L.A. Land reader profile: "Laker" looks to buy

Now for something completely different: A reader profile. Today I hung out with "Laker" -- a frequent commenter, cautious house-hunter, and, naturally, Laker fan.

Where: The Coffee Bean on Ventura Blvd. at Gateway Plaza in Woodland Hills.

About Laker: 32 years old, an electrical engineer with a master's degree from UCLA, married to a teacher, one child. Has lived about 15 years in this area. Family has owned a house in the area and sold due to relocation.

Housing: Currently renting a house in Woodland Hills, looking to buy a 4-bedroom in the $600,000 to $700,000 range in Woodland Hills or Tarzana.

Drives: A 2003 Nissan Pathfinder (paid off).

Reading habits: Looks at listings on redfin.com, researches properties on Property Shark and the L.A. County Assessor's website; reads Calculated Risk (is a big Tanta fan), Mish (Mish's Global Economic Trend Analysis, Paul Krugman's blog, The Conscience of a Liberal, and the Wall Street Journal website. Reads L.A. Land and comments frequently. Understatement: "My wife hates your blog."  No offense taken.

His house-hunting experience: Was working with a Realtor a year ago, who was pushing him to buy because prices had dropped roughly 10%.  "I didn't buy for two reasons: I couldn't afford what I liked and I didn't like what I could afford."

Current view of the housing market: "I'm kind of scared -- I don't think the market will recover soon. The affordability just isn't there. It's insane. ... I think 2001 prices were justified by the fundamentals. But incomes haven't gone up that much since then. And unemployment is rising."

What really upsets him: Mortgage fraud. "I see people that bought and refinanced and pulled out more cash than I'll ever see in my lifetime. And then they turn around and short-sell back to themselves through a cousin or a friend. ... From what I see we have at least the same amount of fraud now as there was during the bubble. It frustrates me."

Thanks, Laker.

Your thoughts? Comments? I'd like to meet more readers, if you're interested, e-mail me.

--Peter Viles

Comments

[Cassiopoea]

Good luck, Laker.

I'm an infrequent commenter on this blog, but I thought I'd chime in...

I'm closing Escrow on a condo this week. Do I think the market has hit bottom? Probably not -- but maybe... what if it has? I got a deal that is way better than I could have gotten even a year ago and I plan to stay for a while, so even if it does go down a bit more, I'm not planning on selling anytime soon.

I'm buying now rather than waiting a few more months because of the uncertainty of the economy. I can get a mortgage now, but might not be able to a few months from now. My industry is uncertain... but, I have enough money in the bank to cover my mortgage for at least a year, so I figure I'll be okay.

Also... gotta love the tax write-off. With that thrown in, I'm paying about what I would to rent in the area (West Hollywood), maybe even a tad less.

It IS a good time to buy if you find a place you love that you can afford. So... good luck with your search, Laker.

[Rational Renter]

Patience, good brother Laker! go ahead and rent that 4 br Tarzana palace.

[BottomFisher]

Governator: Fine. Don't invite me for coffee talk too!

[Cal]

"My wife hates your blog."

More accurately, his wife hates that he reads your blog.

[Nelcisco]

Thanx Peter for giving us the opportunity to get to know a little bit about Laker.
WOW Laker you're a young guy, when I read the comments from others I normally get a mental picture of the people who comment, not all but the regulars, your comments seem more mature than the average 32 yr old, maybe you and shockg can patch things up even though we haven't heard from him in a while.

[shockg]

Peter, what the readers don't get from your sheltered view on Laker is that he is a market timing housing speculator who cherry picks listings to push his agenda. It's sad that someone with a wife and kid could be so greedy. Hey Laker, the biggest mistake you made was marrying a teacher if you feel entitled to a nice home. Trade up the wife dude. $50K a year ain't gonna cut it.

[Cynt]

Thanks for sharing Laker.

[Ace]

Did Laker go on a long crazy rant about how the coffee is only worth $1 and that the Coffee Bean doesn't understand what coffee sold for in 2001?

[esp4p3]

Laker you sound like me. Except I am a Mechanical
Engineer and I love the Celtics. My wife is also a teacher. I'm waiting until fall of '09 to buy. I am hoping for a bottom by then as it would be nice to be in a house with wife and future child (my wife is expecting). We live in Simi Valley. Have you thought of moving over here? 600-700k buys more house than in Woodland Hills.

[puckhead]

OMG, Laker's a knifecatcher!!!!!!!!! Just kidding. I’ll never rip anyone for wanting to buy a house. It’s tough to catch the bottom in the housing market, but it’s even tougher to find a house that you and wifey both like. If you are secure with your job, you’re picking a good time to shop. Sellers are seeing potential buyers close their pocketbooks because of the economy and they will get desperate. Not very many people feel secure about their jobs now to buy a house. Good luck with your search

[Nick]

I'm mildly disturbed by how similar my online reading preferences wrt the economy are strikingly similar, although only mildly. I suppose I share many similarities with Laker: age, education, view, etc... not identical, but similar.

I do diverge on what really upsets me, though. For me, fraud doesn't bother me as much: people will do it, always. What bothers me is when our government doesn't seem to care, and/or rewards the people/companies which engage in fraud, and/or engage in massive payouts to the organizations which propagated the bubble. If the government wasn't giving our money to the banks which turned a blind eye to people defrauding them as they were racing to one-up them in speculative gambles, maybe due diligence spurned by business reality would fix the whole rampant fraud epidemic. Then again, my radical old-fashioned free market theories are feeling pretty unloved in our new order of "change".

[Nelcisco]

Here I was encouraging Laker to patch things up with shockg
and 6 minutes later shock throws Laker under the bus.

I think l'll promote my own version of an Ultimate Fighting match between these two guys and sell it to Pay-Per-View!Hell....I'm not mak'in sh.. in loans so why not?
it'll be a smash!

[Laker]

Guys,
First let me tell you something. Today, before i met Peter, i had the impression I'm going to meet Mr. Viles....you know.
But when i met him and we started to talk..., I felt like the guy is real. He is like many of us here, on the same planet. Works like many of us, drives, take care of his family, etc. Great guy! If you get a chance to chat with him, I highly recommend!

Now Cassiopoea, if you justify buying something just because it is way better deal than last year...well you sound like my realtor that urged me to buy in December 07 as it was 10% less than peak price....

Cal, you are correct. She hates that I spend the time reading the blog instead of being with her.

shock, If you go to Best Buy to buy a 50" LCD and the price is $4,000, are you going to call me a speculator if i wait till thanksgiving knowing they will sell it for $2,500...

esp4p3, I like Simi. You sure will get more bang for the buck there than in W.H. Also the schools are good, and it is pretty clean area. However, the wife is not comfy with that idea.

puckhead, knife catcher only after having an offer accepted and escrow closed...I'm not there yet...
But I agree with you, It is amazing how many people that I know are not so secure in their jobs. That is a bad sign for future housing.

Nick, I'm also disgusted by the government effort in intervening and manipulating with the free markets. In fact, this is one of the things that scares me the most. You see, if the market was let to sort itself out, I personally would feel much more comfortable buying and figuring the value of a property. With the government actions, the law of unintended consequences can get us scary things like severe over correction, crazy unemployment, hyper inflation, etc.

[waitingforgodot]

Shockg,

Class act, dude.

Funny thing, I notice a lot of premium coffee shops going out of business, or experience significant dropoff.

Good luck Laker, even though I can't stand Kobe.

[Tim K.]

Laker, good to hear more about you. I'm not a semi-similar line of work as you, but I'm curious - is $600K for a home really what you think someone of your financial means *should* be paying? Do you have a huge down payment? Or are you saying that the homes that are *currently* selling for $600K in Woodland Hills are the quality of home you believe you should be living in?

A bit about me - I'm making just over $100K and I believe someone in my position should be buying at most, a $400K place. In the areas I'm looking at, that pretty much leaves me with nice foreclosed condos or really ugly foreclosed houses. The kind of places I feel I *should* be living in, because the people who live there make about as much as I do, currently are asking about $650K. Nearly everyone I have met who owns a house of that quality has a household income of about $100K.

I'm pretty sure I can convince my wife to wait another year, maybe 2 tops. So I'm hopeful that we get into a place at that price, but if it comes down to it, I'll continue to rent a house in a good neighborhood if I have to. Thankfully, my wife *does* like that I read Peter's blog and values my opinions on where the housing market is going (she's an accountant).

[TheUrbanHouse]

Good Luck Laker. I myself am slowly beginning to look. I think I am realistically waiting until next summer to see what is happening, but I am beginning to look around as well. I'm looking in Silverlake, Los Feliz, West Hollywood and Hollywood Hills and prices of good homes are just now showing signs of more significant correction (despit the statistics showing the houses that people just cannot sale, the good houses in these areas have held firm in price, until recently), so I want to hold out and see what happens in those areas.

As for those bashing timing the market, WHO WOULDN'T! Isn't that what investing is all about? That is what got us into this mess, emotion ruled the last market, hopefully logic will rule this next market. If hundreds of thousands of people leave LA county like they did in the late 80's/early 90's, which is becoming a very realistic possibility, the real fundamentals will be back into play.

[The Original RZ]

Good luck with your search Laker. And thanks for not buying something you couldn't afford or didn't think was worth it (if only more people would do that...)

One question: Why now? I'm sure you've considered waiting a few more months or until next year. I know no one really knows when this would bottom out, but I'm just curious about your choice of timing.

[Rob]

Laker has abandoned the cause. We will miss you. 40% off (aka 2001-2002) is where we want to be.

Shock. you are a tool...

[Ken P.]

Saving more money for a down payment and waiting for California real estate to fall further sounds like a good idea. It doesn't sound the the California economy is going to get better for at least six months to a year. Unemployement is going to get worse before it gets better. The best advice: don't think about a home as an investment that is going to go up double digits annually like it did the last ten years. Think about it as a place to live and raise a family. Once the market hits bottom next year or the year after, one or two percent a year appreciation will seem like a gift from the housing gods. Tell Laker to buy the best neighborhood he can afford and then plan on living in the house at least seven years. Eventually, home prices will go back up. Since the last California housing bust, too many people thought their house was as an ATM machine or an Internet stock. That's a big reason we are where we are today.

[FZ6]

Shockg-

What a cheap shot. To talk about another man's wife like that is simply childish and shows how immature you really are. Heckling each other is no problem but to talk about his wife, simply wrong. What is next your momma jokes?

With regards to teachers getting paid $50K. My wife and I are both teachers. She is 26 I am 27 and this year we will make $175K. How? Base pay, like you said is $55K and $58K respectively. The rest is extra assignments. Is it really good? Depends on who you ask, but certainly not $50K though. However, we both do something we love, two weeks off in December, one week off in April, the entire month of August off, 5-day weekend for Thanksgiving, every holiday off, and we are home by 4pm every workday. We like it. Would everyone be happy with it, no but we are.

Laker-

I could not agree with you more. The reason my wife and I have not bought is we can’t afford what we like and we don't like what we can afford. My wife and your wife share something in common though, they both hate that we read too much. Best of luck with the home buying.

[Hugh]

Laker good luck with the search. Hope you at least continue to provide us interesting comments here and there (don't tell wifey I asked you to blog).

[TakeFive]

I don't understand why some are criticizing Laker for *aggressively* negotiating on price. Sellers were just as aggressive during the run-up.

I would target these low ball offers at sellers who purchased in 2005-2006. Chances are these folks are taking a loss, which means they can take an even bigger loss, since ultimately the bank may end up eating it. May require a bit of patience to position a short sale, but there’s no hurry, right?

Aside from a lower price, there is an intangible but just as real benefit : you recapture some of your wasted bailout tax dollars, receive some compensation for the excessive property taxes you will pay for inflated housing, and are better set for the reaming the state of California is going to give us to balance the budget.

How about tracking your Ask/Bid/Counter results for us so we can see what’s going on in the mid-level? (Hey – did your wife just throw something?)

[MyLessThanPrimeBeef]

A great chiasmus - "...I couldn't afford what I liked, and I didn't like what I could afford."

Laker, remember, home is where 'the great are small and the small are great.'

[CompaJD]

Laker, I believe you are a fool to jump into the market today. Your quality of life will be much better if you wait a year or two.

[Drew]

I join in wishing Laker luck, we are in a different train a little further along the same track.

We're in a position where we're looking at places where mortgage payments plus taxes equals equivalent rent. And we are finding them out there.

And that's not counting tax deductions for interest and taxes. By our calculation, out net housing payment including these tax deductions will be a few hundred dollars a month higher than what we are currently paying for an apartment (not even a house) that is half the size of the houses we're looking at.

Since we plan to live in the place we buy for 10+ years, we aren't so concerned with what happens in the market in the short term.

10 years from now I feel that we'll be looking at home prices that are increasing, albeit at a more sustainable rate.

And for those who "want" prices to come down to certain levels (2001? 1998? 1975? 1885?), maybe they will and maybe they won't. And in some cases, maybe they already have, if you look at individual properties and not the market median.

But as per the Blondie song: "Dreaming is free."