Home Buying in Santa Fe>Question Details

Rose Lopez-B…, Real Estate Pro in Santa Fe, NM

Do you think it's a great time to buy in this market?

Asked by Rose Lopez-Brown,CRS Rsps, Santa Fe, NM Thu Jun 5, 2008

I am seeing several cash buyers buying at 89% of asking price!

Help the community by answering this question:


That's a very nebulous question. What it all comes down to is: a) do you have to buy and b) what is your situation. Yes, you can buy now and get fantastic deals, maybe wait six months or more and get better deals. But what is that wait costing you ? What will your expenses be over that waiting period versus what will your expenses be with a current pruchase.
If you sit down with a Realtor explain your situation, then work out a plan together, you will win.
0 votes Thank Flag Link Fri Jun 6, 2008
If cash buyers are paying 89% of the asking price, then they're overpaying. And that's assuming the asking price was competitive. Investors buying with cash are paying 65%-70% of market value. Even if the asking price is fair, how long has it been on the market? Has there been a price reduction. Let's say you start off at $500,000. Buy it at 89% and you've paid $445,000. Whoop-de-do! Compare that to the house having a price reduction to $475,000 (a 5% cut), then allowing for a 3% negotiating drop--we're down to $460,750. Throw in a 3% seller concession and your at $446,927. So all cash will save 0.3%.Wow!

Also, I must have missed the letter from the National Association of Realtors asking me to post this question on bulletin boards. Seems like Rose and some of the others did get it. See, for instance, this current thread on Trulia: http://www.trulia.com/voices/Home_Buying/Why_is_no_one_buyin… and this one http://www.trulia.com/voices/General_Area/Why_are_so_many_pe…

Since my fellow Realtors are all posting this question, I'll re-post my answer as to why people aren't buying:

I'm a Realtor, and I'll admit I'm baffled by the comments by most of my fellow Realtors. Read Betty's comments [on the original thread]: They're real world. That's why many aren't buying. Read Jess' comments [on the original thread]: Those are your buyers, and those are the criteria they're using.

To answer a poster's question: Are the prices really good? No. They're better than they were two years ago. But just because a house sold for $515,000 two years ago doesn't make it a bargain today at $325,000. Just because a townhouse sold two years ago for $280,000 doesn't make it a bargain today at $140,000. Those are real world examples from Northern Virginia today (Annandale and Woodbridge, for those who know the area). The $325,000 property is still a dump, just 2 years older and more battered than at the peak of the bubble. The $140,000 townhouse is one of more than 2 dozen properties for sale, virtually all short sales and foreclosures, where the going price now is $95,000-$110,000. So: Cheaper, yes. A bargain: No.

And let's knock down this complaining about the media. Granted, they like to sensationalize. But the media aren't the cause of the foreclosures and short sales. The media didn't pull Wall Street's strings to come up with all the "clever" financing that led to the lending debacle. The media weren't out showing $500,000 properties to janitors and gardeners who--hardworking as they are--were earning the minimum wage. The media weren't lending billions of dollars to file clerks who used stated income loans to get $500,000 mortgages. The media weren't pushing 100% financing with firsts and seconds at 12% or 14% to people, telling them that there'd be no problem refinancing in a few months.

Meanwhile, let's look at the broader picture. The media aren't behind unemployment jumping half a percent just this past month. The media aren't behind $4 a gallon gasoline and $5 a gallon diesel. The media didn't get us into Iraq and the trillions of dollars that's costing us. The media aren't behind the airline failures. The media aren't behind the shortages in our supermarkets of rice and corn and the huge increases in bread and milk prices.

So let's stop blaming the media. Today's potential real estate buyers know better.

Sure, if buyers wait too long, the market will shift upward. So what? I've run comps for a couple of people on properties in Northern Virginia. (Woodbridge area) Prices are dropping there by $8,000-$10,000 a month. They have been since last fall. Consider the typical buyer's analysis: I wait 6 months to buy. Worst case scenario: Prices decline another $60,000. Best case scenario. Prices flatten out over the next couple of months, then begin rising (though not at $10,000 a month). So best case: Prices in 6 months might be $10,000-$20,000 higher than today. Hmmm. Let's see. Downside risk of $60,000. Upside risk of $20,000. Most likely scenario: Prices will be lower by another $20,000 or so. Buyers may not have all the facts that Realtors have, but they're not that dumb. If they wait, prices likely will go lower...maybe much lower. And if they're wrong, they're still buying near the bottom.

Interest rates? Yes, they may go up a bit. But they'll still be just fine in 6 months. It sure doesn't look like the economy is going to get so overheated in the next few months that the Fed is going to slam on the brakes.

Frankly, there are other good Realtors out there with similar perspectives on the economy. But it's not politically correct to voice them. So that's why most of the comments to this and similar postings from Realtors are likely to be along the lines of the question: "It's a great time to buy." For some, it is. For the large majority of the population, the future isn't as rosy.

Would one of you Realtors PLEASE send me that NAR memo?
3 votes Thank Flag Link Sat Jun 7, 2008
Don Tepper, Real Estate Pro in Burke, VA
No. Economy is heading towards recession. Increased unemployment, massive federal deficit, increased prices for commodities, food, etc. Wage stagnation, years of inventory and increasing interest rates with large increases ahead when fed is forced to raise rates. Any questions?
3 votes Thank Flag Link Fri Jun 6, 2008
I'm seeing a lot of realtors making very general statements about the market.
This is kind of a slippery slope to be on, as i'm sure I don't need to tell you all that markets vary greatly from location to location.
Inventory is up? Actually - where I am, straight resale inventory appears to be down - short sales and REOs are up.
Interest Rates are low? Not as low as they were even 6 months ago, and all indications point to rising inflation and economic instability pushing interest rates higher over the next 6 months.
Depending on the individual market, even if interest rates are "low" the conditions lenders are putting on potential buyers are becoming more and more difficult to meet. Again, depends on the market.
1 vote Thank Flag Link Fri Jun 6, 2008
It depends on the market, the buyer, and most importantly - the buyer's intentions.

In some markets - such as northern nevada - that are behind the curve in terms of price correction, i think it's safe to say the bottom has not come yet. For some buyers, that is not as big of a concern. If they have the liquidity to put up a large down payment to minimize potential loss in equity over the next few years, and if they are looking to purchase a home, not an investment - it can be the right time.
However, that same property - but being purchased by someone who wants to finance as much as possible, and hopes to dump it in 3-5 years for a profit - i think is going to have a very difficult time of things, and they would be best advised to hold off for awhile.
1 vote Thank Flag Link Fri Jun 6, 2008
I think a better question is, how will you know when we have hit bottom? When it starts to go up and you've missed it. Buy the home to live in it and enjoy it; buy it if you have enough down and are able to have positive cash flow, and can handle it if you can't rent it out.
1 vote Thank Flag Link Thu Jun 5, 2008
"I am seeing several cash buyers buying at 89% of asking price! "

They think it's the bottom, but it's not.
1 vote Thank Flag Link Thu Jun 5, 2008
Those who were unable to participate in the market when prices were inflated are in a good position NOW to step into the market; the price correction has opened the door. Buy now at great prices, low interest rates, multiple inventory/selection. Your home is not only your "home base" it is also your best investment over time.
1 vote Thank Flag Link Thu Jun 5, 2008
It is a good time for buyers.. is it a good time to buy?... I am not so sure.
0 votes Thank Flag Link Mon Apr 6, 2009

0 votes Thank Flag Link Thu Oct 16, 2008
That is a question I am asked on a daily basis! My opinion is that it is a good time to buy if you need to buy! If you want to flip - not so good!

The prices are down, most of the listings are short sales which can be a long and tedious process and foreclosures which can be difficult. We are seeing multiple offers on properties if they are priced low and most of what I have seen is going from 95% to above 100% on foreclosures.

If you do not NEED to buy you should think about it...many are saying that after November when the elections are behind us that we will see changes. BUT...no one really knows how long prices will decline.
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Sat Jun 7, 2008
It's an exciting time in real estate. There are so many opportunities for every type of Buyer. The interest rates are low and the lending institutions have many good programs.
0 votes Thank Flag Link Fri Jun 6, 2008
There are buyers who want to time the market, but knowing when the market is at rock bottom is impossible to know. Are we there yet? There are those who claim that we are not. There are those who believe we are at or near the bottom. And, there are those who believe that even if we are not yet at the bottom, it is still an excellent time to buy. I am probably in that last group. While the market might travel south another x%, I see savvy buyers sealing deals at great deals today that might not be available next year....even with a greater market drop. Not all properties travel in sync w/ the averages. Averages represent the total activity. A buyer’s specific deal may come in at 12-14% less than market value, while the average fall in pricing may be 3%. If the market does travel further south, that buyer remains in a comfortable place.

I think it is a great time to be active and looking. Buy if the circumstances are right. Down the road, we will hear regret stories from those who did not buy; just like today we hear regret stories of people who bought at high prices and highly leveraged loans.

0 votes Thank Flag Link Thu Jun 5, 2008
Deborah Madey, Real Estate Pro in ,
Its a fantastic time to buy a home the interest rate are at an all time low, and there is tons of inventory to view and pick from
0 votes Thank Flag Link Thu Jun 5, 2008
"Now is a great time to buy", lower interest rates, more inventory and if you are looking to come to southeastern Oklahoma our sells are still up and you can find a great home at a good price. Remember buying a home-base home will be a good investment in the long run.
0 votes Thank Flag Link Thu Jun 5, 2008
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