Now good time to buy a house?

Has it tanked yet? Buy now or wait a few more months, till early next year maybe?


www.smh.com.au...

I have always been of the opinion that it's always a good time to buy a house. A house, in my honest opinion, is one of the best "investments" a person can make. Renting a place to live, when compared to owning ones' own home, just doesn't seem to "pay off" in the long run.

Of course, a lot would depend upon how much one is able to put down as a down payment on a home, the interest rate -- fixed or flexible, and, of course, whether you purchased the home at a "good" price. Was the house a fixer upper, one that needs TLC or is it done to the 9's?

If you are able to do renovations yourself and are able to purchase a good basic home but one that needs some TLC -- repairs that you, yourself, can do --, you may be ahead of the game. Interest rates are still at reasonalbly low rates but one can expect them to go higher in the long run so this still might be a good time to get into the market. But before you do purchase a home....do your homework and be realistic about what you are able to do and about what the actual costs of repairs might be.

People are always underestimating the costs of the services of electicians and plumbers. Materials are another area where people always believe that they can get things at a "reasonable price". Also, people never seem to allow anything in their budget for the unexpected. Remember, the moment you begin any renovation, you are always bound to find a problem lurking behind the drywall waiting to be uncovered. With a home, you are always "in for a penny, in for a pound". I can't emphasize just how important it is to be realistic and to do your homework.

Don'y buy just yet, the number of foreclosures will only increase for another 6 months to a year. Then you will be able to get something at a more reasonable price.

I lean with "infinite8" on that thought. You should hold off a bit longer, the real deals should start in '07'. Although Real Estate is not my forte' of knowledge (I trade currencies in the FOREX), many associates that I communicate with daily that invest in Real Estate are forecasting the same.

if you keep waiting for the big bargain, it'll never happen.

if you need a house, & your able to buy it then buy it,

i don't consciously mix any investment money with my lifestyle requirement money
(if that makes any sense to you)
for example, i presently spend 85% of my monthly income on my townhouse,
[an extremely high % of my monthly fixed income]
and i've learned i really do not require a large clothing or entertainment expense
to live comfortably, i limit my traveling needs to cabs or friends as a way of
forcing me to plan carefully & that small lifestyle accomodation saves me
several thousand per year in car related expenses.

in other words, imho buy what you need/require, you can always make other
adjustments/accomodations to pretty much insure that you'll have a shelter and sanctuary and a haven from the outside world...the roof over my head is not an investment until the time i decide to move-on, only then will i look at the house as having been an investment.

remember: location-location-location!

I just bought a house myself, and the large amount of houses on the market make it very good for the buyer at the moment. Just a year or two ago you'd have many potential buyers competing for a house, but now there are so many houses it's the sellers who are competing.

That said, whether or not it'd be better to wait a while or not, I'm not sure. I guess it's a bit of a gamble, but IMO you'd be pretty safe to be house-shopping at the moment.

Originally posted by JohnnyAnonymous
I lean with "infinite8" on that thought. You should hold off a bit longer, the real deals should start in '07'. Although Real Estate is not my forte' of knowledge (I trade currencies in the FOREX), many associates that I communicate with daily that invest in Real Estate are forecasting the same.

While I agree with this on a general level... real estate varies from market to market. Some markets have already dropped hard (Most of Midwest) some are still on the hill (Florida, California).

Also, remember inflation... If there is moderate inflation between now and when you buy it could hurt you. Your morgtage is in USD...

[edit on 26-9-2006 by Slap Nuts]

Don'y buy just yet, the number of foreclosures will only increase for another 6 months to a year. Then you will be able to get something at a more reasonable price.

cool, I was thinking next summer/fall. thanks for the advice/knowledge

I just bought a house in south west Florida a week ago.

Got a great deal...2/2 for a 150k on 1/2 acre 20 minutes to beach.

Apraises for 190K...many more like it...

Now is a good time...

Dont buy, self-build!

Here in the UK, the housing market is vastly over-inflated, and the majority of what there is available on the market in high-street estate-agents are brick-built 50-100 year-old properties, with an averaged price-tag of £175,000. For around the same price, you can design and build a home using new energy-conservation methods and recycled/sustainable materials in the fabrication, which is a major consideration given the rises in gas/electricity costs. The other bonus is that should you choose to sell in the future, your property is going to be able to command a far higher sale-price than comparable size houses.

What part of the west coast are you on? If you are in Cali, and want to live somewhere decent, you definitely have your work cut out for you. Last time I checked the avg price here was 350-450k.

Edit to add: I live seven blocks from the beach, in the ghetto, and the prices on my street are 650-750k.

[edit on 28-9-2006 by phoenixhasrisin]

if you want to buy a house, do so with the intention of keeping it for a while. anyone who buys now and is expecting to upgrade in the next few years is going to have a hard time doing so. There's a crapload of adjustable rate mortgages that are going to enter the adjustable phase in the next 6 months to a year and there will be many people who cannot afford the new rates. The housing market is expected to drop dramatically in many areas in the next 6 months to a year and there should be plenty of bargains this time next year.

Originally posted by Crakeur
if you want to buy a house, do so with the intention of keeping it for a while. anyone who buys now and is expecting to upgrade in the next few years is going to have a hard time doing so. There's a crapload of adjustable rate mortgages that are going to enter the adjustable phase in the next 6 months to a year and there will be many people who cannot afford the new rates. The housing market is expected to drop dramatically in many areas in the next 6 months to a year and there should be plenty of bargains this time next year.

That's true, except for the upgrade part. If someone can keep up with their adjustable, then they can easily qualify for a decent HELOC.

keeping up with the adjustables is the problem. You'd be surprised how many people were sold on low rate ARMs thinking that the rates won't go up in three years and, even if they do go up, the value of the house will go up even more so they can simply sell and get a new house.

Way too many people over extended themselves with this type of thinking. Think about this. You buy a home and you put down 10%. You borrow the rest and get yourself a nice low ARM. Three years go by, the rates have gone up and now you can't really afford the new monthly payment. Your home has come down in value 10%. You could sell and what would you get out of it? practically nothing since you have paid down next to nothing on the loan. (first 5 years are almost entirely interest).

Lenders have come up with so many frightening ways to entice people to make a purchase they normally couldn't afford and all those loans are going to do is give banks collection problems.

GO back to the late 80's and early 90's and you will see a lot of the same things you're seeing now.

Crakeur:

I know what you are saying. In the 80's though, we did not have the HELOC craze holding people afloat for a few years, people were flat out re-financing. Now you can re-fi, and pull a heloc, basically the process is lengthened.

Just because most people are not going to be able to keep up with their adjustable after three to five years, does not mean that there are going to be bargains though. In order for there to be bargains, equity must be built, and that is not signifigant after 3-5 yrs, especially after a re-fi, and/or a HELOC, which most peolpe are doing.

And true, in the near future prices might drop a bit, but like the 80's, they will not drop much, and the next boom will be built off of these new inflated prices. Just like this boom was built off of the inflated prices from the 80's.

Cold hard facts about real estate...you have to find the Sr. repo, or other sob story who has almost finished paying off their house but couldn't finish due to financial distress, illness, govt seizure or whatever. Those are the only ones that have buit up a decent amount of equity, which allows the banks to sale them for only the amount owed.

I think you're wrong. The price drops I'm seeing in and around NYC are pretty huge. Apartments listed at 2.9 million 6 months ago are now listed at 2.1 million and they aren't getting offers. Areas in westchester have seen prices cut almost in half. The number of homes on the market is staggering and there are buildings still going up. In NYC there will be such a glut of studio and 1 bedroom apartments that the poor bastards that paid $500,000 for a 500 square foot studio will be left with something worth closer to 250 or perhaps even less.


Those HELOCs aren't helping. they are giving people false hope. I have a client who has a brownstone in Brooklyn and two properties in vermont. This guy has like 6 or 7 mortgages on the 3 properties. He's working helocs, pay as you go mortgages and god knows what else. I asked him what he'll do when the rates go up and his response was "they won't. if they do I'll sell and make a mint"

that was back in March. He's been unable to sell the vermont properties without having to kick in some cash to pay off the mortgages and he has been unable to refinance the brooklyn mortgages because, well, he's a schmuck.


for the record, he's a new client who came to me already shoulder deep in the stink.


[edit on 28-9-2006 by Crakeur]

Crakeur:

I haven't heard anything about prices dropping 50%, not saying that isn't that case, but it definitely isn't the case in suburban Cali. Nor was it during the 80's either. Prices did decline, but nowhere near 50%.

out here in the 80's prices declined after the boom, but only by 50k or so, after they had already appreciated to 150-250k. Then this recent boom came, and the prices have just soared from there.

Of course in that sort of situation where 50% of value is lost, people are just plain screwed.

( I like how you mentioned that this was a new client)

Originally posted by phoenixhasrisin
I haven't heard anything about prices dropping 50%, not saying that isn't that case, but it definitely isn't the case in suburban Cali. Nor was it during the 80's either. Prices did decline, but nowhere near 50%.

Mostly going on prices of unsold properties. There's a bit of over-inflated suggestive pricing involved too I guess. Last year brokers were pricing product insanely high and getting their sales. Now, they are suggesting lower pricing, and this is one of my favorite tactics, setting up a bidding war. How can they expect that to happen? They can't. It's nonsense.

Originally posted by phoenixhasrisin
out here in the 80's prices declined after the boom, but only by 50k or so, after they had already appreciated to 150-250k. Then this recent boom came, and the prices have just soared from there.

I see a lot of property sales in my business. I'm an accountant, mostly personal taxes, but I am also involved in real estate development and mortgage lending so I have seen quite a bit of the market lately.

I can say that over the last few years I have seen a decent number of people who sold their apartments for what they paid for them in the late 80's and they were thrilled to get their money back. I'm talking $350k for a studio that was valued as low as $85,000 at the start of this boom.

Originally posted by phoenixhasrisin
Of course in that sort of situation where 50% of value is lost, people are just plain screwed.

anyone financing 80% or more in the current climate is taking a massive risk of owing more than the property is worth in the next 6 months to two years.

Originally posted by phoenixhasrisin( I like how you mentioned that this was a new client)

I wouldn't want anyone linking my genius to this guy's utter stupidity. He's so incompetent I am thinking of doing his work for free with the promise that he never contacts me again.

I think it's a good time to buy. The market has cooled off and long-term interest rates have fallen.

It's a buyer's market for the moment which gives you the advantage to find the home you really love rather than fight over something you can just live with, so take advantage of it while it lasts.

My $0.02

Thanks for the replies everyone I'm reviving this thread because I have still not bought and still wondering the same question.

According tothis article written by so called experts at the SF Business Times in the spring of 2006, SF was expected to go through a "cooling" period.

"We're in a definite market cycle. The market is adjusting right now," said Ed Krafchow, president and co-owner of Prudential California, Nevada and Texas Realty. "We're not in a buyer's market. We're in a buyer's sympathetic market."

Yet now in the fall of 2007, SF has gone from a "predicted" cooling of the market to a significant decline. See this table for the numbers.

I happen to live in Seattle which seems like the most stable market in the country. But trends are now cooling off here and some expect such trends to continue or for the market to possibly flatten out. This sounds like what they said about the Bay Area a year 1/2 ago... Should I be concerned? Or just approach it with a longterm investment attitude as some have suggested.