A majority of Americans think now is a good time to buy a home, although few believe the U.S. economy can escape a recession, according to a Reuters/Zogby poll released Wednesday.
The survey of 1,049 likely voters found that 53.8 percent thought this was a good buying opportunity as home prices have fallen sharply in many parts of the country. Some 41.6 percent said it was not a good time to buy, and the rest were unsure.
I hope the NAR isn’t getting their hopes up too much. I suspect that a majority of Americans feel that now is a great time to lose weight, but that doesn’t mean they are going to go out and do it. People who are worried about a recession are unlikely to run out and buy a new home.
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I guess it depends who you poll.
http://www.msnbc.msn.com/id/24108324/
http://search.yahoo.com/search?p=Poll+Most+wont+buy+a+house&fr=yfp-t-501&toggle=1&cop=mss&ei=UTF-8
So many unrealistic realtors will tell you “we have reached the bottom of the market, this is a great time to buy.” However, it is hardly a “great” time to do anything other than save every dime you can. That’s just my opinion. On the other hand, if you can take advantage of a housing bargain, and can dig in for the long haul, why not?
You are right L-
From the MSNBC link:
So it might be a great time for the neighbors to buy, but we’re staying put!
Funny story – happened to be in AZ last weekend and went around town looking at condos just to see for myself how the market is.
Well, let me tell you, if what I saw last weekend is any indication it’s way worse than even I thought.
One complex in particular stood out, The Mark by Toll Brothers in Scottsdale. It is across the street from the Valley Ho hotel, and real close to Old Town Scottsdale, but man, these people are on some serious drugs if they think they are going to get the prices they are asking.
The link:
http://www.livethemark.com/
The one model we saw was a two bed, two bath on the ground floor that had a little patio. The view from the patio is of the 60 year old tenement across the street, amenities were nothing special at all abut it did have one really special feature: two of the four ground floor windows looked out on 1) a gigantic transformer and 2) the stairs to the garage. Ooooh, be still my beating heart! And all of this luxury for only 600K.
when I asked about financing the guy in the office said a minimum of 15% down and at least a 700 FICO. It appears as though they have sold some units but not a lot, and the second phase has been put on hold indefinitely.
Needless to say I was underwhelmed.
Who in their right mind would plop down 90K for a freaking condo when big houses are selling down the street for 200K less? It seemed, and is, absolutely crazy.
Yeah… last weekend I sold a used washer for $50 on craigslist. When the little family picked it up, we spoke about how bad the job market is. Then I asked them if they own a home. They said yes. and immediately started telling me that now is a great time to buy.
I thought, well, the not-so-smart money is just coming in.
I’ve never based any of my personal finance on whether I thought a recession was coming or not. I invest the same, spend the same, and keep the same amount of liquidity for emergency purposes. It just makes life easier to base your decisions on personal choices rather than market conditions.
The ‘right time to buy’ is a VERY loaded question. Does anyone ever buy a house thinking it’s the wrong time? Look at the folks who bought in CA over the past 2 years. Their thought was “I better buy now before it gets more expensive.” For them, it was the right time to buy. Now, the method used is the real problem (back to personal choices). Too much home for the income, ARMs, no liquidity, etc etc etc.
Now that I’ve said that, it is definately a better time to buy than it was 6 months ago, and I’m looking. My home will be on the market by the end of the month, and I’m looking to move into something with a lot more space. Financially, I’m ready. The houses I was looking to buy a year ago have now droped by 10s of thousands. That makes now a great time to buy.
I thought everyone who wanted to buy a house would have bought one by now. Back in 2001, I was that buyer who thought, gosh this is it, what’s with the house inflation?, I’d better get one soon, so I did.
Now I’m just building equity.
Every major financial decision requires careful evaluation — especially a home purchase decision in a declining market. What would YOU do in this case:
http://www.foreclosureexpert.info/2008/02/whose-afraid-to.html
I would buy.
If I needed a place to live and saw myself staying there at least 5 years.
I have thought about buying a rental. Prices in LV are hovering at about the magic number. Not to far from my neighborhood you can get a 1300 sf house for around 160-170k. The tradeoff is it is either going to be 15-20 years old, or be a one car garage detatched townhouse. More maintenance on one, less desirable on the other. But still rents for these go from 1200-1400. PITI on one of these would be close to the rent income. As a purchaser it might make sense. As a landlord, it is pretty close.
If i can find the right one, or values dip another 10k, I will probably be all over it. I am not in a rush, given the layoffs at MGM mirage, but realize that Vegas is not going to turn into a detroit in the next 5 years. 50 years maybe.
I did buy two weeks ago.
A forclosure in an area I’ve been wanting to live in for some time. I put 20% down and my payment is less than 25% of my net monthly pay which includes mortgage, taxes, insurance and HOA fee with a 15 year loan. It needs paint and some minor repairs but overall it’s in great condition. I think it would rent for a little less than my payment but not by a alot. Had I went with a 30 year loan rent vs. the mortgage payment would have been about the same. Is the house going to drop in value for the next few years? Certainly but I’m in it for the long run and don’t really care what it’s worth as an investment. I’ve been watching and waiting to buy since I sold my last house in 2005 so for some it makes sense to buy now for others maybe not.
I’m also going to buy now. I’ve waited long enough. I’m not in the market to sell in 5 years but looking for a home. I too have been watching and waiting and have found several houses that are asking about $50-$60,000 less then the original asking price. Will offer even less.
I’d chew my foot off before I bought a home this year.
Now, if I got a really good deal on a farm, then I’d think about it.
I think the WSJ polled a variety of analysts three or so months ago… the majority believe we are at least two years away from a bottom.
That’s not when prices go back up. That’s when prices stop declining.
And those, in my view, are the optimists.
Market clearing is a bitch.
If it were my decision alone, I wouldn’t buy for another 2+ years.
Unfortunately, I live in a city where housing prices are reasonable (San Antonio) and my wifey needs to nest. So, I anticipate sometime in the next couple months I will have a home that will probably decline in value, but, a happier family.
Yossarian,
I’d chew your foot off before I bought too.
I mean mine…
Listen up guys and gals.
I’m back in Scottsdale as a house renter and I see 3 houses that have been walked away from in the last 2 weeks, and 3 others are short sales.
All are within 2 blocks of me in the “magic zip code” as the realtors like to call it.
That’s 85254 for those of you not familiar with ‘realtor happy talk”.
I sold my house here in 2005 and made a killing.
What a difference 3 years makes.
We are in a cul de sac populated with renters on both sides of us.
This area is STILL being described as the right place to buy NOW.
I’ll rent indefinitely, no hurry.
http://thelyonsden.wordpress.com/2008/04/14/this-weeks-mortgage-market-view/
can they is the real question rather than will they?
The survey of 1,049 likely voters
Did anybody else do a double take of that? Maybe that’s why the results don’t match other surveys.
If prices drop significantly by the end of this year, I may buy. I am in no hurry, however CD rates have dropped significantly and my apartment rent has gone up. So, it just depends on what kind of deal I get. I realize that the market will not be at the bottom by the end of the year.
the logic for someone who sat on the sidelines during the great housing mania to purchase a home now is completely lost on me. the bubble market ran for 10 years in some places, somewhat less in AZ; but to think the market will fully correct (AND not overshoot to the downside which by any account it has yet to do) in just 18 months time is absurd; in particular given the slow “sticky” nature of housing prices to the downside with ma and pa’s reticence to sell for less than their neighbor got in ’05.
moreover, if the market is going to make either a “U” or “V” shaped correction, why not purchase on the way up or at least upon tangible signs of a prolonged bottom. predictions that this thing could last another 5 years with 35% further price depreciation are not uncommon.
caveat emptor sports fans.
the kid:
Dead on correct. It’s better to buy 5% higher than the bottom (but know the bottom is here) than to risk losing 20% on a dead cat bounce.
Also, there’s no chance that we’ll have a quick bottom (aka V bottom). Inventory will slowly decline over a couple of years, causing foreclosures to decline over the same duration of time (with a year’s overlap), and finally prices will bottom. The real bottom will announce its pending arrival well before we’re there, just watch inventory, sales and NOD/foreclosures.
Also, think about it, what market force will be there to begin raising prices again? Credit availability? Peoples’ savings being applied towards down payments? I suspect prices will bounce around the bottom for at least a year.
The choice to buy should be based upon several factors:
1- Is your market overheated like AZ, CA or FL?
2- Will you be in the house for a good 5 years?
3- It’s the price stupid! A 20% discount on a foreclosure in an area that is expecting a 10% decline over the next two years is still a good deal providing you are not in #1 above and will answer affirmative to #2. The lenders are not likely to let you get in over your head on financing either.
All real estate is local. And all prices are negotiable.
Tobby — Which market do you sell real estate in? Just curious.
The Judge
Dont’ sell real estate Judge. I investigate banks that finance real estate though. I live in Central Florida. Bubbleworld. I’ve owned my home free and clear for some 20 years now and have no intention of selling or refinancing. By the way I have recently bought and sold several investment properties. It’s the price! Not the market. While I would not recommend that anyone purchase a house at current (declining) market value in my area, if you can buy a property at a deep discount then it should not matter how bad the market is. And mine is bad, real bad. Regards.
I have actually began shopping for a loan and houses.
I’ve been renting in this neighborhood (like Twist, I’m an 85296′er [well 85297 now]), in 2 separate houses, since 2004. The first was 1,888 sqft 4/2 and was perfect for my kids and I.
The current one is one I always though I wanted.. twice the square footage, more rooms than I know what to do with, but I’m finding out way too much space.
That first house’s same model is in 3 houses for sale down the street between 200k and 210k.
If I can get an offer accepted under 170k, I think I would take it.
I believe we’re in/going in a recession and that the housing market will continue to deteriorate but 170k is about 1100-1200/mo and the rent on those same models is about 1250 currently so it’s a savings.
Additionally, 1100/mo is the magic number for me. If I can get a 4/2 in this neighboorhood for that much on a mortgage as well as getting mortgage interest deductions – I’d do it. Only on a fixed though. I don’t want to end up as one of Twist’s next stories =P
So while I’m still skeptical, I agree with the above poster(s) who said that as long as the total “after everything’s added” monthly payment on the mortgage for the property (at 100% financing) is at the same price or cheaper than rents for that type of house.. it’s a good time to buy.
Could be better, but the alternative is locking into a rental contract for a year and then missing an even better opportunity because you don’t want to lose your security deposit by breaking the lease.
So we’ll see.. they’ll have to accept the low-ball offers first. If not, they can sit and stew until I finish my next lease and make another offer at the same price
MG,
My strategy was to rent a house owned by a realtor.
I ended up with multiple realtors that owned houses for rent.
The reason I wanted to have a realtor as a landlord was to have it in writing that if I wanted to break the lease and buy a house, I would be able to do it fee free as long as I used my landlord as my agent.
Not one of the 4 realtors I interviewed had a problem adding that to the lease.
So, I am free to buy whenever the right deal comes along with no worries about breaking a lease and the legal and financial hassles that can come with it.
MG-
I currently have a lease- [I'm not worried about missed opportunities at the moment] but I had a good deal with my last rental. The landlady wanted to sell when our lease was up, and originally asked us to vacate- she thought it would be difficult to sell with a tenant in place.
I cut her a deal. She was free to sell the house, and I would have it “showroom perfect” when buyers came by to look at it. We agreed to vacate within 30 days of going under contract- and I was free to rent month-to-month and leave any time with 30 days notice.
After we left, she rented it out again, waiting for the market to “recover”.
I know the current landlord wants to sell this place, but I think he suffers from the same sort of delusions. I will probably make him the same offer when the lease is up in December.
Two weeks ago I closed escrow on a house 3bdrm, 2 bath, 2 car, 1 story 1894 sq.ft., built in 2004 by Pulte. The purchase price was 212K. At the peak of the market here in Las Vegas the house sold for 500k. (42%)(58%)…
I have 2 others currently in escrow. Same development, same models, both are a little more upgraded. 230k (46%) (54%)… & 220K (44%) (56%). Also, I am a real estate agent and I was able to make a commission on each of my purchases.
I have kept a keen eye for almost a year on this development where I purchased and I focused specifically on this model. Another agent told me 3 years ago what a great buy these homes where and she also mentioned how there was such a demand for them. I politely kept my mouth shut.
Each home will take me 2 days to get ready to rent. I’m putting 30% down on each property. There will be a very small monthly negative on each property & I am OK w/ that. I have other rentals in Dallas/Fort Worth that will cover any negative.
My plan is to sell two of my Texas rentals this spring/summer and purchase again in Las Vegas in Nov/Dec. There should be a lot to choose from at that time w/ low prices.
Currently, we have a 15.4 months supply of homes on the market here in Las Vegas. Lending is getting tighter & more foreclosures are on the way.
Some things that are important for me to purchase. The trend of market inventory & the number of sales. The number of foreclosures & the direction (rising or falling.) Rates. One thing very important is the Mood of the public. I like to buy when everybody is negative about buying. (I like to sell when the public is excited about real estate.) When I have the money & cash flow to safely afford the home. I like to buy when people want to rent. i also like buying now because many jobs will be created here in Las Vegas w/ all the hotels & casinos being currently built. (people got to live somewhere…right?
When the market returns to about a 7 months supply of homes here locally…I’ll know if my decision to purchase was the correct one.
Twist and nordaq -
Great points and ideas. As I’m a full-time single dad doing it all on my own, unfortunately I don’t have quite that much flexibility (as I need to stay in this neighborhood to make it realistic for my daughter to get to school and for me to get to work on time).
But the realtor-owned lease is a good idea. I’m curious if I can approach the owners of these homes and rent it from them in lieu of them selling it – it’s been over 3 months so far and no bites.. I’ll have to see how motivated they are.
If anyone else asked me though, I’d still tell them to avoid buying right now. Had I not lived in this same neighborhood for the past few years in 2 separate rentals, I wouldn’t have enough research and experience to properly find the “right price”.
I am curious how offended the sellers will be at my offer. I’ll leave it standing for them to consider until I’m locked in otherwise, but I’m actually optimistic that they’ll buckle eventually.
Don’t hate the player, hate the game. Don’t hate the buyer, hate the market