Hello Tobias

I can understand your concern with the apparent conflict in information with your friends situation in San Diego and what you feel agents are saying in Spokane. Firstly real estate is a very localalised so the history of the market you are looking at should be the first thing to research. Here in Spokane historically we have experienced 10-12 year cycles for major increases in value - other markets behave differently. Once you chat to a few realtors and open houses can be a great way to do that, you may find one you feel comfortable with. Then you have a real estate resource, someone who can show you the total closed sales over the last 10 years versus the total number of listings. Explain the median and average prices changes over the same time periods. This information is produced by the Spokane Association so is not produced in different ways by different Realtors or companies. For instance the median price moved from $185,400 in 2007 to $184000 in 2008 and the average price moved from $211,872 in 2007 to 206,291 for 2008 which is a 2.6% decline in value. Now, have there been sellers who have taken a bigger hit, of course. Have there been and are there realtors watching the market with their clients search criteria, waiting for and identifying great opportunities for their clients, you bet . So like you said it comes down to finding someone you trust so you can share your concerns and find how the local market facts, may affect your currentlly held opinions. This trustworhy Realtor should not be presuring you to buy on any time frame other than that you wish to pursue.

On a slightly different note most any market is a good market for someone - whether it is for any particular buyer depends on their personal financial situation, the price range and neighborhood they are purchasing in. With good credit, staying in Spokane for min 3-4 years now could be the best time for a first time homebuyer to buy. They will only know for 100% with hindsight, after the market has moved up and then the very best opportunity will by definition be missed. In fact I have heard pundits in Spokane say this could be the Golden Opportunity for many buyers and we may look back at this time and be thankful we could assist our clients take advantage of this moment. To paraphrase Warren Buffet, waiting for the perfect time, the absolute bottom to buy or the peak to sell was not a strategy for long term wealth it was the margin one should focus on and what he had based his investment decisions.

Hope this helps you to start communicating with your chosen real estae resource at least 2 months before your lease expires.

I would argue that Warren Buffet is really advising that market timing is very difficult indeed. If your time horizon is one or two years, it is always a bad time to buy. If your time horizon is ten years, don't you think there will be some price inflation in that time frame? Considering that you are leveraged with low cost long term financing, a small amount of appreciation can result in a huge rate of return on your downpayment. Spokane never had the large run ups that California had and is not having the large downturn. Values are up over last year. What next year holds is anyone's guess. All I know is that anyone who bought two or more years ago have seen nice increases in equity, often more than their downpayments.

BethAnn,
I appreciate your response. However, I think when you factor in maintenance costs, property taxes, the rate of inflation and the fact that your equity is not liquid unless you sell your home, your investment would have been more profitable if you had put your money into the market. Housing prices mirror inflation and wages. I understand there are other reasons to own a home including pride of ownership and stability, however looking at it from an economic viewpoint, owning the home you live in is not a great investment and having realtors use economic gain as a selling tool is misleading. So I still stand by my statement, it is better to view your house as an expense not an investment.

Kelly, when you said "the average guy will not make money by owning a home, it's shelter, consider it a living expense" I realized we indeed come from a different experience. Because of the long term stability of the Spokane, WA market many average people have huge equities in their homes- including me! I was a stay at home mom for 20 years with five children living on one income, That is 7 people on one very average income, and my home is my largest asset. I do understand our market here is not immune to ups and downs. But in the big picture over time, I am certainly glad I am a homeowner here. I now sell real estate and I am not in to "pat answers" as far as being a person to offer a sales pitch. Buying and selling real estate involves risk, and I am glad I took it!

Has anyone ever met a realtor who doesn't think it is a good time to buy? Over the past 2 yrs, no matter what is happening in the market every realtor always advises that it is a good time to buy. When prices were climbing, the time to buy was now, cause real estate always goes up and it will cost you more later and you might not be able to get in if you wait. As prices have come down in my market, the time to buy is now cause these prices haven't been seen in this area for years or they say interest rates are at historic lows so you should buy now. Initially in California we were told that the housing market here is different cause its a desirable place to live and they aren't making any more land etc, so we won't experience the downturn. Guess what, real estate doesn't always go up, particular markets are not insulated from one another and prices do come down. In the Bay Area, prices are down 25% year over year and are still headed straight down. Just as Spokane experienced the acceleration later, it will also experience the downward trend. Your market is not different or insulated or protected. The average guy will not make money by owning a home, it's shelter, consider it a living expense. If you go to a realtor for advice on when to buy, they only have one answer because their livelihood depends on selling houses.

You've made a good decision. That market is just now starting to accelerate in decline. If you save 20% on a 400K house that is 80K savings. I've saved thousands this year, just by waiting.

I totally concur with Rick Shulman's opinion. We still do have great interest rates. We know what they are now. Rates can change by next year and they very well could rise. If they do that then, of course, so will your payment. If you are planning to buy a home for $200,000 or under, the supply of homes is not as huge as one would think, based on media reports. I would advise you to "go for it"!

Actually the market in Spokane does lean towards the buyers not the sellers. Spokane has not been as adversely effected by the down real estate market as other parts of the country. As a result values are pretty much just holding. When the market does recover, Spokane is poised to take off again. So you see prices are probably the best they will get. Couple that with low current interest rates, I am not sure why you would wait. Of course by renting you can take some time to get to know neighborhoods better. I am a landlord too, and the demand for good rentals is high. Best of luck to you!

Tobias. I just closed on our first house in spokane. I have looked at a lot of things similar to you. One thing I do have to say in our purchase is that it actually seemed more like a buyers market in our deal. I think you can definitely wait a year or so and it won't hurt you, but one thing I have read in all books is don't try to guess when the bottom is or you will never end up buying. IF you are buying LONG TERM, houses average a 5% gain. Short term you could lose money. If you haven't done it yet, TAKE A LOOK AT BLOOMBERG.COM's rent vs buy calculator. Run a few scenarios. For us, only planning to stay in a house for 3-4 years, buying comes out better if it even averages 2% gain per year over that time. Run your own numbers. It will either ease your mind or worry it more, but it is a very unbiased and accurate way of making a judgement. Also, don't forget to change the sales costs to 9% instead of the 7% they have preset, since our realtor tells us that is a more accurate number in Spokane.

Hi Tobias,

Hmmm........I have been working with clients and sold a couple of houses in the past 3 weeks. It was a challenge. Both of my clients were looking for really great deals! We looked at over 50 houses.. The first set of clients lost 2 houses to competing offers before we found their home. The second client(s) wanted to offer a lower price than what was listed..... It took two weeks of negotiating, but we got it. The market is vibrant right now. There are over 4000 listings in the Multiple Listing Service....compared to 1600 last year at the same time. This indicates it's a buyers market....but from my recent experience, it could go either way. Spokane is a wonderful town. I would be happy to show you the "town". I don't think you would go wrong whether you bought a home now........or a year from now. Let me know if I can help. Kathy Schultz Exit Real Estate-Jones & Associates 270-2133

I think you are making a wise decision to wait a year. Even if the market holds steady or has a slight increase, you are taking the time to learn more about the Spokane area and what neighborhoods are the best match for you and your family. It also gives you time to figure out what amenities are most important to you for this locale. Finally, it gives you a chance to go to open houses and meet agents and see how they work.

Hi Tobias! If past is a good reflection of Future, then now is a great time to buy in Spokane. The ONLY price decrease recorded since 1983 was a .08% decrease in 1999 (when the world was coming to an end as we knew it....) Spokane is a bubbling brook - never up very far, never down very far. Interest rates are still around 6%, there is more money in down payment assistance programs than there has been, and more inventory to choose from. I think it's a great time to sell, and a great time to buy. In fact, I just purchased a new home. You are buying either way, by paying someone else's mortgage or your own.

Tobias, I think you are making a rationale decision. Don't waste your time asking Realtors about price trends or if it is a good time to buy. It was Realtors who were spouting off two years ago in Califoria that "it was a great time to buy" and "prices never go down." We all know how foolish that advice was for most buyers on the west coast. According to Realtors, every day during the past 100 years was a great time to buy OR sell real estate -- and remarkably the same will hold true for the next 100 years.

Realtors may be knowledgeable on current and past prices for their area, but they are NOT experts on future price trends. Realtors are NOT economists and very few have any business or economic training to speak of. They are SALESPEOPLE. The reality is that they only get a commission if you buy, so they have an incentive to be less then accurate as to their assessments. The few competent Realtors with integrity would admit that prices are going down and most buyers could save money by simply waiting for the bubble to further deflate.

If you can afford a home with a large down payment and conventional financing and don't care about prices dropping further, consider the purchase. But DON’T purchase with the expectation of future price gains. This was a huge bubble that needs to finish deflating. If history is any guide, prices will not rebound quickly when the bottom is finally reached.

Best of Luck,
NewportFiji

Thanks Tobias, I was hoping to hear back from you. I understand completely you want to make the best decision for you family. The truth is none of us have a crystal ball, but it would be nice if we did. If you would ever like to talk in person I know you will find me trustworthy. I am the mother of five children, and I truly love what I do. Best wishes!

I love all the positive energy you guys have. I really do. BethAnn hit it on the head. I have trust issues with Realtors. I have two friends in San Diego who I respect as inteligent people who recently got forclosed on and a third who is $200K upside down on her house. I expect that their agents also told them something about San Diego being special and all kinds of justifications for why homes were more expensive than they have been historically. They bought into it because San Diego IS a special, unique place with lots of great atributes. And now they are renters again. San Diegos median home price dropped from 525K at the peak to 390K currently. I realize that for a thousand different reasons Spokane is not the same as San Diego. I think that Spokane is different but not immune. I have realized with your help that forclosures will not be any more than a blip on Spokenes' real estate market. My agent in Spokane was a wonderful guy who was very laid back and low pressure. I thought that was a great thing at first. Now I realize if I could open the Supra lock boxes myself he would be entirely useless. I think he is a really nice person he just isn't offering me much of a service. I have found some of your comments very helpful and will probably call you when I find a house I want to make an offer on.

DON I am sorry if you feel like I am being disingenuous when asking for advice. I have been renting for the last 12 years as I followed my wife all over the world. I have been diligently saving and want a house for my family. I am sick of moving but I am just trying to take every precaution that I can to ensure their security. After seeing my co-workers go through the stress of losing their homes I would like to avoid that at all costs. It is my desire to take good care of my familly that is my motivation for all these questions.

Donna: Really! The NAR tagline of "Real Estate Always Goes Up!" and "Now is A Great Time To Buy" are so out dated. If you want me to think of you as anything other than a sleezy snake oil sales woman try a little more thoughtful answer. If I call you can you hook me up with a nothing down loan for the purchace of a house that will have instant equity? Then can I get a HELOC to buy another house as a rental? repeat repeat repeat until I am driving a Ferrari? If I don't "Get in while you can and start riding the equity wave and stop paying your landlords mortgage any longer!" will I be a looser forever? How would you like it if I made medical procedures sound like they were life or death if really I was just trying to pad my pockets. This is exactly the kind of marketing that I find offensive and why i feel I can't trust RE agents. I expect this is what my friends in San Diego got caught up in.
I think Spokane is a beautiful place. My wife just got out of the Navy and we could have moved anywhere in the world. We chose Spokane. I currently expect to retire here (I'm in my early 30s)
I have really apreciated your comments and advice.

WHY I AM GOING TO WAIT: Do you all really think I am missing out on something if I don't buy RIGHT NOW? I don't see anything in the economic forcast that would lead me to believe that prices are going to do anything except go down over the next 6 months. Inflation is up, unemployment is up (6.1% in Spokane in march vs average of 4.8% last year) lending standards are tightening and I believe will continue to tighten over the summer. FHA loans are going to be more expensive starting in July. I think at the price point I am looking at these things are hurting people and will effect their ability to buy a home or stay in their home in the near future. I think invintory will continue to increase and anyone who needs to sell their home will be forced to lower their price. I don't mean to insult anyone when I mentioned that I think home prices may fall. It is only ment as an observation based on market forces that make up the value of anything. I do expect values to increase here in the long term because it is such a beautiful place (and we will have a price explosion when California runs out of water!) I just think there are lots of things that are depressing peoples ability to buy a house and usually when you have an decrease in demand and an increase in supply something needs to change to achive equilibrium. I think in the next six months it has to be prices decreasing. I am actually worried that all the good houses will be bought early and if I wait till the end of summer only trash will be left. I will continue to check the public MLS and go to open houses and hope that my perfect home is out there. I do think that there are well priced homes now on the market but I just haven't seen them. I am realizing the limiits of how much infomation you can gather online. Sometimes you just have to drive down a street to decide if you would want to live there or not.

Thanks everybody.

Me ...again! I am guessing Tobias, that trust is an issue for you when it comes to realtors. Each of us who have taken time to answer you would be glad to sit down with you face to face and show you the active MLS which includes lender owned properties. Don is right, it all sepends on your motivation and you must not be a current buyer. My question would be are there any other reasons besides getting a " deal" that you would like to be a home owner? What about personal satifcation and building a home for your family? None of us is yanking your chain. It is less than doubtful you will see home prices drop here.
If it's ok for me to have your e-mail address, mine is : bethann@tb.com

I think quoting Warren Buffet is a bit much Tobias. You've received a lot of good advice from real estate professionals who know Spokane but you must feel they are self serving. You've enjoyed the banter on Trulia but I don't think you're a buyer. I'm happy there are many out there like yourself, willing to rent the homes of the investors that are returning to the market. Best wishes.

Now is the time to buy here in Spokane! Interest rates are still near all time lows, there is so much to choose from for buyers, many sellers are offering great incentives like helping you with closing costs and values here in Spokane are going nowhere but up! Get in while you can and start riding the equity wave and stop paying your landlords mortgage any longer! For all the homes available in the Spokane area, check out my free MLS mapping search or ask for me for my foreclosure listings... http://.www.DonnaSellsSpokane.com Thanks for your great question, I'm sure there are many more feeling the same way as you...Donna Henry 509-844-2181 ps...CUTE PICTURE!! how old is she?! I have a 3 year old cutie myself, very fun!

Don't take this the wrong way, but it seems to me that you are contradicting your own advice in this statement. Now is the time to be a buyer so why would you wait....are you fearful that YOU are being greedy and you may miss your opportunity:)

Love the post!

Tobias, first of all.....welcome to Spokane! It has been interesting talking with you in this forum and I sincerely wish you the best of luck in all your new endeavors here. I truly feel that prices are not going to get better for you here in the housing market, only more expensive. I know you have done lots of research and I hope your decision works well for you in the end. I am seeing values increasing as of most recent and things really have been picking up, who knows what will happen but all indicators are showing our "bottom" to be changing to an upswing. Take care and welcome to Spokane! Chris Warmuth Windermere/North

Correction: the said article
By CYRIL MOULLE-BERTEAUX was in the Wall Street Journal (not the journal of business)
Tilled: "The Housing Crisis is Over" .
I realize this is an opinion, but something to think about.
The only way to know if prices have bottomed out is when they start going UP. Are you comfortable buying in a rising market? Also, are you concerned about value in the short run or the long run?

Tobias ~there was an excellent article in the journal of business last week. This analyst said the bottom of the market could have well been April 2008.
I am not sure that in a year you will get a better deal here. Time will tell -but based on our history, it is doubtful. You may be spending rent on what could have been a good investment.
best wishes ~
BethAnn