Real Estate Question ?

Doug · Aug 3, 2007

My step-daughter wants to buy a condo for around 160k or less in CT.

I've looked at a few with her, but the problem I have is whether it's a good time to buy or not. I really don't know which way the local market may head. Prices have doubled in under 10 years, so I tend to think they are at a high level in this market.

If it was me,I'd leave the area for NC or somewhere cheaper, but she wants to stay here.

150k gets a small condo around 900 sf around here, something like this :http://homes.realtor.com/search/lis...f19d96ec&lid=1079500114&lsn=8&srcnt=41#Detail

Is it time to buy now ?

BigMonkey · Aug 3, 2007

"is it time to buy"

How long does she plan on living in it?

Does she expect the value to go up and how much?

Does she need the value to go up and how much?

BM
Realtor

Doug · Aug 3, 2007

BigMonkey said:
How long does she plan on living in it?

Does she expect the value to go up and how much?

Does she need the value to go up and how much?

BM
Realtor

I'd think she would be looking to live there 5+ years. I don't think she has expectations of a large value increase, she's about 25, a college grad with a useless degree, works basically as a secretary now, just changed from working for an old folks home (5 years) to working for a dentist.

I don't think she needs the value to increase, the tax advantages of ownership are good , interest low enough.

I have no idea where prices may head, but I'd suspect lower. CT is a state with no population growth, people move away from here in excess of people that move here, so the state stays at around 3 million people. There's nothing extraordinary for job opportunities here.

I'd bail out of here if I were her, but that doesn't seem to be her aim.

BigMonkey · Aug 3, 2007

Ok......

I am going to assume her credit profile is solid and no changes over the next six months....

If she expects her income to increase over the next 4-6 months, to allow her to buy a 200k home [townhouse] I would suggest she wait.

If her income is not going to change over the next 4-6 months, she should buy now for two reasons:

1. The positive mental advantage that people who own have over most people who rent. This advantage usually leads to longer interpersonal relationships and earning more income over thier lifetimes vs. renters.

2. The tax advantages

The above two reasons are constant and never change.

I live in Las Vegas. The prices of real estate went from straight up [2003-2005] to flatline [2006-present]. Speculators and loose lending requirements fueled an artificial rise in home prices [40% plus]. Lack of investors, stricter lending requirements and the re-setting of adjustable rate mortgages and overbuilding of new construction has led this market to a standstill.

Right now, 40% of the homes for sale are vacant and we lead the country in foreclosures. It will probably take 18-24 months to clear out the inventory and get back to 4-6% value appreciation.

What hasn't changed is the constant influx of new people to the Las Vegas area because of job potential and economic growth. An advantage that most parts of the country are not enjoying.

If your daughter was moving here, I would have asked the same questions and given the same answer.

BM

WVU · Aug 3, 2007

I would hold tight until about Feb or March before buying a condo. These prices may go down between now and then and they most likely will not increase. The condo market looks like it will be taking the biggest hit in real estate

Doug · Aug 3, 2007

She is very responsible and has excellent credit. Her income is likely to increase.

However since you are from LV, do you have insight to the market near Hartford,CT ?

I appreciate your answers, but markets are different. Detroit is cheap as hell, Vegas ( I used to live there) experienced a prolonged boom, now it is slowing/ending.

I think this CT market is high, but I'm no expert... just want to tell her right.

My instinct says the price is too high now.

ChalksR4Kids · Aug 3, 2007

We are probably in the beginning of a big real estate meltdown. Typically, the Northeastern states will be the last
area where property values drop. If this is the case, your step daughter should wait at least 6 to 12 months for the correction to become more wide spread in Ct.

PatsFan1283 · Aug 3, 2007

I doubt a 1br 900 sf condo drops too much, as it probably wasn't too overinflated to begin with. These guys got good real estate advice, however, if she really wants to stay in CT (not sure why unless you live in western part of the state and do the NY commute thing) she could just buy and get it over with. Where in CT is it? That will probably give some people an idea of how much of a bubble there is (my guess not THAT much) so she could get around to buying now if thats what she really wants to do....

Just saw the Hartford part, yeah it probably isn't too overinflated. I'd just buy now if she wants it and start with building equity, getting tax breaks....

Doug · Aug 3, 2007

PatsFan1283 said:
I doubt a 1br 900 sf condo drops too much, as it probably wasn't too overinflated to begin with. These guys got good real estate advice, however, if she really wants to stay in CT (not sure why unless you live in western part of the state and do the NY commute thing) she could just buy and get it over with. Where in CT is it? That will probably give some people an idea of how much of a bubble there is (my guess not THAT much) so she could get around to buying now if thats what she really wants to do....

Just saw the Hartford part, yeah it probably isn't too overinflated. I'd just buy now if she wants it and start with building equity, getting tax breaks....

Yes, we are talking central CT, not the ritzy bedroom community are serving NYC.

I bought my first condo (similar to above, but only 1 bed/bath... even smaller) for about 57k less than 10 years ago, those go about 130k now.

I can see buying ( her) in this case because of tax shit type stuff, but also waiting because of more complicated reasons that I don't desire to post, it's too complex to explain briefly.

Personally I doubt the property goes way up here, I think it has peaked.

PatsFan1283 · Aug 3, 2007

Oh, didn't mention that personal stuff....

However, yeah I think its not gonna fluctuate to much within the next 12-18 months that she should probably do it as soon as she gets whatever she needs to get together.....

Also, prices doubling in 10 years isn't that crazy.. Only 7% appreciation a year which is a lot for housing but nothing unfathomable....

Pricing tripling in like 3-4 years in the southwest/west/florida a lot crazier.....

Anyways, I'm no expert but your question seemed pretty straight forward...

fhmesq44 · Aug 3, 2007

I don't know the market, but from what has been posted, I would buy as opposed to rent. Whether she does it now or in 6 months, not sure it matters much other than there are generally fewer buyers in the market during the winter. Housing is shelter, it isn't an investment.

Doug · Aug 3, 2007

fhmesq44 said:
I don't know the market, but from what has been posted, I would buy as opposed to rent. Whether she does it now or in 6 months, not sure it matters much other than there are generally fewer buyers in the market during the winter. Housing is shelter, it isn't an investment.

That's one of the complex issues,she does not truly rent. She kind of splits time between my house and her boyfriend's apartment dependant on work and classes at college.

I imagine she pays some portion of the rent with B/F , but it is not my business. She is welcome when she chooses to stay here, but she is a responsible adult on the verge of home ownership, also. That seems to have changed as her new job is nearer to B/F.

I'm thinking of advising her to buy, but be very picky... the condos of choice have over 300 units, so there are always at least 5-6 for sale, so cherry-pick one that's primo condition ( like new paint and carpet), seems advisable.

valueman · Aug 3, 2007

Doug - a lick of paint and carpet are dirt cheap and easy to do. I'd advise if she wants to buy to buy something that is superficially ugly but probably in a good area and that can be got at bargain price.

My gut feeling is that the North American market is overvalued etc based on rental prices and net income ratios - I just sold an investment condo for what its worth.

Doug · Aug 4, 2007

valueman said:
Doug - a lick of paint and carpet are dirt cheap and easy to do. I'd advise if she wants to buy to buy something that is superficially ugly but probably in a good area and that can be got at bargain price.

My gut feeling is that the North American market is overvalued etc based on rental prices and net income ratios - I just sold an investment condo for what its worth.

Condo seems the choice, for her. new paint and carpet can only be a plus, that has to cost arounf 5k. that particular (carriage crossing) seems to work.

I don't know about a lick of carpet, you could paint poorly, but carpet is different, probably $1,000 to do a small unit ?

valueman · Aug 4, 2007

Just some advice - I had 3 realtors suggest a selling price of $260k for my 800 sq ft condo - realistically i would have got $250-255. I spent $2k on pro painting and 3k on engineered hardwood floors and sold the place for $275k.

Spending $5k got me in the region of $15-$20k profit so I'd always get a place that isn't upmarked for a bit of superficial easy work.

Doug · Aug 4, 2007

Carpet/ flooring/paint always make it look nicer, no arguement there !

SportSavant · Aug 4, 2007

Doug, if I could go back to that age I would try to find a small house with a rental apartment attached to it, or buy a bigger house and rent rooms out to room-mates, this way she can have someone else pay her mortgage.

Im moving to the suburbs of montreal in october and I just bought this house here:
http://www.lespac.com/search/detail.php?a=5004617

Its about 1650 square feet so not very big, however, there is an apartment in the basement with seperate heating and seperate address with city, that rents out for 625$ a month. This will cover 120 000$ worth of my mortgage and all I lose is the basement!!!!

If I could go back 25 years and start doing this this is what I would do if I was her.

SportSavant · Aug 4, 2007

valueman said:
Just some advice - I had 3 realtors suggest a selling price of $260k for my 800 sq ft condo - realistically i would have got $250-255. I spent $2k on pro painting and 3k on engineered hardwood floors and sold the place for $275k.

Spending $5k got me in the region of $15-$20k profit so I'd always get a place that isn't upmarked for a bit of superficial easy work.

EXCELLENT ADVICE.....

I wish I was better with my hands, or I would have bought an old beater for sure, but since I have to hire everything out, I went for a newer house.

Doug · Aug 4, 2007

SportSavant said:
Doug, if I could go back to that age I would try to find a small house with a rental apartment attached to it, or buy a bigger house and rent rooms out to room-mates, this way she can have someone else pay her mortgage.

Im moving to the suburbs of montreal in october and I just bought this house here:
http://www.lespac.com/search/detail.php?a=5004617

Its about 1650 square feet so not very big, however, there is an apartment in the basement with seperate heating and seperate address with city, that rents out for 625$ a month. This will cover 120 000$ worth of my mortgage and all I lose is the basement!!!!

If I could go back 25 years and start doing this this is what I would do if I was her.

Not a bad idea, but she wants to go the condo route. In this area her price limit would force her into something very old, if she went for a house. The 150k or so only gets a small condo, a nice house is more like 250k+.

fhmesq44 · Aug 4, 2007

since you are talking about a girl, don't buy something that needs too much work. Cosmetic stuff like painting, new carpet, stuff like that is one thing, but much more than that becomes too much work for her. Plus, she will have just bought the place and will likely be someone cash strapped (she will, presumably, have or want to furnish it) and unlikely to want to drop $20k on a new kitchen or bathroom.

I would also tell you to buy the lesser place in the better neighborhood if given the choice between that and the nicer place in the lesser neighborhood.