It's consumer confidence, the economy sucks, politicians like Obama spending money our country doesn't have at alarming rates with tax hikes imminent due to this careless spending is threatening the stability of small business' which in turn endangers the working man's jobs. People are afraid to make a large investment when they don't know if they'll have a job tomorrow.
The incentives for home buyers are tremendous at this time however many nay sayers like "Found the Bottom" are making the gloom and doom look even worse which in turns makes our economy and consumer confidence even weeker.
Interest rates have NEVER been lower, $8,000 tax credits available for home buyers that have not owned a home in the last 3 years, not just 1st time home buyers, a Buyers market meaning a large choice of homes to choose from and the ability to get sellers to offer more assistance to the buyers in the form of sellers concession to help make it easier and cheaper for them to buy are incredible incentives, couple that with other incentives like state grants like the NJ Smart Start program make it an awesome time to buy for those who can afford to.
I get it, you get it, but it all ends up on consumer confidence, that is the bottom line. People that I have sold homes to recently are loving the benefits they are now seeing to home ownership. Unfortunately it is easier to spread negative comments then positive ones like the nay sayers do on this site spreading propaganda is easy and effective. Just look how it worked in Obama's campaign!
1) Prices, especially in the mid-to-high end of the market, still have very far to fall.
2) Many people make too much money to qualify, especially in those more expensive markets.
3) $8K is a pittance compared to the boatload of money you'll lose as prices continue to crater.
Generally speaking, and contrary to what a Realtor will tell you, this is almost the worst time to buy as interest rates are artificially low and housing prices are still way overinflated. When interest rates rise, and they will, buying power will decrease and housing prices will continue to fall. It's a certainty.
The best time to buy is when interest rates are low and prices are also low. Second best time is when interest rates are high and prices are low. The absolute worst time to buy is when interest rates and housing prices are both high, and that's what is coming next...just before the housing market swirls down the toilet and prices return to normal.
We also have another wave or two of foreclosures to come as the last batch of dupes that listened to their Realtors finds out that most Realtors are full of crap and motivated almost exclusively by self-interest. Notice that their BS never changes no matter what's happening in the market? It's always a great time to buy...for the Realtor, that is...they make money no matter how much you lose. Do they have any credibility left?
Keep your powder dry, rent for now, and wait for your real opportunity to buy in another year or two.
Right now, everyone is afraid. Afraid that the prices will drop even further and even though they could get a good deal now, they might be missing a great deal later. Afraid that if they do buy, the price will go lower and they won't be able to sell if they are transfered, etc.
At first the foreclosures hit the sub-prime borrowers. Now I see many standard and preferred borrowers who are in trouble.
For many years the lenders have allowed the inclusion of up to 6% for the buyer's closing costs into the loan. This is partly offset by the downpayment which is currently 3.5% for most borrowers. Never-the-less, the borrower is upside down in the home from day one. Then, when it is time to sell, the marketing and closing costs can run another 6% to 8%. This lending strategy only works in an inflationary environment and we're not going to see any inflation in homes for some time to come.
The bottom line is that our lending practices have created a foreclosure machine that is going to continue to saturate the market with abandoned properties that are sold below loan value.
The smart buyer should not buy if there is a possibility that they will not be in the home for at least 5 years whether or not there is a tax rebate attached.
Real Estate Broker
1. job uncertainty - fear of losing their jobs
2. some already lost their jobs
3. some buyers can't qualify for a mortgage anymore - credit scores are now too low, and requirements are higher now (as they should have been all along).
4. some lost their downpayment , or at least part of it in the stock market downturn
5. some don't have a downpayment - and the days of 100% financing, including the closing costs, are over (as they should be!)
6. they're afraid to buy because of the economy , as so many people are just paralyzed with fear today
7.on the opposite end of the spectrum, for the fortunate few - their income is too high, and disqualifies them for the credit
People find security in the status quo - so,...... many are just staying put.
The $8000 tax credit certainly is a good thing, and we need to make sure people are aware of it. We also need to be sensitive to the fact that many can't take advantage of it
And my view is that buyers who are buying now had already made this decision regardless of the credit, they are doing it because they see that it is a favorable market, prices are good, or interest rates are low.
And buyers who are hesitant to buy now have as others have mentioned other concerns, such as their job or fear that prices will drop further. The $8000 credit will not solve their job situations or their perceptions that the market will depreciate, so they are not going to purchase now regardless of the credit.
As Christine, said if you can "afford" to buy, this is great time to buy... but the problem is the economy, the unemployment, the uncertainty out there. Very few new buyers are wiling to take the plunge now as the $8K is one time credit for a purchase that a buyer needs to be responsible over the next 30 years of their life.
And what this might telling you unfortunately is that at the present time there are more buyers who are concerned about their futures than buyers who feel secure to move on with their purchase.
So, the credit will have little effect in swaying those that have already buying now vs. those who are buying later. Sorry, but the housing market or demand for it is not going to be fixed with a $8000 tax credit, the economic fundamentals and consumer confidence need to change for you see buyers go from cautious to optimistic.
If any Realtor I hired told me to wait - after saving money that is nothing to sneeze at, after being responsible, and after avoiding the scams and craziness of late - I would tell her/him to take a serious hike.
I never thought I would thank an (R) Senator, but thank you Sen. Isakson for pushing the $15K credit for everyone who wants to buy a home for the first time or upgrade seasoned buyers. Remember, the "goverment funding" will help: with funds leftover, people can buy new furniture, hire contractors to do work on their homes. Now that's a stimulus.
I am getting an FHA loan. I'm not marginal. I'm a 1st timer that likes the advantages of FHA for 1st time buyers. Yes, I am one of "those people".
In the meantime, it's much harder to get a loan than it once was and prices are still dropping in most of the country. So if you don't need to buy, why not wait till the credit has stabilized, housing prices have approached bottom, and in the meantime build up your down payment and credit scores?
I see the reasons for buying now, but I can see how the uncertainty surrounding the tax credit is keeping more buyers from purchasing. All the more reason to focus on lowering asking prices vs hyping credits. My two cents, good luck everyone.
When a behavior is subsidized then more of that behavior is created.
Welfare creates more poverty...the poor are rewarded for being poor by the state.
States giving people money to buy homes keeps home prices high for a time. Subsidizing higher home prices produces higher home prices via the $8000 tax credit and low interest rates.
The smart money is aware of this and will not buy because the smart money buys low and sells high. As long as high home prices are subsidized by low interest rates and government tax credits their will be little chance of buying low cost housing. Again the smart money is patiently waiting for exhaustion on the part of sellers, interest rates, and tax credits.
Currently the propaganda put out by the NAR/realtors/government is bringing in the few remaining suckers before the interests rates zoom higher and home prices come crashing down.
Bad moves in housing usually resulted in tens-of-thousands-of-dollars magnitiute mistakes. $8K isn't enough to enter into that kind of equation.
As for the Tax Credit issue, many people do not understand it or know about it and it is a Realtor or lender that brings the information to the client. Each person's situation is unique and if you are ready to purchase a home you have choices to make. If you qualify you can take advantage of the tax credit as well as some very attractive interest rates. You can also make a much better deal on the home of your dreams today than you could last year or two years ago, etc. If you choose to "wait and see" then you join the ranks of risk takers who are banking on rates staying low, prices dropping further and tax credits being increased. I don't know if any of these events will take place, my crystal ball has been out of commission for a long time! Interest rates could go up, prices could begin to climb as banks become more stable and less willing to take a loss on foreclosed properties and the tax credit could expire or stay the same. What I do know for sure is that now is a better time than it was in 2005, 2006, 2007 or 2008! Will 2009 join the ranks, guess we need to "wait and see".
Buyers need to evaluate their personal needs and desires and weigh them against the economics of today.
If you are buying a home you will look at the purchase much differently than if you are buying for investment only. In the past buyers were just happy to buy so that your "rent" payment was going to toward something tangible and maybe you would see a little return on investment in 10 or 20 years not in 6 to 12 months! I purchased a home in 1978 for $62,500. 21 years later it sold for $156,000. Gee if I had waited another year I could have sold it for $250,000 but then I would have had to pay $100,000 more for the home I moved to.
Bottom line, find a Realtor and a lender who will give you the advise you need. Ask your friends, co-workers and neighbors for referrals. Look for agents who offer credentials that indicate advance practice studies such as CRS.. Certified Residential Specialist. These designations come only with a significant investment of time and money to obtain additional education and is not a requirement to hold a license to sell real estate!
EJ, Realtors provide a service for a fee. If you feel qualified to make is often the largest investment of your life on your own, Bravo! But don't deride the roll Realtors play in providing valuable services to those who may not feel so qualified or who have relied on the advise of trusted real estate professionals over and over again. If broken down to an hourly wage most real estate agents would fall well below the average minimum wage law! In other words "we work hard for our money". Remember, most people are qualified to dig their own hole, but they still need an undertaker to finish the job properly!
Back in the old days when I started in real estate, and the dinosaurs were roaming - that's what people did. They saved for a downpayment and THEN bought a home. That's a novel idea, isn't it?? For some reason the system got messed up (for lack of a more eloquent way of expressing that), and anyone could get a loan - bad credit? no problem.......no savings? no problem.....low income? no problem - just sign on the dotted line, and voila - here's your money.
If we have learned anything, it should be that people need resources behind them before taking on a huge financial obligation. I don't know if that lesson has been learned, however.
Dan I don't disagree with much of what you said, but please don't paint a picture of the poor innocent buyer who was taken advantage of .
If someone told you your mortgage would cost you over 50% of your monthly income - wouldn't it occur to you that you just might be over extending yourself? The bank doesn't know what your lifestyle is, but you do.
Shouldn't adults be responsible enough to ask ,before signing papers, how much their adjustable loan will cost when the adjustment peiod comes up? Realtors, mortgage lenders and appraisers weren't a bunch of pied pipers leading defenseless children into the sea. When I bought my first home in 1976, i didn't expect the banker to tell me how much I could afford - I expected him to tell me how much he'd loan me, and then I could determine if I could afford that amount based on my lifesrtyle and budget. I have often sold homes to people for less than they were aprroved for.
Greed was rampant during the run up. People who were in no financial position to do so, bought up homes to flip and make quck profits. People saw a home as a get rich quick plan, rather than a place to live in for years to come, for the long term. Appraisers wanted the banks to be happy, so they made sure the houses appraised out, true - but the houses DID appraise out because the buyers swarmed like hungry bees, and that's what drove the prices up. Something is worth what someone will pay for it. You can't say people overpaid for homes 5 years ago, because the prices have dropped now. It is what it is, and it was what it was. Years from now when the prices reach those heights again, and they will eventually, will those prices be too high? Not at all - they will simply be the current market prices.
Owning a home was the American dream - it became the American nightmare for many. No fingers can be pointed at any one person or industry - we're all in this together.
So.........Is the $8000 tax credit enough of an incentive to encourage someone to buy a first home?
In my opinion, It shouldn't be if they are not financially stable without it.
With unemployment at an all time new high ( which remember are conservative figures) who wants to buy? Most home owners are not going to list their homes in this market, they like myself will wait until we see improvement and proof of a recovery in our nation. The only homes available seem to be undesirable homes.
At least in California, the government is most likely going to extend/renew the $10,000 credit for first time homebuyers closing beyond March 2010. According to some articles online, the bill has little opposition and the amount of extra tax credits just depends on the final CA budget. Plus, they're trying to modify the CA tax credit so that buyers can reserve for it when signing the deal, rather than at close of escrow.
All this means is that now people in CA can wait for better prices on homes rather than trying to beat the tax credit deadline. And with the moratorium in place in CA for forclosing homes, why not wait?
Plus, did you guys hear the news this morning regarding insider selling at top corporations in the U.S. There hasn't been this big of a sell-off by insider and executives since right before the market collapse in late 2007. Yea, of course this has to do in part by people trying to take gains from the past few months. But that doesn't mean it will be a temporary drop in the stock market. These transactions have to be reported way in advance of the actual transaction dates (unlike normal people that buy and sell at any given time during open market everyday).
Also, 15K, leverage 5 to 1 (20% downpayment) raises the price of the homes about 75K.. At least thatâ€™s the way Iâ€™m looking at it, by far the biggest obstacle for most buyers in the down payment, this removes that hurdle and allows bigger and bigger purchases.
This is all about keeping Americans in debt. Is it no obvious?
Sorry folks, but the prices aren't low enough for me. I don't NEED to buy a house. I have a secure job. Since I live where I live, I seriously doubt whether the housing prices have bottomed out yet. I know about the tax credit. It's not enough to make it worthwhile for me.
So I'm looking online, learning, and getting some cheap entertainment (some of the home tours where the agent is being honest about the interior of the house, is great! I probably won't look at the house, but I hold those agents in higher esteem for a nicer home). Perhaps, if the prices go down further, I might be more serious.
People (me included) have bashed almost every Pro I have ever seen on here with the Great Time to Time. You are by far the most honest and in touch that I have ever seen - if there were more like you all the buyers, sellers, banks and everyone in between would be better off and we could get everyone in home. I am giving you a huge "thumbs up" and hope you keep dishing out the great insight. I bet you have sold a home or two and are in it for the long haul. Thank you.
Also, knowledgeable investors won't touch a property unless they can get it for below 100x rent. That is far from the case now.
So for all those Realtors that say buy why don't you put yourmoney where your mouth is and go out a buy a property..... i don 't think so!!!!! You can't recommend something that you are not willing to do & then again many of you go on do that anyways.
23 yrs of being a realtor and I don't think anyone has seen a crazier mixed upmarket than this in their career.
Hang tight but be ready to do your thing some time around November/December.
Yours truly honest,
Don Yosef Marcus GRI,ABR,CCREC,SRES
Century 21 MB Chicago & Northbrook
Because foreclosures are showing no signs of stopping.
Not until 2012 will this mess clear up.
Banks aren't giving out loans.
I'm not an economist. But I don't need to be one to figure this out. There's excess supply in foreclosures, and limited demand in buyers due to no loans being given out.
Lets see, when supply goes up (as it will the next 3 years), and demand goes down, tell me what happens to price?
Case Shiller's Composite 20 index has shown that home values have gone down every single month since August 2006. They went from a value of 206 to a value of 139.
While that's a 67 point decrease, he still believes the market is overpriced by 39%. A tax credit that maxes out at 10% doesn't save the 39% that I would lose on purchasing a home now.
I'll let someone else catch a falling knife.
I think it is due to the frankly - crappy - job market, fear of layoffs still are very much alive, and so many people's credit ratings are shot. So many are barely treading water, so the $8K means nothing if you don't have money to buy. Also, we are collectively going through some societal trauma coming out of this housing and mortgage crisis, so people are cautious of the market, professionals, mortgage products, etc: who wants to run into a house (no pun intended) that was just burned down? Not the majority.
@ Barbara Nowak: With respect, your answer " ..even the job security issue has been resolved, because some sellers and builders are offering insurance to cover mortgage payments if you lose your job.." appears scarily out of touch.
$8K means nothing if you don't have money or stomach to buy.
Did I mention you get an $8,000 tax credit if you buy? Maybe I should say it slower for you stupid uninformed buyers!!!
NEWSFLASH!!!! BUYERS KNOW ABOUT THE DANG CREDIT!!!!
So you believe that the government handouts is going to be good for real estate? How so? If you are selling something that people will not buy unless the government gives them money then how is this a good product to be selling? You agents are hawking welfare homes to losers.
What is really happening here, per transaction, is this:
The government is stealing $8000 from the American people by inflating the money supply by $8000(via printing press) then giving the $8K back to a single American at which point the single American pays interest on that which was stolen from him in the first place. Hi, I am a moron American!
This official theft is standard fare in third world countries which the USA has become.
We are so freaking doomed.
People electing to not be suckered into overpriced debt/tax trap boxes are renting(rates are falling) or living with family until prices reflect reasonable valuations or low valuations.
Here are the benefits of being a savvy and patient buyer:
Higher interest rates leading to much lower home prices and much lower amounts to be financed and even the possibility of buying outright.
Homes are depreciating assets. Waiting to buy means one forgoes the expense of maintaining a breaking/broken home. Smart buyers clobber sellers at negotiations that fail to maintain their property.
Buyers can park their cash is appreciating and highly liquid assets like physical silver and gold bullion while watching others flounder in their debt traps and pay their still appreciating property tax bills.
These are just a few benefits to being smart and patient in real estate.
1. money is now more difficult to come by as banks are making borrowers jump through numerous hoops. ie "proof" that the street the home is located on is public or private. Come on.........
2. many buyers have become entangled in the "short sale" mess. It doesn't help sales when you have 3,4,5, ect. buyers waiting on the destiny of one home that might take 4-6 months.
3. too many banks are applying the "trickle effect" to releasing foreclosure properties for sale. some people are patiently waiting for what they have been told is the "next big wave" of foreclosures.
It's important that we understand what is happening as well as what the potential causes are. There is much more to tis complicated situation but I don't think the powers to be are looking at the "big picture." One thing is for certain...the banks are once again being given too much freedom to create their own destiny...at the publics expense.
We know you "think" real estate is still at the market peak (even though it was in late 2006-2007)
We know you think real estate is a conspiracy driven agenda run by the evil Realtor conspiracy out to scam everyone with a dollar and no clue (let people make up their own minds by supplying some facts instead of negative "opinions" and conjecture)
All your posts in this thread are so negative, I looked into your other posts since you first becoming a trulia member and it's all more of the same.
You're like the negative guy in the office always in a bad mood never having a nice thing to say about anything.
It's nice to see how you "support our troops" implying they are ignorant for joining the military and wanting to fight for their country and deefending it's core beliefs. You're pathetic, not everyone will share your views and that is something you need to deal with.
In case you haven't noticed these forums aren't suppose to be for propaganda but rather an information source for exchanging facts (thus the web references space provided below every post) in an effort to help others through experience, not brainwashing or intimidation or repetitive posting of the same message. I give the readers here more credit than that for being smart enough to observe, do research and come to their own conclusions.
To Cathgrl, sounds like you've already made up your mind so no need for further discussion there but I would think any house less than $80K would need a lot of work, maybe you are better off renting.
Some people just shouldn't own homes especially if a mortgage and taxes alone would over extend them. Don't forget to take into account other expenses you have like car, credit cards, groceries, heat, water, sewer, insurance, kids, cloths, etc.....
Some folks income just isn't enough to own and maintain a home and should just be renters until they get can improve their financial situations.
If you really want ownership and don't earn a lot another option may a home in a mobile park.
I agree with Victor.
Individual Homesellers CAN compete with the incentives that Builders/Developers offer.
Would your Sellers sell faster if they were priced aggressively and offered financing start rates at 3.5%?
Below market interest rates in addition to the $8,000 tax credit should help to encourage the "fence sitters"
Unless of course they choose to wait...
Goat says "wait til rates go to 9% and prices tumble further".
$2,500/month P&I at 5% = $467,000 mortgage amount...Purchase price: $484,000
$2,500/month P&I at 9% = $313,000 mortgage amount...Purchase price: $325,000
An increase in interest rates is inevitable...the "unknown" is... how much further will the market deteriorate?Will homes that are currently asking $484,000 be asking $325,000...when rates are at 9%?
That's a ~33% decrease.
Just wait till the mortgage rates hit 9% and home values tumble even more.
Sellers that do not sell in 2009 are going to be amazed at how low the price will go on their home in 2010 and 2011.
Price the home real low and buyers will step up to the plate I assure you.
I have to agree with everything that Debbie said, and I want to add one more possibility for why people are waiting.
Buyers are attempting to "time" the market such that they are buying at the very lowest possible price for the type of property that they'd like to acquire. The analogy that I think is most accurate here is trying to catch a falling knife.
While I'm not of the blindly repetitive "it's a great time to buy" crowd, for a select few folks this is in fact a great buyer's market. This is not the same as saying that prices may not continue to go down for the next 9-12 months if not longer.
But if you:
have great credit scores
do not have a property to sell
can put down 20% of your purchase price
and are a first time buyer (or have not owned a principal residence in the last three years) and qualify for the federal tax credit;
then this is an excellent time to attempt to find a property that suits you.
If you can find a deal that makes financial sense for you (even if prices dip a bit more), the deal still makes financial sense for you now. And as I answered in a different post quite a while ago regarding "why buy in this market," this is the type of market to feature many more historically discounted properties than you'll see as a buyer in a stronger seller's market (as we've had for the past 7 years or so).
Also the education about the credit will take some time to spread out into the market. Many people know about it, but they don't know EXACTLY what they have to do to get it for themselves. They'll learn or they'll pass.
Broker Associate, Sudler Sotheby's International Realty
I am touched by your kind words - thank you so very much!
To respond to your comment, yes, I have been in the business for a very long time (24 yrs). I have always done my best to be direct, upfront and honest with my clients. It's who I am, and how I operate. Thank you for noticing!
ps... yes, Carmen, you're right - the $8000 tax credit is for 1st time buyers, not new homes....I have a blog that goes into more detail if anyone wants that information
Yes, they are motivated sellers. Even so, I'm paying 45% less than the owner purchased in 1992 (has been the only owner of the condo, it was built in 1990). Finally, something that works for me. And this is someone who never thought she would ever afford even a condo!
Iâ€™m not sure what you mean by your train analogy, but to blame some mythical train for the disaster in real estate doesnâ€™t really explain how we got here. I wasnâ€™t on the train. Iâ€™ve been as short of real estate as one could be.
Group-think, greed and irrational exuberance drove the run-up. Denial, fear and panic will continue to drive the downturn. The negative sentiment of the average consumer, in regards to real estate, is no more to blame for the downturn than Time magazine is to blame for the run-up.
Enjoy the show.
50% off 2009 Prices? You can't be serious, what data do you have that could support that GUESS, it is just a guess after all unless you are a fortune teller. Even the feds and case shiller index are showing an uptick in real estate sales saying its showing signs of stabilization.
Steve a real estate broker???? I highly doubt it, most real brokers will create a profile and show their contact info and as required by law name the brokerage they are affiliated with.
Steve is obviously a fake profile of someone just trying to dissuade buyers from doing just that. Just another character which is part of a new slacker movement on trulia to promote avoiding home ownership at all costs, probably a stock or gold broker. ;-D
Get a life, get a job, get a clue....