All real estate is local. In a area like Chicago there are several different markets within just the city alone. Some areas are decimated with foreclosures and prices are down over 50%. Other areas down maybe 10%.

I would concentrate on one area you are interested in and look at the inventory numbers. Chart the months of inventory for the area and when it declines for a 3 straight months, a bottom is likely in. When I compute inventory, I don't just do it for all houses, all sales. I compute it for a narrower slice of the market. For example, count the number of 3-4 bedrooms single family homes in Lakeview/North Center available between 700K and 900K. Then count the number of sales the last 3 months, 6 months and 12 months and chart the months of inventory that way.

I also think that is someone can get a property today at 10% below today's market value than the downside risk is quite low. Once the market starts to turn, sellers that have waited this long are not likely to be dumping their properties at bargain prices.

Eric Marcus ABR, CRS, CPA
Certified Negotiation Expert
ESM Realty
Your Real Friend in Real Estate
773-244-1110

The bottom is a long way off. Thanks for trying to get sales going, but prices have a ways to go down more.

Housing is for your lifestyle.... if you prefer to rent, by all means, that is your option.

Many people have built significant wealth owning real property-- while providing a great home for their family. It is a personal choice, and for many, a necessity. Some say the most money is made in periods such as we are presently experiencing. Those with good credit or cash may see the opportunities, be smart enough to act, and reap huge rewards from buying at or near the bottom. Kudos to those who have that kind of ability to act now, and buy a home for their family!

Steven: You are basically saying that all Buyer's are idiots. Not very nice.

Prices down 30%: http://money.cnn.com/2009/02/24/real_estate/Case_Shiller_December/

Any buyer that waits for the bottom will be very smart. Waiting even ongr may be better. Best would just be renting - it is often much, much, cheaper and you can save tons of money and not lose 6% to a Realtor down the road.

Steven:

You say "Financial professionals have all said that we will know when we hit bottom when prices begin to go up.... But by then, it will be too late!"

To late for what? Are you saying prices are going to shoot up?

Would it alo be to "EARLY if you bought at any time before the bottom?

"continue to rent, and build someone elses personal wealth."

Wouldn't you have built a lot of wealth over the past few years renting and then just saving the difference in costs?

No one believes the "GREAT TIME TO BUY!!!!!!!!!!!!" thing anymore. No one.

@ Will - That make no sense.

Brian
illinoisrealestate.com
Realtor

I remember seeing this question asked a month or two ago and a PRO responded with nothing more than "When people are buying again" . I still think that's the best and most honest answer I've seen.

As far as why buyers are waiting, how that could be a surprise or mystery to anyone is beyond my understanding.

Financial professionals have all said that we will know when we hit bottom when prices begin to go up.... But by then, it will be too late! Real Estate is just like any other market, it's a game. Sometimes you win, and sometimes you lose. It's all about chance. At the end of the day this holds true.... You can't win it if you aren't in it. So "Eager Buyer" and those nay sayers like him can continue to rent, and build someone elses personal wealth. Where others are willing to take a chance while planning for their future. you decide for yourself.

This "advice" from the Pro is what makes the use of an agent such a waste. They do not know. rtaher than just say "Hey I show houses. I help you find a good school"....they claim to be financial forectasers. They give advice that is not in thier "clients" best interest. There is almost no reason whatsoever to buy right now when you can wait. None. No good news. Nothing. yet they all just claimit is the best time to buy and that now is the bottom or when the bottom turns you will be priced out forever. Gimme a break.

Nobody knows. I disagree, the bottom will be in when buyers return, and buyers know when they intend to return.

I agree with Brians first response. Nobody knows.

Matt Laricy
Americorp Real Estate
mlamericorp@aol.com

I guess the only way we will know for sure is when things continue to go up.

A quick correction to my earlier post. The interest savings over 30 years (principal value of $150,000.00) on at a rate of 5% vs. 6% is a total of $33,876. Still a large chunk of change. The payment difference between the two is $899.33 vs. 805.23, a savings of $94.01 per month (over $5,000 over the first 5 years!).

Good point from Chris, consumer confidence in the market is an enormous factor. I will also note that the lack of consumer confidence, combined with the ideal climate to buy (low prices, low interest rates, tax incentives, etc,) make a perfect storm for the savings minded to take advantage.

With Americans now more concerned about savings and less with consumer goods, this may foretell that the market is nearing a turn around. First into the recession, first out?

In many locations they will have to come up with another reason to continue sitting on that, by now, very uncomfortable fence.

When investors are out buying properties in significant numbers, that'll be a green light that jumping into the market is a good idea. Opinion, based on real estate downturns in the past.

Dear Steven,

The bottom will be defined almost as much by psychology as anything else. The psychology of buyers right now is to hold on to and save everything which lessens the chances that buyers will go out and actually buy a home unless or until they have to.

A good shorthand (although these statistics usually lag behind the actual occurrences) for price recovery will be inventory levels. Current inventories are running between 12-24 months depending on what area of the country you're focusing. A more traditional range is between 6-9 months, but once the inventory is back down to that range prices will have already begun to stop falling if not yet actually begun their arduous and more historically statistically sustainable climb back upward.

If you are waiting or know people who are in an attempt to time the bottom of the market, I'd suggest just getting off the fence now and offering whatever you'd like on the properties that you want. If the market is as bad as most of the indicators, there may be someone out there right now willing to accept 50% off their current list price. Good luck.

Sincerely,
Christopher Thomas
Broker Associate, Sudler Sotheby's International Realty
773-418-0640 (cell)
christopher.thomas@sothebysrealty.com
http://www.mayagentchris.com

Here is another good sign when builders stop building. There are to many vacant homes out there.

I was speaking with a lender the other day, and he perhaps put it best.

"Waiting to catch the bottom of the market is like trying to catch a falling knife."

The bottom will ultimately be defined by an uptick in transaction volume and then shortly after, an uptick in price.

Wait too long...and you think you've missed out. Buy too soon and you think you've paid too much.

It's all relative, and the financial benefits of owning a home, are much greater than just the savings on purchase price in todays market. In fact, the only time an investment becomes a loss or a gain is when you choose to sell. Buyer's should keep in mind a few things when making a decision as to when to purchase.

1. Rental Expense: If owning cost less than renting, there's a distinct advantage to renting when considering your ability to save.

2. Deductability of Mortgage interest: For years, mortgage interest has provided a tax shelter for the middle class. This contributes further to your ability to save.

3. Prices are currently very low, and so are interest rates. This is a very unique time for buyers. Low interest, tax credits, low property values, short sales and motivated sellers are a perfect climate to get a deal. If you were planning a picnic, this is a perfect sunny day in the park. Conditions are ideal for buyers and the market is a dynamic force. Conditions can change at any time, just like the weather.

4. Lifestyle: The enjoyment you get from owning and being able to establish roots in a home is a priceless intangible. Even if I could double my money on my current home, I wouldn't move. Besides, moving at the whims of a landlord tenant relationship can get expensive in real dollars.


It seems like all too often, the deal that people want is entirely focused on purchase price. Price is a big component of when the right time to buy is, but is always just speculation. No one knows when the bottom will arrive (I sold my crystal ball on eBay last month because crystal ball prices are higher than ever! It never worked well anyways!). A 1% increase in interest on $150,000, compounded over thirty years is $45,000!. Add that to an $8000.00 federal tax credit, and before price hits the table, $53,000 of incentive exist over last month on a purchase of $150,000.00! Not to mention the tax benefit over mortgage interest payments vs. rent.

One sign would be when rental costs are comparable to what a mortgage would cost.

Steven- We can only speculate.

However, there is a way to alleviate a Buyer's legitimate concern regarding declining values.
Rather than lowering their price, Motivated Sellers offer to pay discount points at closing to BUYDOWN the Buyer's rate and payment for the first two or three years.

When you can show a Buyer that he's actually paying $290,000 for a $400,000 property he/she feels pretty darn good about BUYING NOW!

http://www.321advantage.com/sellers-how-it-works/sellers-how…

Barbara Q.
(Not a Realtor or Lender...Just a value-added service!)

I think people are confused and scared and I don't blame them. I think holding off is a polite attempt to let the agent know that they're not ready to make a serious commitment to buying yet.

On the other hand, I think that comment also presents a golden opportunity to provide your client with the education and guidance they'll need to realize that they'll never properly time the bottom.

Comps, and other statistical analysis is essential to helping consumers understand what is really going on out there and how it effects them individually in the long and short term.

If you provide your client will all the information and patient guidance they needed and they still aren't ready to move forward then they're just not serious buyer.

I honestly believe many will be more comfortable buying when the market finally starts to recover because they will feel like they're making a safer investment. I'm not saying that is the right way to think I just think it's how many consumers look at things.

Scott Newman
Newman Realty

Hi Steven,
I am not an economist and I think the most sophisticated and most experienced of them are not sure. But I will give it a shot and say what I think!

I think the huge number of foreclosure, short sale and pre foreclosure properties have to disappear from the market before the market can stabilize and pricing can become normal..... The bottom will be right before the
employment numbers will go up..... Someone who should know better once told me that the stock market will show those signs of improvement a good 6 months before it shows up anywhere else, including the real estate market.....

I think and that is just my personal thought and opinion, the real estate market in our area will still go down a little, then become a bit more stable and after that slowly very slowly move upwards....

Just my opinion and feeling. If I am right it would not be too bad.

Nobody really can determine the bottom 100 % right, but I think any buyer who can afford to buy, has a secure job, and a good down payment, 2009 is a good year to find good deals and negotiate great purchase prices.

What's your opinion?
Edith edithsellshomes@gmail.com

Nobody will know for sure is the answer. Nobody.

Brian Nygard
Realtor/Owner
IllinoisRealEstate.com
Chicagoland Residential + Commercial Real Estate Services

Cell/Text: (312) 217-8002
Fax: (312) 253-2049 http://www.illinoisrealestate.com