Home Buying in Downey>Question Details

Jaime, Home Buyer in Downey, CA

is right now a good time to by a home?

Asked by Jaime, Downey, CA Tue May 24, 2011

My wife and I just got pre approved and are looking for a house around los angeles
but my friends tell me to wait cause the prices on the houses are going to go down next year.. ???

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Jaime,

I personally live in Downey and I can say that I know each part of this city. If you live in Downey you probably know already that in Downey the prices are not going down that much. You can still find good deals as this was my work over this last weekend but the prices compared with other cities are still up. It all depends on what area are you looking for in Los Angeles? I can get into details for each city that I work and show you the sales comparable for the last year. It's true you can see a lot of properties for sale but it doesn't mean that the banks are going to give those away for nothing. Plus, I can't say how the interest rates would be by next year and your friends can't guarantee you this either. If the prices are going down another 10% lets say for a $300,000 current price right now it will bring a price reduction of $30,000. I can tell you right now as rough numbers it will not change dramatically the monthly payment especially that you should take in consideration at least a slight rate increase.

If you go FHA, they just changes the guidelines last month by increasing the monthly mortgage insurance. Since October 2010 the monthly mortgage insurance for FHA went from 0.55 to 1.15. You can say that this made a difference into some borrowers monthly payments.
If you have any other questions related to this area let me know and I'll answer.
1 vote Thank Flag Link Tue May 24, 2011
I asume your friends are real estate market analyst. It is really tough to know what will happen next. We can only base it on probabilities. Probabilities based on the information we have available now and past market history. Based on market history and current information i believe this is the best time to buy. Housing affordability is at its highest (cost of house compared to incomes). Interest rates are low. The reality is many people can't buy. If you can, do it. Buy when others can't and sell when others can.

Warren Buffets, Billion dollar investor, says this about timing the market " Be fearful when others are greedy and greedy when others are fearful"
2 votes Thank Flag Link Tue May 24, 2011
Prices go up and prices go down. I suggest you buy when the time is right for you and your family. Timing the Real Estate Market is like timing the Stock Market. There is no right answer! In Downey specifically, homes priced under $400,000 are selling quickly. Talk to your lender/ broker to determine whether its your time to buy. Thanks and best of luck!
1 vote Thank Flag Link Tue May 24, 2011
Hi Jaime,

What I want to say most of my other friend agents already explained to you.
For me, the most important for you right now is looking for a nice house that both you like and feel happy to buy it.
No one will even know exactly how the price is tomorrow how can your friend know the price will go down until next year (365 days in advance).
When you buy a house, feel happy with it, make it become a beautiful sweet home, you gain more than lost!!!!!
I hoe that you can find a nice home to buy it asap!!!!!
1 vote Thank Flag Link Tue May 24, 2011
Jaime,

I believe that actions speak louder than words in most cases. And even though I am a mortgage professional, I am also a homeowner. My wife and I purchased a "move up" property last summer and we couldn't be happier. We're not concerned if prices go down --- this will be a family home and we like the community as well.

If you're an investor, that's a different story. Then you need to be very sensitive to the price you're paying for any asset. But if you're like the majority, you are looking to buy because you want to build your life/family, be part of a community and know the benefits of home ownership. These are intangibles when you ask for advice, but they are far from insignifcant.

If the timing is good for you, on paper it is good for most. Inventory is plentiful, sellers are motivated, rates are great and you can still get a great loan with approx. 3% down. We may never see such an convergence of factors again in our lifetimes.

Best of luck and let me know if I can help in any way!

Rob Spinosa
rspinosa@rpm-mtg.com
1 vote Thank Flag Link Tue May 24, 2011
Jaime,

Here's what I tell anyone that asks me "Is it a good time to buy". I in return ask them, "Is it a good time to buy for you". Only you can tell us if this is the right time for you, it's pretty simple. You've done the first step by getting pre-approved, my guess is your lender has told you how much you can afford and what kind of loan options you can look at.

No one can tell you what the prices are going to be tomorrow, what the interest rates are going to be, whether or not loan qualifications are going to get more demanding, or having to put more money down. The sure thing is what you know today. If you are financially and emotionally ready and capable, go for it.

Best of luck to you.

Lou McNamee
Coldwell Banker
loubandb@ca.rr.com
562-879-9677
Web Reference: http://loubandb.com
1 vote Thank Flag Link Tue May 24, 2011
Notwithstanding my agreement with Mack, it's a great time to buy. However, no mortgage or real estate guy can tell you whether or not this is a good time for YOU to buy.
Only a qualified financial planner, taking into account your complete financial picture, can advise you on this.
1 vote Thank Flag Link Tue May 24, 2011
It will depend greatly if they change the FHA guidelines or not. If you are going FHA you may need more money down in the fall. If you are not going FHA it may be a better time to wait. If you are looking for a town-home I think they will be effected by FHA more than anything and their prices will go down because less people will be able to qualify to purchase them.
You always play the where will rates be game as well. Good luck.
Web Reference: http://www.Laura4homes.com
1 vote Thank Flag Link Tue May 24, 2011
Jaime,

People are always full of good advice, and NO ONE knows where the market will go. Since we don't work in your area, I would take some time and find a broker there who is experienced, knowledgeable, available, and honorable enough to be looking out for your interests, especially when that means advising you against buying.

Ask for referrals and interview until you find the right one.
1 vote Thank Flag Link Tue May 24, 2011
If your PITI payment is close to rent and you plan to not sell for 7+ years, yes it is a good time to buy. When rent and PITI are equal, ownership is often advantageous because you get a tax write off and loan principle pay down you don't get when you rent. Plus you can remodel how you want the place, unlike renting.

But if the house payment is a lot more than rent, I do not think it is worth it to buy. Because you also have to tie up a down payment when you buy & you have a lot of property repair and maintenance costs you don't have when you rent.
0 votes Thank Flag Link Sat Feb 18, 2012
It is nice that your friends have your best intentions in mind. At the same time, they do not know any better than me or you or the next guy. Also, "going down" is quite a wide definition with a big gap between a 2% and 25% downward movement. Also, what if mortgage rate increase by 1% or more? By buying now you can take advantage of some of the best rates this country has seen.

On a short-term front employment picture is gradually improving with downticks in unemployment rate monthly and jobless claims weekly. Manufacturing activity is picking up. There is a stream of legislation aimed at loan modifications and other ways of helping homeowners in need in lieu of foreclosure. If you can find a home you really like with payments comparable to what you are paying in rent and you are comfortable with the state of your employment situation - there is no need to put too much stock into what will happen next year. Americans spend 7 years on average in their homes anyway.
0 votes Thank Flag Link Sat Feb 18, 2012
Jaime,

No one can know for sure what homes prices will do int he future.

If you are thinking of buying a home make your decision on CURRENT market conditions. If you locate a home in an area you desire and it is in your price range, go for it.

You should also plan on keeping the home as a long term investment. If you want to flip a home, I would be cautious. Current market conditions are not ripe for flipping.

Best of luck to you.

Kawain Payne, Realtor
714-293-1151
0 votes Thank Flag Link Sat Feb 18, 2012
nobody can predict where prices are heading. all you can do is use general indicator to make an educated guess. as long as unemployment remains high and the level of foreclosures/short-sales remains elevated, it is reasonable to assume that prices will remain low. but that doesnt mean that will continue to drop markedly
0 votes Thank Flag Link Wed Dec 14, 2011
I know you may feel a little frustrated. Many buyers, just like yourself, have family, friends, and especially the media saying that home prices will go down. There are a lot of predictions from many people. When you buy a house there are a lot of factors to consider. Number 1 being is why are you planning to buy a house? Is buying a house a huge priority for the moment because you have a new job at a different location or you feel it is time to buy your first house? One thing I can say is that at the very moment this is a great time to buy because interest rates are really low as well as the price of the houses. If you wait longer you may miss this opportunity and the interest rates may increase.

Lets say that house prices were to decrease what would happen is that a rush of buyers will come in to the market to buy and the home prices will rise again: you will be in the same position, but it will be a year later.

Please let me know if I can help you search for a house with a monthly payment that you are comfortable with. I specialize in the Downey area, our office is located in Old River School and Firestone: Home Central Realty. With us, we pay for your closing costs or 3% of your downpayment, you decide. You are more than welcome to come in to our office. You can reach me at (626) 476-4822, Vanessa@homecentralrealty.net.
0 votes Thank Flag Link Sat Jun 4, 2011
I am sure your friends have your best interest at heart and they may not know how real estate works. Real estate goes up and down, it always has....if you buy at the wrong time (1990 to 1995 and between 2005 and 2008) and with a toxic loan then you may have a bad taste in your mouth for real estate. Maybe some of your friends purchased at the height of the real estate bubble and their homes have lost value.

You need to purchase after the bubble pops not while it’s being inflated. I work the Downey area and I believe that Downey has bottomed and prices will be low and increase a little within the next few years, but they will come back up again. Of course, not to the levels that it did in 2006/2007 and no one knows at what rate homes will appreciate but prices have no where to go but up, but that’s just the real estate cycle. The danger of waiting is your interest rate can go up and so can the cost of getting a loan: loan points, title insurance, homeowner insurance, private mortgage insurance, escrow fees.

Buying a house is more than just a financial decision, it’s a place where you are going to build a home for your family. If you find that right place at the right price, what does it matter if prices fluctuate up or down, if you are planning on staying for at least 5 years, you’ll be ok. If you are buy to flip and try to make a quick profit, then I say you might be treading in dangerous waters. If you are planning on flipping for a profit, I wouldn’t be able to help you but if you want to buy a “home” then I can most certainly help you. Please call me.
Web Reference: http://reobrokerandmgmt.com
0 votes Thank Flag Link Thu Jun 2, 2011
Hi Jaime, it all depends on which area you guys are looking into.
To answer your question: yes this is a great time to buy because prices are very low, there are plenty of inventory and interest rates are also at a all time low.

I would love to discuss these options with you more in details and also the opportunity to earn your business.

Thank you.
David Akram
Realtor, DRE# 01891274
661-505-8550
Century 21 All Moves
Contact: http://contactme.davidnewhome.com
Web: http://www.DavidNewHome.com
Blog: http://blog.davidnewhome.com
FREE Monthly Newsletter: http://newsletter.davidnewhome.com
Web Reference: http://www.DavidNewHome.com
0 votes Thank Flag Link Thu Jun 2, 2011
Hi Jaime
Now is a great time to buy while interest rates are below 5 % and selections in every price range are plentiful. There is nothing better than owning vs renting ,it is a really good feeling to be a new homeowner..I know that none of my clients have regretted it & are thankful that they took advantage of this homebuying window of opportunity, so I would say don't listen to friends & do what you feel in your heart is right for you!
0 votes Thank Flag Link Wed Jun 1, 2011
Ah, the friends who can predict the direction of real estate. I assume that with their vast knowledge and insight--and maybe a dash of psychic ability thrown in--that they're multimillionaires now. They'd have to be. If they really know so much and can see the future.

No one--much less your friends--really knows what'll happen to real estate prices. And there are pressures in both directions. If you're preapproved, you have the money, and you're planning on living in the property for 5-7 years or more, you might as well buy now. Interest rates likely are going to go up. Prices may or may not go down next year. But let's assume they do go down 5% next year. Then--just playing games--let's say they're flat for a year. Then they rise 2% a year for the next 5 years. You'd be ahead of the game. And even if you believe your friends that prices will drop, a drop followed by a slow rise is certainly possible.

So, if you're ready to buy and plan on living in the property for 5-7 years, go ahead and buy.

Hope that helps.
0 votes Thank Flag Link Sun May 29, 2011
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Really depends where you are at, but with interest rates being where they are at now is a great time to buy. Talk with a local agent and they will be able to give you specifics.
0 votes Thank Flag Link Sun May 29, 2011
Well, Jaime, here's the thing - if you listen to your friends, then you can go back to them when they're wrong and thank them when they're right. If you listen to other people, and they tell you something different, then your friends will come back at you when you're wrong, and ignore you when you're right.

All the best,
0 votes Thank Flag Link Tue May 24, 2011
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