Home Buying in 90505>Question Details

Moni, Home Buyer in Torrance, CA

South bay prices - how far will they fall?

Asked by Moni, Torrance, CA Tue Feb 17, 2009

I keep hearing that things are going to keep falling for the next 12-24 months. Wondering if it's better to wait another year to buy, and risk potentially having worse interest rates, or to buy now and risk losing a lot of value and being immediately underwater on a mortgage. Any insight into the south bay market in particular?

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I bet the real estate market bottomed out shortly after you posted this question and you thought the values would decline another 12 to 24 months. No one knows the future or can predict which way values will move, up or down. I advise my clients to purchase what makes sense to them and plan on staying in their house at least 7 years. Buying a house for family use should not be considered an investment but a safe haven to live and enjoy life.
0 votes Thank Flag Link Wed Oct 8, 2014
Where can someone get this information on the prices on the market? Maybe it is because I am not an expert in this field, but I have been looking for the price ranges on the market. I am trying to figure out what would be a good price and what wouldn't. http://veteransrealtyaugusta.com/properties-rent/
0 votes Thank Flag Link Tue Oct 7, 2014
Talk to a real estate agent that works in the area where you are looking to buy - this is the most correct information you can get. Not sure about the link you posted - it looks like it is a website for a real estate company in Georgia.
Flag Wed Oct 8, 2014
I am only responding to this old question because you heard right. Looking back now it appears that the bottom of the market was 2010-2011. Prices have since soared and values have increased as much as 35%-40% since 2010. Rates have gone up in the past two years but remain relatively low.
So what was the end result? Did you wait to buy afterall?

Alex Montelongo/Broker
Coldwell Banker Star Realty
562-810-7387 Cell
BRE Lic #01456982
0 votes Thank Flag Link Tue Oct 7, 2014
The important thing to remember in buying a property is location...if you find the right house in the area you are looking go for it...that way you can benefit from home ownership and all the perks that go with it!
0 votes Thank Flag Link Thu Jul 3, 2014
What more important the price you pay or the monthly payment, If interest rates rise it affects your buying power and payment. You could end up qualifying for a lower price range and possibly worse area? We are starting to see multiple offers again. Opportunity is knocking...answer the door
0 votes Thank Flag Link Mon Feb 21, 2011
The answer is LIFE STYLE. Ask yourself why you are interested in purchasing a home. Is it life style, home ownership benefits and to create equity? Rates are going up just slightly, but almost daily. If prices drop say $10-20,000 over the next few months, but rates rise 1% you will be able to purchase about $40,000 less of a home. These are rough numbers, but true. So it all goes back to... What life style do you want???
Call for better stats! Take Care Tami
0 votes Thank Flag Link Tue Feb 8, 2011
Moni

Prices may not fall as fast or as low as they did over the past few years. I was on a web-interview with B of A short sale exec 2 weeks ago. They said they will be releasing their "shadow inventory" slowly to avoid upsetting the market any further. They too are very aware if they put a massive amount of inventory on the market at once it will cause downward pressure on prices for everyone including the same homes they are trying to sell.

Also, keep in mind sellers who do not have to sell are waiting out the market. In my area sellers are telling me they will only sell when the market starts to rise and if it takes a few more years they are willing to wait it out.

Bottom line: if you are ready to buy and plan to stay for at least 3-5 years or more take advantage of the low rates AND low prices ESPECIALLY if you find a house you really want. No one can predict what the prices will be a year or 2 years from now.
0 votes Thank Flag Link Mon Jan 31, 2011
High costs mean you should be prepared to stay put. Judging by curent market trends and future projections it doesn't make sense to buy a home you'll own for less than three or four years. Reason: the high transaction cost of buying and selling property means you could lose money on the deal. If you do make money, you'll pay capital gains taxes if you're in the house less than two years.
So ask yourself if you can really stay put for that long. Will you need to move because you are transferred by your current employer or a new one? Are you thinking of going back to school?
0 votes Thank Flag Link Wed Dec 29, 2010
The market trends only become visible in hind sight. That being said, it all depends on why you are looking to buy a home. Is it a first time purchase and you are currently renting? In that case you have to look at the fact that you will be paying someone else’s mortgage for another year instead of your own. This is not the time to buy a house and expect it to appreciate quickly. If you need a long term place to live then this is a good time to buy. Sure, the market may fluctuate a bit and may even go down slightly, but in the long run (8-10 years) it will all balance out given the fact that interest rates are really low and that you will be one year closer to paying off your home.
If you are looking to buy an investment property, then look longer and harder, as there are a lot of good deals and some more to be had in the next couple of years. There are a lot of opportunities to purchase distressed property, rehab it and either sell or hold and rent out.
Let me know if you are interested in more information about either scenario.

Best of luck to you no matter which way you proceed.

Catherine Bedrossian
Home Sales Maker
(310) 383-4212
catherineb@socalhomefinds.com
0 votes Thank Flag Link Wed Nov 10, 2010
Hi Moni,
In my professional opinion, we are in a recovery now. It is an "L" shaped one, meaning we will not see an increase for some time to come.
As far as prices falling further, I must say that many sellers are losing money now, they will be hard pressed to go down any more.
0 votes Thank Flag Link Fri Sep 10, 2010
0 votes Thank Flag Link Sun Aug 22, 2010
Moni, anybody who asks a similar question on this site will get several responses from agents and brokers who will use any number of sensible sounding arguments that always end with the same conclusion: buy right now. One has to ignore these folks because this is how they make a living. It doesn't mean they're not sometimes right, and it doesn't mean that they don't believe what they're saying, but you won't know when they're right if you don't do your homework.

If you've been watching prices over the summer, you've noticed strong reductions as the gov't credit expired. Low rates are keeping prices from plummeting, but do the math on mortgage payments for a given interest rate, and you'll see how quickly prices will fall if rates rise even 1 to 1.5%. Point is, don't worry about rates rising. If they rise, the house prices will drop accordingly.

Other thing to consider is the shadow inventory - those homes not listed, but waiting in the sidelines to come onto the market. As the banks trickle them out, they'll be priced to sell, putting downward pressure on other sellers. Take a look at good housing blogs like http://mhanson.com/blog and http://www.calculatedriskblog.com/ for more information on this topic. At current levels, it will take years for the foreclosures to clear out (just look at the number of listings on Trulia! wow.)

So my advice is buy if it's the right time for you, but don't worry about waiting and saving up more down payment either. Even when houses bottom out here, prices will probably be flat for a long time while your income goes up. The South Bay is still overvalued historically, not by much now, but it still is. Usually corrections have to go to undervalued, not just fairly valued before things start to recover. This hasn't happened here yet.
0 votes Thank Flag Link Sun Aug 22, 2010
Moni,

I agree with Frank. We are seeing first time home buyers and investors becoming very active in the market. Homes are being purchased and inventories are reducing. You may hear lots of different things about the market. Unfortunately the ones that want to be heard the loudest are always the ones that want their news to be sensational. The reality of the market today is that we are seeing signs of the bottom. I don't know how long it will take to recover, but I don't think we will go down much further.

You can now purchase a home and maintain a similar payment as renting. This is very attractive to both the first time home buyers and the investors. Once they are buying, then the sellers no longer need to reduce the prices.

I also think there is a lot to be said about taking advantage of the low interest rates. Plus the longer you wait, the most tax savings that you will lose.

I think the South Bay is doing very well in some areas and medium in others. It really depends on your price range and neighborhood you are considering.

If you would like more information, please feel free to contact me.

Mike Magaw
M@NHLBrokers.com
Web Reference: http://www.NHLBrokers.com
0 votes Thank Flag Link Tue Feb 17, 2009
Hello again Moni,

Be careful you are falling into a familiar trap. One that has you always looking for the 'PERFECT" time to purchase a home. The window of perfection is too small and too subjective for many to take advantage of. But I will tell you this. Today is as close to perfect as you will likely see. Inventories are declining, Interest rates are at near record lows, more units are selling today than at any other time in the past three years. And all of these facts are indicators that we are near the bottom of our current market. And that is the absolute best time to purchase. One thing to consider, even if values drop another couple of percentage points, if interest rates go up even marginally from where they are today you will have lost any gain that you might have from the lower purchase price. If you are ready to be a home buyer, today is a great day to jump in with both feet.

Happy home hunting

Frank Spencer
0 votes Thank Flag Link Tue Feb 17, 2009
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