Market Conditions in 95742>Question Details

Pamela, Home Buyer in Northern CA

How long do you think it will take for the house market to pick up again, is it a good time to buy now?

Asked by Pamela, Northern CA Tue Jan 22, 2008

Hello, we are in the process of purchasing our first home. We got a great deal from the builder ( a 4.875% 30yr fixed loan, an incentive of 6% of purchase price towards closing cost and down payment) Do you think that we should get it or wait ?

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13
That all depends on you. Are you in love with the house you are thinking about purchasing? Are you planning to stay in the home for a while? Are you looking for a place to plant roots, raise the kids, decorate, etc? Can you afford the mortgage payment vs. your current rent payment? Do the nearby neighborhood amenities and schools support your lifestyle (now and in the future)?

I suspect interest rates will stay low, at least for the next few months. Housing inventory (both new and resale) in Rancho Cordova will likely continue to increase. If circumstances in your personal situation are such that a purchase now makes sense - go for it. If you are looking at things from a strictly financial point of view, you could potentially benefit by waiting a while...
Web Reference: http://www.erinattardi.com
2 votes Thank Flag Link Tue Jan 22, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
Contact
You should take it. The interest rate is amazing and you are getting a huge amount of help toward closing. If you do the math. If homes sold before for 250,000 now you can subtract the closing costs off of that price (or 6% of purchase price). You are also saving a huge amount over the life of your loan. Great job!! Enjoy your new home.
2 votes Thank Flag Link Tue Jan 22, 2008
Hi Pamela,

Just wondering if you would be willing to share the builder and the house info. I'm looking in that area and would love to get more information. Thanks.
1 vote Thank Flag Link Tue Feb 12, 2008
You're asking a number of different questions here. Let's work on them one by one.

How long do I think it will take for the housing market to pick up again? Impossible to tell. Christian, below, is pretty optimistic, and he could certainly be right. I'm not as confident. I'm looking at a time frame of 4-5 years. So, simple answer is: we don't know. But, as is frequently suggested here, if you're planning on living there for 5 years or more, you'll probably be OK.

You list a lot of great numbers--a 4.875% 30 year fixed loan, a 6% incentive. That's nice. But that's just icing on the cake. The real questions are: What's the price of the house? How does it compare with what the builder charged for other similar houses in the same development? Further, what are the comps? If you're overpaying by 10%, then a 6% incentive and an interest rate buydown doesn't compensate. You need to look at the whole picture, and the primary element in that is the price you're paying.

You ask whether it's a good time to buy now, or should you wait? Assuming you can comfortably afford the house...assuming it's a good value when you factor in the price and comps...and assuming you're pretty sure you'll live there for at least 5 years, it's probably fine to go ahead and buy now. On the other hand, if any of these tests come up negative--you can't afford it now...or it's not a good value once you factor in the price or consider the comps...or you think you'll only be there a couple of years, then you should definitely reevaluate the decision.

Hope that helps.
1 vote Thank Flag Link Fri Jan 25, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Hi Pamela,
Could you share the builder's name and the community name?
A very close family member is looking in that area(kavala ranch; anatolia) as well.
Your info can help him to negotiate such a deal with them as well.
1 vote Thank Flag Link Wed Jan 23, 2008
Home prices are down, builders are in need of qualified buyers, interest rates are at rock bottom and you are in the market for a home. Sounds like a winning formula to me. Enjoy your new home.
0 votes Thank Flag Link Thu Feb 18, 2010
Hi Pamela, for local market predictions listen to your local agents, BUT from a general advice standpoint, I would say, yes, act to take advantage of the builder incentives and the terrific financing rate. Many buyers lose sight of the correlation between interest rate and buying power. While I have no crystal ball, I can say with high confidence that interest rates will heading higher - where else can they go?! - and when they do, your buying power declines. Buyers that try to time the market perfectly usually discover this incovenient truth when it is too late.

You've got a great set of circumstances at play, I would go for it!

Good luck from New Jersey!
http://www.WarrenRealEstateAgent.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Thu Feb 18, 2010
Dear Pamela,

Is It A Good Time To Buy A Home? The simple answer is YES! It is still a good time to buy a home. With the help of the right agent, you can make this "good time" into a "great time" for you and your family. The news is full of stories about the housing crisis, homeowners losing their homes, and the overall bad state of the economy. Not all of this news, however, has to translate into dissuading you from buying a home. In fact, right now is a very good time, especially for some, to jump in and achieve the American dream of home ownership. As of late, the housing market is starting to look better. Read on for more information about why it is still a good time to buy a home.

First, the government is looking to help you. If you are a first time buyer (which, to the government, is defined as anyone who has not owned a home in the last three years), you are entitled to a maximum $8,000 tax credit. Additionally, interest rates are at all-time lows and the Federal government is taking steps to insure and make these loans available to more and more people.

Leverage. Leverage is defined basically as borrowing money to supplement existing funds for
investment. Imagine if you invested ten thousand dollars in stocks and those stocks earned ten percent, you would have earned one thousand dollars. But investing ten thousand dollars on a home, and having that home's value increase ten percent; effectively, you would have earned ten thousand dollars. Which sounds like a better investment to you?

Next, you have to live somewhere. And so does everyone else. According to nationwide statistics, approximately 800,000 new households are created each year in the United States alone. Each of these households will need housing, regardless of the state of the economy. This fact alone ENSURES the recovery of the housing market.

Cycles. The economy is a cycle, and like a cycle, what goes down must come back up. Once this happens, it will create INSTANT equity for you. That means you will have earned FREE money just by living in your home, which you are going to do regardless of where you live. Why not buy a home and earn free money in the process?

Mortgages. Many people think a mortgage is just like paying rent, right? WRONG! With the right fixed-rate mortgage, you are basically ensuring the same payment for thirty years. If you try to rent an apartment for thirty years, odds are that every year or so, your rent will be increased. That does not happen with mortgages.

Ownership. Owning a home is a GREAT accomplishment and it allows you to express yourself in the best way possible. You can decorate it any way you want, furnish it, paint it, and improve it and all the while you will be increasing its value and the value of your investment. Ownership also gives you and your family a sense of stability and a place to lay your roots.

These are only a FEW of the reasons why right now is a good time to buy a home. A qualified agent will be able to answer any questions you may have and also give you more reasons to consider investing in your next home!
Web Reference: http://www.crestico.com
0 votes Thank Flag Link Sat Apr 4, 2009
Great answers by fellow responder Don Tepper....since 30 yr Fixed rates are about 1 full percent higher than your rate, and unless you locked on Jan 23rd, before about 12:00 noon, it appears that you might have a 2/1 buy down in place. A great thing if the builder paid for it, something to ask about if you're not sure..

Though prices will definitely go lower from here, the issue I have with waiting is what you'll be able to qualify for in the near future. Currently 5% down is the standard minimum...Starting Monday two of the largest loan insurers, PMI and MGIC will start requiring a 10% down for loans they'll insure.......the rule of thumb here: as home prices fall, lender requirements tighten......do you even know if you have a conditional lender approval yet? If not, you should be asking....

thanks, Jeff
0 votes Thank Flag Link Sun Mar 2, 2008
I am a Realtor and I currently live in Anatolia and sold over a dozen homes there. If I were just looking at the prices, I would wait a bit before buying. The problem is a bit more complicated than that. A 3/4% drop in interest rate is almost the equivalent of a 10% drop in the value in the house. To put it another way, you can buy a house 10% more expensive for the same monthly payment. A 30-year fixed at 4.875% AND 6% incentive is pretty tough to pass up. If you truely love the house and want to live there for 10+ years, I'd say take it. While you might try to wait for prices to go down (and there's a good chance they will), you may not get the same rates. Think about the whole picture. If you would like to sit down at the clubhouse in Anatolia, let me know and we can go over some of these figures.
0 votes Thank Flag Link Wed Feb 20, 2008
I wonder what the price is, how many bedrooms, baths, and square feet. There's 148 listings on realtor.com in that zip code, priced from $253,000 to over 1 million. More information is needed but on the surface, that's a super offer.

Frank Biganski, Realtor ABR
0 votes Thank Flag Link Fri Jan 25, 2008
Did you check the area for prior homes that was done by the builder? You should ask people that live there how the builder has taken care of the problems that WILL come up with the house. Are there homes in the area by that builder that others are trying to unload via short sale or foreclosure? Is the builder financially sound enough to be there to provide the 10 year warranty?

I know that I looked at a development where the builders largest home was going for $599,000 in 2005/6/7 and you can now find people trying to unload the same model home they bought in 2006 for under $400,000.

The builder incentive isn't always the best best, especially when it is tied to using their lender. Push them for the same incentive regardless of who's lender you use and get their lender to compare against other lenders. You can use offerangel.com to get an apples to apples comparison of the offers. Get a good faith estimate and check to see if their fees chew away at that 6% pretty fast. A lot of builders will specify in their contract that you have to use their title company, even though technically they cannot force you to use a specific title company.

Above all else have a real estate attorney review the contract if you do not understand it. Builder contracts are written to protect their interests and many will not budge on changing them. Remember if a particular housing feature or incentive isn't listed in your contract and/or addendum's, then you will not get them.
0 votes Thank Flag Link Fri Jan 25, 2008
No one knows how long it will take for the housing market to pick up again, but wow! What a great deal!

If you are buying just to invest in real estate...no one knows. But, if you are buying a home for your family you plan to be in for a number of years and you love the place I don't know that you can beat the deal!
0 votes Thank Flag Link Fri Jan 25, 2008
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