Home prices WILL continue to decline. The prices have been based off of ARMs, interest only loans, etc. That is now over, and home prices will bottom once they come back down to levels that correspond with fundamental factors such as income.
Furthermore, with all of the government spending happening, inflation will set in at some point. Treasury rates will be going up, and thus mortgage rates will go up. When mortgage rates go up, prices WILL continue to come down in order to maintain fundamental affordability.
Higher interest rates are not a bad thing though. They are tax deductible, whereas principle is not. Down the road, when interest rates go lower, you can then refinance at a lower rate---you won't be able to refinance a higher principle balance down to a lower one though.
8K is NOTHING compared to waiting for another 1-2 years and saving $50K-$100K or more depending on your intended home price.
"Who knows" answers = "I don't know because I haven't done my homework".
Interest rates are still great so that is one thing to consider. No one really knows if the prices will continue to decline. Our office is seeing homes sold in multiple offers and that could be a sign that prices are beginning to stabilize.
The Chance Team
Keller Williams Realty Studio City
Good question! The difficulty is it's tough to gauge the bottom of the market. Median sales prices (provided by C.A.R.) for Buena Park reflect a pattern of decline (360, 369, 360; 345 and 335) from Oct. '08 through Feb. '09. Median sales prices in La Mirada were more consistent at 370, 357,500, 360; 363,600 and 367,700. While, the median for Hacienda Heights varied from 350 to 410 to 375 to 329 to 328.
The best advice is if you intend to live in the home a long time you'll be less sensitve to market fluctuations. Of the communities you like, however, La Mirada seems to be holding its own.
Best of luck,
Monique is absolutely right. The overall trend for real estate prices is always up. You hear experts say this a lot when they talk about stocks and I think the same goes for real estate, you don't try to time the market. If you are looking for a home that you can be in for a while then take advantage of the refundable tax credit and then all the other tax advantages from having a mortgage. If you purchase within your budget you can use the tax benefits to pay down your mortgage quicker and building equity that much faster. After a few years you might be in a position to move up, if you want to.
My parents also bought there home in '76 around $30k and the home is worth close to $1 million now. It was my parents' first and only home and has been paid off for years. Now that they're retired they have so many options but for now choose to live rent and mortgage free.
However interest rates are still low and based on the current response I have been getting from buyers, open house attendance and offers being made on properties - it does seem like buyers are more actively looking now then say a year ago.
Hope this helps.
Realtor, DRE# 01891274
Century 21 All Moves
FREE Monthly Newsletter: http://newsletter.davidnewhome.com
There is no question that home values have decreased in the area and they may go lower. The supply is just low.
No one will ever know when the exact bottom will be until it has passed. You can be fairly certain that it will occur in the next calendar year.
I would not let that stop me. Interest rates are going to go through the roof in the coming years. You can get a good deal on a foreclosure. Look past the condition of the house and imagine it fixed up. Most repairs are not that costly. Get a home inspector to come and evaluate during your inspection period. don't be afraid to make a low offer.
I understand you concern. It could get worse. At the end of the day if you aren't planning on moving out of your home quickly you are protected. No guarantees but home values have gone up in Southern California. The home I grew up in in 1962 was sold for 30k and now is worth 2 mil. You never know when you are at the bottom of the market. The 8k credit is only good through the end of the year so get in while it's still an incentive. Even if values go down eventually they will go up above what you paid.
The Carrabba Group
Keller Williams Sunset