any time soon. We even had 3 months to closing, so it seemed like we should be able to sell our old house with no problem, especially since our old house was perfect for a family with kids who wanted a great school district. Alas, we found out that not too many folks are looking to disrupt their families during Thanksgiving and Xmas-time to buy a home and make a move! It did take until spring to sell the old house and, for several uncomfortable months after we moved into the new house, we had a huge loan since the equity we needed for the new house was tied up in the paid-off, but unsold, old one.

So, did we regret having made this leap? No. We loved the house -- and still do -- and never once second-guessed our "rash" decision. I admit that we were fortunate to be able to swing the mortgage payments until we sold the old house, and that, with perfect foresight, we would have been better prepared. But I think that just illustrates your theme that you never perfectly anticipate everything. And even if you have the time and ability to educate yourself, you still have to trust your instincts and be ready to jump if necessary.

Kudzu, Fortunately, we had already sold our home. Otherwise, we would have never taken the leap. We will never carry two notes. Ever.

homechef-

Two notes would have been unnerving: I only had one note since the old house was paid off. The note was for a new, large mortgage until we got the equity freed out of the old house. I understand that is something not everyone would want to do, but I also knew it was within our financial capability to carry it for as long as needed. It was a leap, but a calculated one: we wanted the house, we thought it was worth the price, and we had the means to acquire it without risking our financial well-being. It simply was a far less conservative choice than I would usually make. My underlying point is that sometimes analysis only takes you so far, and then you have to trust your instinct.

Kudzu9: like you, we are looking for a perfect, or nearly so, place and then plan to list our own home for sale.

Maybe my instinct is telling me that what we've offered on, thus far, isn't quite right? Who knows. Right now nothing appealing is on the market so the whole hunt had paused for a bit.

melle-sacto-

It's out there somewhere. We saw quite a few houses that were really nice and would have been fine, but it wasn't until we saw the one we're in that the light bulb lit up. After we moved in, I was talking with my new neighbor who has a house almost identical to mine (same architect) and he said that they looked at approximately 125 houses in 3 months before they found the right one! Not that I'm advocating for that degree of pickiness, but just realize that it's only wrong to keep looking if you aren't resolved to go for it when it feels right (and you can afford it).

And quite honestly if you're looking at the house as an investment, you're better off buying a mutual fund tied to the stock indexes and leaving your money there. The payoff will always be better over the long haul.

Well, based on the last RE bust, you want to put the least down and owe the most. When things go bust you just walk away from the house/debt. It worked for many people with no penalties ... actually the financially irresponsible were rewarded handsomely! So many here in CA had cashed out their sky high equity before the bust and got to walk away from that debt too.

Not how we like to conduct our lives, but worth thinking about and planning for, when the irresponsible get bailed out ...

Salti--would you please explain what you mean by leveraging a down payment as an investment?

Chispa-- it doesn't feel fair. We have always acted very responsibly, and to see things play out the way they have is frustrating

Whether it's a buyer's or seller's market, it's always going to be a double edged sword for an existing home owner, looking to move.

We've just entered a buyer's market, where I live and I found a place at a great price.

It's such a buyer's market right now, that I viewed on a Saturday, put an offer below asking on the Monday and my offer got accepted on the Wednesday.

As excited as I am, I still have to contend with selling my current place, in a difficult and overstocked market.

In terms of costs its difficult to compare what you are paying now to what you spent in the past, so many factors to consider.

My new place is only slightly bigger than my current because of the back yard and is only a block away, but is almost double the price. But I remind myself that it was 6 years ago and it was a bank repo.

My reason for moving is because I realize that my current place has its limitations and no matter how the market changes it will only be worth a certain value. Whereas the new place has more options as the market changes and I can enjoy living in it for awhile.

With regards to waiting for the perfect one, that's up to you. I looked at hundreds of online listings, been to about 30 or so open houses or private viewings, put in offers on around 8 of those and it's taken me about 18 months to find "the one".

I truly believe that a house speaks to you. There have been a couple of places where I walked in the door and immediately said that this isn't for me and some places I instantly saw myself living there.

If you get a good feeling from a place and it doesn't impact you negatively by moving there, then go for it.

I wish you all the best in your quest, because believe me it is quite a quest!

I have been on both sides. Prices are very high In Sacramento now. You could sell and take advantage of that and rent until the market takes a downturn then scope something up for less. I have been in too many bidding wars and it's not pleasant to feel that you overpaid but if you fall in love with a house sometimes you overpay.

The time it takes really really depends on the current market and even more that that-ones's circumstances and needs

Fist place, we bought in a day. We won a lottery for partially subsidized housing, it was our chance to buy anything at all. It existed just in blueprints. We borrowed several K from my brother and signed the contract that very day we were notified we won.

Second, we bought in a week. actually it was the first house I saw..I did look at some more to make sure. It was the whole different level..and yes it was a great house.

Third, we also bought in a week, or maybe ten days-that was already here in OC. We were in a hurry..and it was a buyers' market. Saw it, felt it, bought it. We did look at many during that week though..each day several houses. Also easy to set up an appointment in such a market..last time we were looking, the house you like might be gone by the time you call

Fourth, now-house, we were looking for months. First, sellers market..suddenly many investors with cash and all..Second, our circumstances changed, a lot. We were considering very few homes since we needed walking distance-95% of the market doesn't work here in OC (unless you can live in Laguna Beach and the likes but alas we can't afford it))). We had accommodate for very different needs of growing family. It was tough. It was several months..we looked at lots of homes..I was close to becoming desperate..since I was used to finding good homes in a week, right?

And when we bought we had to remodel too. Walking distance plus some privacy=older home.

People who look for cheaper, starter places here are constantly outbid-not enough inventory. So they can bid for months, and still not able to buy..

Sometimes people are very picky though. One acquaintance of mine was looking for three years. Very well off, and not into changing things. Wanted everything just so. And wasn't in any rush.

We are in the same predicament, fortunately we have a home in Florida. We decided to sell our home in connecticut now, I was shocked to hear our home bided in 24 hours. The problem is we sell and wanted to buy smaller (connecticut), the homes are priced to high right now because of the bidding war.

If I was you, rent for a year and wait for the crash!!!!, it's going to happen.

If Simeon could sell and hold off from buying then do it, we are going into that roller coaster ride again with the housing market.

If you know the market, the home are being appraised beyond what they are worth (I was shocked on how much the bank appraised our home in the city infested with crime, but I'm the seller so I was happy)

It's going to happen, if you could sell and hold off from buying i would say rent for now.

We're going to wait to buy in connecticut next year will be good, we know the interest rate won't be there but will pay cash anyway.

Another wanna be moderator!

what is interesting is that three years ago it was a sellers market, people said they were going to wait until the "bubble popped", three years later, the bubble hasnt popped and is even bigger.