There are good times to buy assets, when the news is so bad that prices are depressed, and you just have to hold your nose and jump in. Now is not one of those times. Loans are really cheap but real estate is nothing close to it. The reverse - cheap houses and expensive loans - is a much better time to purchase, and that's how it was when you got into the market, Mack. You believe your long experience makes you immune to mistakes, I think it's made you overconfident. There's still a reasonable chance that buying today will work out okay but it's nowhere near as certain as you believe.
Last word from me. All this nonsense about how renters are paying their landlord's mortgage, like some kind of serfs? Give it a rest. Owning a home is a huge commitment. I've been on both sides and prefer to own, but renting is a lot cheaper. Homes cost a ton of money over time that is not captured in any price/rent calculations. You have to want it, and not wanting it is no reason to feel shame. A serf is basically someone who is stuck in their situation with few ways out. Frankly, that is every landlord who bought during the bubble. Their only choice is either continue shelling out thousands a year to subsidize the rent payments they receive, which don't nearly cover their cash costs let alone depreciation, or sell at a large loss. Renters today can just move to the next subsidized home and continue the American tradition of labor mobility. We are going to see a lot more renters in this country going forward. There's nothing undignified about that.
The "right time to buy" is based on an individuals personal needs and the opportunities that are available to them at a specific time.......
The perfect opportunity is not created by interest rates and inventory alone......as was demonstrated during the "strong market," buyer confidence and the strength of the economy were major factors.
What the consumers are telling us with their inactivity is that this is neither the "Perferc Storm" nor the "Bridge Over Troubled Waters" for buyers.
No agent at any time should be telling people that it is a great time to buy. We should be stating facts, including the real possibility that prices will continue to decline for years to come and that increasing interest rates and shadow inventory (which is very real) are going to drive down home prices further. I am actually trying to talk some first time homebuyers (that I have been working with for over a year) out of purchasing because they are planning on moving out of state in a few years. If they took my advice, that would obviously suck for me, but I still think its right for them.
I know some people who bought very successfully when rates were in the teens because the prices were outrageously low and when rates came back down, they were able to refinance with great interest rates and home values were often doubling, tripling or even more. Things are not always so clear cut as the RE industry tries to make it seem.
Many people still aren't buying because their employment situation is shaky or they know that being tied to a house that is possibly still depreciating when they may need to move in the next few years will put them in a terrible situation like so many people are dealing with now. Not everyone is in a position to stay in the same home or 10 years or more in our increasingly mobile society.
Our job is to help people make an informed realistic decision, so that they are able to do what is in their best interests, not in OUR best interest.
Why would/should anyone take seriously anything that has been said for years now? How do you all think sellers feel when they were told a few years ago that NOW IS A GREAT TIME TO BUY!?
Oops! Well.....okay maybe NOW IS A GREAT TIME TO BUY!
Keep repeating it over and over to yourselves and maybe you can convince yourselves that you are all experts.
Meanwhile it makes the RE profession look like fools.
Since buying is an individual decision based on individual circumstances, maybe we should just stop cheerleading the buying and do our jobs: providing great service to those who choose to use us, not trying to convince people one way or another whether or not now is a great time to buy.
a. Who are you?
A first time home buyer in your new home 5 years or more?
Time to buy. Buy low sell high works here too.
b. Outgrown your home and time to move up?
Time to buy. You get the square footage you need to feel comfortable, at mortgage rates that do also.
c. Just bought a great no money down cd set off of late night TV and your ready to do the deals and
get your first Lamborghini with the cash you take!
Dont Buy. Why? This is a market so fluid and volatile that your chance of success is low.
Chance of getting eaten alive? High.
What do you think?
It will never be the best time for everybody to buy.
It will always be the best time for somebody to buy.
End of story.
Higher interest rates equal four very important things (warning, this is going to be rant-like).
1. Prices decrease due to lack of demand (people who want to buy can't afford the interest payments for the property they want. One that at one time was perfectly affordable at lower interest.). Higher interest rates mean a tightening of the credit market... which makes it even HARDER For people to get a loan they want. As interest rate increases, so does the default risk. This can mean a SIGNIFICANT decrease in housing prices, but a HUGE increase in housing value (fire sale anyone?!). After the initial price shock from decreased demand, those who buy at this time will see a MASSIVE increase in value due to the inflation hedging nature of real estate.
2. Those who CAN afford to buy real estate ARE EQUAL OR BETTER OFF with higher interest rates. People tend to forget the deduction of interest on mortgages from income taxes, as well as depreciation deduction if the property is used for income. Those who are high net worth individuals would prefer higher tax write-offs than an extra couple of dollars(rent - mortgage- RE taxes) from renting out that same property after buying. For every dollar that is put into interest, up to 50 cents of it is given back from tax write offs and other deductions! For a wealthy individual who's income is only from investments (the real wealthy), this can be a big deal!
3. Higher interest rates tend to do 2 things:
1) Force people to rent
2) Force rent prices up due to increased demand (less people can buy, so they rent... but the amount of places to rent is limited at any given time, this means more competition to get that rental!).
4. Higher interest rates generally mean higher inflation, which again means higher rent that can be put into risk free bonds at higher rates (for 30 years!). But what most people don't understand is that as soon as inflation falls off (finally subdued by increased interest rates), it falls off DRASTICALLY(Another shock!), which means people can begin to afford houses again! (That $250k house that you bought at $200k during the price shock has suddenly increased to $400k and so did your rent income during that time.
And now there are PLENTY of buyers due to the lowered interest rates at the start of the next cycle.
But since you bought during the start of high interest rates, you have the following:
A substantial profit from the land itself
A substantial amount of of fixed income risk free bonds (some of which are tax free!) that surged in prices as interest rates fell. You smartly bought them using the income from your properties during this time period.
Plenty of money to buy at the perfect time during the next cycle!
But if you don't believe me, I have some great properties in Manhattan you can buy right now! :)
Some of the people who did the best in the RE market were those that bought in the 80's when there was double digit interest, bought when house prices where ridiculously low, and then refinanced when interest rates went back down to reasonable and house prices began to rise. That may or may not have been a unique circumstance and I am not sure we will ever see property values rise the way they have in the past but I get tired of the sense of urgency that so many agents like to create and I'm an agent. Makes you wonder what the average buyer thinks, especially since the same advice has been spouted for years, unfortunately to many people's detriment.
As many have said, the appropriate time to buy is an individual decision but agents need to stop acting as if the largest investment decision of most people's lives is an urgent one just because we say so.
We'll have to check back to see if 2011 ends up being the bestest-estest time to buy! Good luck to you all!
The fact is, "nobody" buys at the "right" time. "Everybody" misses out on all the best deals. During the tech boom of the '90s, "nobody" bought Microsoft or Amazon or whatever low, they all bought it at the top.
"Nobody's" buying right now, really, because "nobody" else is. They're going to wait until other people buy, in which case, they're going to buy above the trough. Some are going to wait and wait and wait, interest rates will be over seven, and values will be up 20%, but that's just the way people are.
Certainly, people have been hurt by the crash. But, it's a funny thing - most people who bought and can afford to keep up their homes, maybe refinance, are pretty darned happy that they're homeowners, and not renters. Because homeownership, in the end, isn't just about how good a deal you made.
Buyers you have the potential to get more for your dollar! A decrease in listing price(s) started over two months ago in certain areas of San Diego; be ready to "pull the trigger" and have your loan conditionally approved with a direct lender!
Now that gasoline is $4.00+ per gallon, it will be interesting to see what will happen this spring/summer when sales & demand typically increase. If you are serious about buying plan ahead and have your financing ready for this summer!
Sr. Mortgage Banker
Point Mortgage Corp.
That really doesn't make much sense. Because cars occasionally run red lights, you only cross on the red?
- Anyone who works with statistics will openly admit how easily manipulated the data is and how it can be interpreted to fit a desired conclusion.
The US Census Bureau is unlikely to have a pro-Realtor bias.
- When I was talking about people who bought during double digit inflation when home prices were very low I was talking about people I actually knew. There are a number of them.
Let's look at the story you reported, Joan. The overall message is: smart people bought when prices were low and interest rates were high, and sold to people when falling interest rates pushed prices up. It's a good story. But if you take out "interest rates," the story correlates with the data - they bought when prices were lower, and sold when they were higher. The story would correlate with the data if you had written, "they made money by buying in the '70s when interest rates were low and selling in the '80s when interest rates had gone up."
So, in fact, interest rates do not have any relevance in the narrative. Simply put, for people who don't want to read much further:
Year Avg Price Med Price Int Rate
1975 $39,242 $42,525 9.2%
1980 $64,708 $76,425 14.4%
1985 $84,275 $100,992 12.7%
1990 $122,275 $148,992 10.1%
1995 $133,433 $157,600 8.2%
What do interest rates have to do with this?
- Mack, you keep trying to paint me in a corner acting as if I am shouting from the rooftops "DON'T BUY!"
Well, you are shouting at agents not to shout from the rooftops, aren't you?
- I figure its my job to be as informed as possible but its not my job (and so for not within my abilities) to act as if I KNOW that this is the best time to buy.
Well, now you are better informed.
Joan, you seem like a person with a strong moral and ethical code, who would serve her clients well, except that you seem to over-compensate for the failings of your profession. Two wrongs do not make a right - to be the best agent you can be, don't over-compensate, get it right.
Actually Mack, of course there can always be flaws in the narrative but in this case, I tend to believe the opposite- that the data does not always fit the narrative because of some flaws in the data.
Anyone who works with statistics will openly admit how easily manipulated the data is and how it can be interpreted to fit a desired conclusion. Nationwide median prices are pretty meaningless to me. When I was talking about people who bought during double digit inflation when home prices were very low I was talking about people I actually knew. There are a number of them. Just a few, admittedly not statistically significant. They made out very well by buying at the time when the market was seemingly horrific. So you can stick to your national median figures - I have my personal contacts who were actually a part of that market and when I have talked about that with other people, they all seemed to know people who bought then and did really well. People who buy now may also do well in 20 years. I don't believe they will short term. Maybe now is a great time for people to buy, assuming they are in a position to. But there may be more pain before there is gain. Maybe not, but there are a lot of things that are indicating most markets are going to be at best stagnant and at worst, declining for the next several years.
Mack, you keep trying to paint me in a corner acting as if I am shouting from the rooftops "DON'T BUY!" and I have never said anything close to that. Only that it is a decision obviously based on individual circumstance, that we as agents need to stop creating a sense of urgency for a decision so huge, and that for some people it is the right time for THEM to buy and for some people, it is most definitely not.
I get just as frustrated with the naysayers as I do with the cheerleaders. Its okay to tout low interest rates and lower housing prices but its also okay to make it clear to people that home ownership carries a lot of responsibilites and costs that first time home buyers may not be aware of and if there is any possibility that they may need to move or sell in the next few years they may find themselves in a tough situation. I certainly don't go around to all my buyers and say What?! You idiots! Why would you want to buy in this market?? But you will also never hear me state Now is the time to buy!.
I figure its my job to be as informed as possible but its not my job (and so for not within my abilities) to act as if I KNOW that this is the best time to buy. The reason so many buyers are skeptical of the BUY NOW nonsense is because they have been burned by the market when they bought at a time when realtors were saying the exact same thing.
As stated many times, the only people for whom it is truly the right time to buy are those with stable jobs. Unfortunately, that is an increasingly lower percentage of the population. Until that improves, RE will be a tough business for most of us.
House prices can lower dramatically with interest rates staying low and there will still be a significant segment of the population that will be unable to obtain and/or afford a mortgage. Buying opportunity has little to do with it, employment opportunities are what people are craving.
I realize that these are separate issues: If you are able to buy, is this a good time to buy? vs. can I buy if I want to buy? but I think it really comes down to just doing our job- helping people be realistic about the costs and responsibility of home ownership, being realistic about short term resale and what they can or can't afford. A commission is not worth convincing people who maybe shouldn't be buying (for various reasons) to buy when it may be contrary to what is in their best interests.
I get concerned when agents create this sense of urgency out of a desire to generate business and therefore benefit themselves to the potential detriment of buyers.
Well, Joan, we don't.
- Some of the people who did the best in the RE market were those that bought in the 80's when there was double digit interest, bought when house prices where ridiculously low,
Except that the data doesn't support that mythology.
Median and Average Sales Prices of New Homes Sold in United States
Period Median Average Interest Rates
1976 $44,283 $48,100 8.9%
1977 $48,983 $54,350 8.7%
1978 $55,792 $62,667 9.6%
1979 $62,750 $71,917 10.8%
1980 $64,708 $76,425 14.4%
1981 $68,825 $83,067 16.8%
1982 $69,300 $83,817 15.2%
1983 $75,458 $89,867 13.1%
1984 $80,017 $97,492 13.8%
1985 $84,275 $100,992 12.7%
1986 $92,233 $112,158 9.8%
1987 $104,675 $127,933 10.1%
1988 $113,350 $138,925 10.5%
1989 $120,383 $148,317 10.3%
1990 $122,275 $148,992 10.1%
The interest rates are from a table I copied years ago, I believe from the St Louis Federal Reserve.
Anyway - what you don't see in the table above is "ridiculously low prices" anywhere; another thing you don't see is high interest rates pushing prices down. Maybe keeping them from rising, but that's speculation, isn't it?
The data does not always fit the narrative, usually because of some flaws in the narrative.
The right time to buy is such a personal decision...and nobody knows exactly where the market will go for sure.
We're also negotiating buying another investment property. The current prices and rates help return....
So it makes sense for us but I think that a lot of people are afraid to buy now and have the value go down further. If people are in the market to buy and are worried what the prices will do over the next year because they may have to move - they don't need to be buying.
I really think it depends on where you are. In my local home market, Austin Texas homes are starting to move. The key is price it right and have it in perfect pristine condition. Lately Buyers only want to look at perfectly updated homes. It seems that wel priced good condition homes that need updating are languishing. That said there are some that are updated that still sit, because they are too far from city center or may be smaller than most buyers really want. Each market is different and you need to look at your local market, not the country in general.
Pending Home Sales Surge Massively, Up 10.4%
Up 10.4% for October, with the index rising to 89.3%.
Analysis: Last month the pending home sales index fell 1.8% (for September).
Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. â€œIt is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,â€ he said.
â€œMore importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,â€ Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
David Cooper 1-702-499-7037
This guide will help you or your party decide if buying a home now is right for you. It also has
Tips to Figure out your Financial Strategy and Home buying Readiness
Hope you enjoy reading it
If you understand that the rates are the lowest in 50 years, I would say: This IS time to buy.
If you could choose locations, prices and conditions for the lowest price I have ever seen, I would say: This IS time to buy!!.
Who knows what is going to happen next year. ? We are living the most amazing buyer market. NOW!!
Keller Williams Stamford
(1) Is your income stable?
(2) is your marriage stable?
(3) Are people continuing to move to the aria you wish to live?
(4) Are new jobs continuing to move to the aria you wish to live?
I believe we will have A housing shortage in Phoenix AZ. with in two years
because very few new homes have been built in the past 3 years.
This will allow the thousands of homeowners that want to sale but can't
because they are under water to sale. Do you agree?
Am I surviving thru these troubling economic times. If my expenses are under control, and I can see steady income for the next 5 years, I might look at houses selling at 50% less than when they were 3 years ago and with interest rates in the 5% range, the lowest in 50 years and see opportunity.
If I am still living paycheck to paycheck, and my expenses are "killing me" or my job and income is risky, this is definetly NOT the right time to buy.
My Las Vegas area has a 15% unemployment rate, BUT there are 795,000 employed works. The glass is 85% full with the people working. They need to live somewhere, BUT, the guru's and the news media that quote them make it feel that everyone is living in a shelter and eating in soup kitchens.
David Cooper 702-499-7037
I get a lot of calls from people thinking Florida is "on sale." Yes, it is from what it was, but you still must be practical. If a house was $ 450,000, it isn't going to be $ 150,000. It may be up to 50% off from where it was depending on the community. Some communities have fared better than others and held their prices.
We are in a boom-and-bust market. Is it a time for home buying in the Boca Raton/Delray market? Yes, if you are in a position to do so and plan on keeping it for a while. This is not a time for flipping houses, in my opinion.
I had buyers out yesterday looking at condos originally priced at $ 475,000 - $ 600,000. They're on the market for $ 249,000 to $ 300,000 today. Brand new, gorgeous! Now, that's a deal!
We've been named by Forbes, Wall Street Journal, Fortune, and many others as the #1 and #2 real estate market in the US, the #1 most recession-proof city in the US, #11 best city for jobs, and the #1 most affordable city. And we have an NBA team now.
I am biased. I love Oklahoma. There are plenty of good reasons to buy now, no matter where you live (low rates, low prices, huge inventory supply), but these have all been explained very well by the other posters. For links to the articles about the OK RE market, click on the blog link below. Thanks!
More importantly you need to understand the market you live in and see how the market has efftected it. Not all cities or neighborhoods are the best to buy in at this time. So do you're homework so you get in the right area that is in demand and has long term stability.
Prudential California Realty
516 5th Ave,
San Diego, CA, 92101
Actually there are micro markets and macro markets.
Macro economy such as that in the entire State and Micro economy such as what is happening around Encinitas, CA.
Also you have to check your own personal situation (Personal Economy) and how do you think your
business will fare 5 years out.
We have in the Silicon valley folks from Google, Apple, Amazon, Ebay, and successful start ups buying out homes all cash down upto $2.5M. The last 6 weeks recorded the highest Sales Prices on record for
San Mateo and Santa Clara county, which indicates C-Level staff at key companies feel the market is improving and jumping in. So if you have worked hard and joined the right company and made them successful, then you are successful and with free cash on hand, it does not matter, as Real
Estate is a long term investment with at least a 10 year horizon you should do just fine.
If you or your clients have to look over your shoulder every month as to how the market is faring, then
it would not be too bright to buy.
The economy overall is improving, we have both local money and foreign money right now buying homes
off the MLS and at Court Auctions. Once the smart money moves into your area it is too late. Also with rising rates its going to get tougher to make money on an investment property as Cost of Money rises.
It all comes down to whether the business in your area is improving, and the population trend, is
their migration into the town or out of town. Can a town or city hold on to the Businesses, their skilled
and educated workers, their fresh college graduates is the future. If the answer is no, then the future is
bleak for the town or city, no matter what the Macro Economy is doing.
The answer is simple, Yes people are jumping in and in selected areas, the fundamental question is:
How is your Town or City doing?
If the rot continues then one should experience further price declines; this rot reflects both the number of
homes that are facing Short Sales, NOD as well as available Inventory of Available homes that are Regular,
Short and Foreclosed. The rot also reflects what your town economy is faring, if business are shutting down
then more layoffs, followed by more price declines and foreclosures. The rot also reflects if builders overbuilt and there is a glut.
If one sees growth then price increases.
I one see stagnation then dont bother jumping in.
Perry & Ruth
If I was in a room full of poeple 3 years ago, at the height of the price bubble with interest rates in th 6-7% range, and asked "Is Now the Time to Buy a Home", every hand would have shot up. Yep, the market is going up, because that's what all the statistics and guru's were saying.
Now, with prices are down 50% and interest in the 5% and below, all the statistics and guru's are saying NO!.
Seperate "YOUR ECONOMY" from "THE ECONOMY" and I would being a BUYER if it makes sense for you
David Cooper 702-499-7037
To answer your next question... UNCERTAINTY is the reason more aren't jumping in the pool. If YOU are uncertain about the stability of your future income, if YOU are uncertain about your federal income tax bill, if YOU are uncertan about increases in health care costs, if YOU are uncertain about having to relocate and selling your current home at a loss. UNCERTAINTY is crippling our economic recoverynot the housing market.. Real estate agents are like historians...we can only look back with certainty not forward. No one can see into the future but one can speculate based upon indicators. Indicators in the housing market and financial market, tax laws, interest rates, anticipated congressional bills that may affect home ownership all go into the mix. Real estate agents are like any other profession. The good ones are the ones that are knowledgable of all these indicators but only YOU can determine your level of risk and tolerable UNCERTAINTY. My advice, interview an Accredited Buyer Representative that is in the know before you search the first listing on the internet. Andrea Gaume, Accredited Buyer Representative