My epiphany came when we were at an open house near our daycare provider's home (this was early 2005 back in Virginia) and ran into another couple whose daughter attended the same daycare. The mom was a lawyer in D.C. and dad was a mortgage broker. Just like us, they were young professionals who couldn't afford a reasonable sized house, in an older but reasonable neighborhood, pretty far from the city center (Fairfax County where we lived would probably be akin to Placer or El Dorado County's distance to downtown Sac), using reasonable financing mechanisms (30yr fixed rate) with 5%-10% down.
After that we began to watch the market carefully for signs we should sell. Several months before we learned we would be moving back to Sacramento, we had decided to sell our house and rent for a while (around July 2006). We probably would have tried earlier in the year, but my son was born in March of 2006 so that had us a bit preoccupied =)
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I knew there was something really wrong when people making less than half what I make were buying homes that cost over twice what I would be willing to pay.
When I told my Realtor what my price range was, and he told me that with my income I was able to afford a loan that was over twice that amount. And when I insisted on only looking at places for under 400K and we were looking in run-down areas and borderline ghetto areas. That's when I knew.
When people started telling us our house was worth 3 times what it was 5 years before, we knew it was a good time to sell. Incomes just don't rise that quickly.
Other things heard around the neighborhood then: "Wow, I couldn't begin to afford to buy my house today."
Wish I had seen this thread earlier!
I knew there was something wrong with the housing market when . . .
The Sacramento Bee published a story in 2004 about a gardener earning $40,000 a year who bought a $400,000 house in Elk Grove.
When I called Countrywide Mortgage on a lark to see whether hubby and I could get financing for a $525K dream home in Whitney Oaks in Rocklin, and the mortgage broker told us that Countrywide would finance us up to $1.2 million. We wouldn't live long enough to pay off a $1.2 million mortgage.
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