I would like to buy my first "old home" fixer right now for several reasons including wanting to grow my own food, having privacy, being closer to bus lines than where I rent (gas prices - yikes!), and needing a home office for the business I own. However, I'm worried about house prices going down to a more reasonable "affordability index" here, which would put my mortgage "underwater." This town (on Northern California coast) has several eccentricities that I worry will effect the market here more than other places, including:
-The mortgage + insurance + taxes on a 2 or 3 bedroom home are less expensive than RENTING the same homes.
-BUT the rent here is exorbitantly high, as compared to wages. This is the kind of area where as many people cram into a home as possible. And many homes for rent sit vacant for a long time until a few suckers decide to spend 50% of their income on rent and share a single bathroom.
-This area has a high unemployment rate compared to state average, and has been in its own recession since the 1980s, when it lost most of its timber and fishing industry jobs. The largest staffed sector of the economy here is social work. Many people on unemployment, food stamps, drug rehab programs, homeless shelters, or living on the streets. There's no infrastructure to support modern businesses like internet companies (no truly high-speed connections).
-There is an "underground" economy here that may explain why rents and house prices have shot up so high compared to stagnant wages and increased unemployment. Many houses are converted into "grow houses" for marijuana cultivation. The growers tend to have higher incomes than people who work legally. This area is known all over the world for this.
-This "underground" economy is about to bite the dust if California legalizes weed, which means house prices will drop even more than they have already.
-So...Am I a complete sucker for buying a house now, if I can get one at what *seems* like a reasonable price? I just read a N.Y. Times article that said house prices have to drop another 40% to reach historic affordability. Maybe more so, here?
I know everything I've said makes this place sound awful, but believe me, if you've ever lived here, it is a gorgeous place with potential, right on the coast, surrounded by redwood trees, w/ mild weather in summer and winter... Has a lot going for it, aside from a lack of living-wage jobs... I just feel so stupid for wanting to buy *now* rather than waiting! But I also feel stupid spending even more on rent, and having nothing to show for it! Anyone else had a similar dilemma?