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 compotent Realtors with integrity would admit that prices are going down in most parts of the country and most buyers could save money by simply waiting for the bubble to further deflate.
From an investment perspective, now is a good time because prices are at a low point ... in the Seattle market, ...barring any more catastrophic market news...many areas are on the way up ...5 houses in my neigborhood that have been for sale for months all sold in March. If that hold true across our general market area, then yes...we may have hit bottom and now would be a good time to buy FOR A LONG TERM INVESTMENT. 2008 prices will probably remain flat with a slow return to a historical normal rate of appreciation in 2009 and into 2010. If you're going to buy and flip ...like i said earlier... you shouldn't buy.
So I guess the short and sweet answer to your question is... someone should buy in this market if they don't care what happens in the next 3-4 years and they're planning on staying in their home for a long time. If you're a home hopper every year or 2 ... or an investor that just wants to flip homes...now is ..for the most part...NOT a good time to buy.
Separating your question into two parts might result in an answer more tailored to your specific needs.
I have been a real estate agent in Washington state for over 16 years. Long before I chose this particular career, I strongly believed in ownership vs. renting, and not just when it came to a place to live.
In the very old days, phone companies owned the phones their customers used. We were charged a fee (rental) to use them. As soon as that system changed and it became possible to purchase my own equipment, I did so. I did not want to pay someone else for the ongoing use of something I could own. That said, nothing remains the same. With todayâ€™s technology making yesterdayâ€™s purchase obsolete, I chose to rent my TIVO.
My point is, current circumstances definitely contribute to what works best for an individual at any given time.
Home ownership is very different from buying any other commodity. All of us need a place to live. By paying rent, a renter helps the landlord purchase his property. Why not build equity for yourself instead?
There are actually a few times when renting makes better sense. In a normal market (not the mega appreciation market many people have come to expect) buyers who sold in less than two years had to take money to the closing table because the cost of selling was higher than the amount of appreciation they had accumulated.
If you do not plan to remain in your new home for a few years, now is not the time to buy.
Creative loans have pretty much disappeared from todayâ€™s market, so that is probably a non-issue, but if you are strapped for cash for a down payment, work at saving some money. With home ownership comes home maintenance. If your credit is shaky, work at repairing it. Low credit scores mean high interest rates.
Now might not be the time to buy.
If, however, you do not fall into any of the preceding categories, now is a great time to buy. For the first time in a number of years, this is a buyersâ€™ market. When will prices bottom out? I donâ€™t know. But I do know the disappointment of a buyer who has invested emotion and excitement in writing an offer on what they perceived to be their new home, only to learn they had lost out to someone else in a bidding war with other buyers. And, for many buyers, this happened more than once. In the frenzy of the process, sellers, not buyers, benefited.
Interest rates are low. Not all sellers have come to terms with the reality of todayâ€™s market, but the sellers who are truly motivated are making concessions they would not have done a year or two ago. And, motivated sellers definitely include builders. Standing inventory for them creates huge carrying costs. So, especially if you are interested in new construction, this is the time to buy!
There's always a reason to buy...it's each person's individual's needs and goals. If you don't believe what a Realtor or what the National Association of Realtor's say ...then don't! I don't believe much of what NAR says myself and I'm a member! You gather the information and make your own interpretations. If you want to rely on economists and expert opinions, go google for it and you'll find that among all the doom and gloom stories in the past year about the real estate market, Seattle has almost always been called out as the exception.
Why should someone buy in this market? In our market, our forecasted job growth and influx of people means there will be an ever increasing demand for housing. Some of them will rent, some of them will buy, they all need a place to live. As long as demand is strong, it's a good time to buy.
Yes...we're in a rut right now ...some areas worse than others. As for Realtors always saying it's a good time to buy it's because statistically ....it is! If you look at long term growth of real estate, it's been ever increasing. If you're looking to only buy and flip ....now is a terrible time to do that. If you're looking to buy and live in it and keep it for the forseeable future, ... historically, it's a good investment.
2) It's what the millionaires are doing to prosper in the future.
3) It makes sense to buy while real estate is on sale.
4) It's fun!
A side note in our local market, real estate is on sale. I can't speak for the rest of the nation.
Large corporations continue to ivest in the great NW creating lots of great jobs. The Seattle area has a good school system, both public and private. It 's a great outdoors area for all ages.
Seattle has lots of different packets of feel good neighborhoods. If you need information on any certain area just let me know. I moved here 18 years ago, so I know what it means to make a change.
In our current market there is an abundance of inventory to choose from, prices are lower than in the last several years and interest rates are still at an all time low. I can't imagine why not to buy with all these positive factors.
James Hsu (below) has it right. It depends on the personal situation and motivation of the individual. Although the market here in Seattle is going down slightly recently, it is still a strong market relative to much of the rest of the nation. If a buyer is looking for the long term of 5 or more years, and they are looking in the low to mid price range, I think it is a very good time to buy. Especially to sell to move up to a larger home. But again, it depends on where you are and what you want to accomplish.
Anni Zilz, ABR
A $8,000 Tax Credit Provides Outstanding Opportunity for First Time Home Buyers. The tax credit is available for qualified first-time home buyers purchasing a principal residence before December 1, 2009.
SELLERS & NON-FIRST TIME HOMEBUYERS:
Median home prices are lower this year compared to last year. If you sell and buy in this type of market, you may sell for less, but you will also purchase your new home for less. Another important consideration: the mortgage interest rates are at historical LOWS!
REAL ESTATE IS LOCAL:
Remember, real estate trends are LOCAL. The Dallas/Fort Worth area is very fortunate in that our population growth is positive (The Dallas-Fort Worth area experienced the largest population jump out of any other metropolitan area in the country in 2008, according to the U.S. Census reports).
DALLAS/FORT WORTH METROPLEX J-O-B-S:
In the Forbes' annual list of best cities for jobs in 2009, Fort Worth-Arlington was ranked #4, and the Dallas-Plano-Irving areas were rated #5. Throughout the nation, unemployment has risen everywhere. In the state of Texas, however, people are finding that this may very well be the best area to live while waiting for the economy to recover. Recently a list of "Best Cities For Jobs" included Texas having 20 cities in the top 100. Texas not only has more jobs than most parts of the nation, but also very affordable housing. Although Texas has lost jobs in this nationwide recession, the unemployment rate is lower here than in most areas. People are relocating to the Dallas/Fort Worth area for jobs and this provides opportunity for home buyers and home sellers both.
The area added more than 146,00 people between July 2007 and July 2008 as the Metroplex attracted new residents.
If you plan to stay in the house for five+ years, now is the time to buy.
According to a Today Show report there are 5 cities which should lead the country out of the real estate slump. They are 1) Denver, Colorado 2) Raleigh, North Carolina 3) Austin, Texas 4) Seattle, Washington 5) San Francisco, California . It is time to buy in those markets because prices are low but starting to move. There is plenty of inventory and interest rates are low. I woul not buy near San Diego right now or other areas that are still likely to drop in value, even though prices are lower than they were a couple years ago. Wait for three consecutive months of improvement in any market.
New agent here hoping to help. We will work together.
Real estate never goes down (as long as you hold it long enough) and it is a ALWAYS a good time to buy!
Helping you BUY and SELL the homes of your dreams.....! -NNA
House prices way down... "Tons of dollars" in real estate... MBIA in the clear (for now)... Janus is a bargain... Porter is a scream... Home sales: Not as bad as you think...
"Wherever you look, things look bleak," says Robert Shiller, co-creator of the S&P/Case-Shiller home-price indexes. Home prices fell 8.9% in the fourth quarter of 2007, compared with the fourth quarter of 2006. As covered in The Digest, Miami was the hardest-hit major city, w ith an 18% annual decline in 2007. Las Vegas, Phoenix, and San Diego house prices all fell 15%. Charlotte, Portland, and Seattle are the only three metro areas measured by the Case-Shiller index that still haven't experienced year-over-year price drops.
That's why it's called a "Buyer's Market."
Homeowners who purchased 2 years ago, when the market was at it's peak, are asking "Why did we purchase in a Seller's Market? I wish we had waited until now!"
Your assertion that economists could not see a bubble forming in the real estate bubble is devoid of merit. In fact, Greenspan spoke of â€œfrothâ€ in the real estate market as early as 2003 -- quintessential Greenspan speak. Mark, with your excellent rhetorical capacity I am sure you understand that forth is a material essentially comprised of small bubbles. Volker was speaking in the early part of this decade questioning financial markets and the Fedâ€™s ostensible election to prop the real estate market with actions which were likely to lead to an inflationary period and the devaluation of the dollar. Bernanke inherited the problem.
It was the quack â€œeconomistsâ€ at the NAR , David Lereah and Lawrence Yun, who apparently never realized that the real estate market could slow down.
There is little question that historically it make sense to purchase a home at some time. But, references to previous gains have little applicability to the present discussion. The question is not whether it made sense to purchase in 1975, 1985 or 1995, the question is whether someone should purchase today. The alternative is not to always forego purchasing, but whether it makes sense to wait a few years and purchase when prices decrease as the housing bubble deflates.
In my opinion, an implication that housing can create wealth is misguided under current market conditions. Ask someone who purchased in 2006 or 2007 in most parts of California how much wealth they created with such purchases. The answer is obvious from the record level of foreclosures and defaults the state is experiencing. Those purchasers would have been better served by renting and ignoring the hype created by realtors who claimed real estate is always a great â€œinvestmentâ€ and prices would only continue to rise.
In my opinion, there are ample rental opportunities to wait out this deflating real estate bubble. This is especially true to the extent someone considers making a purchase today with an adjustable rate or other non-traditional loan with no money down. With that said, if someone has sufficient assets, they may not care about whether their home decreases in value over the next few years and there are benefits from home ownership. I donâ€™t disagree that over the long term values will increase. But as Keynes once said, â€œin the long run we are all dead.â€
Yes, prices are going down in most of the country and where the bottom is, not even Greenspan, Volker or Bernake can tell you. Remember that even Greenspan was late to acknowledge that the doo doo was going to hit the fan until it was too late. You don't have to be an economist, however realize when a hard rain's a gonna fall.
It does sound like Mr. Fiji is bitter and I can't address where that is coming from other than California is a tough place to make it as an agent right now.
I have two points:
The first is that if you are going to stay in your home for a minimum of 5 years, it is a good time to buy even if prices drop a bit more. Homes were never meant to be short term investments, that is what they have become in the past few years.
As an agent, I tend to point my finger at the banking world and the lack of regulation going on in that world. That being said, we agents have to shoulder some of the blame for the reckless run up in prices over the past few years.
My second point is that if your question is actually "Why should someone buy in this market in Seattle?", there are many reasons. I would start with a book that just came out called "Who's your city?" by Richard Florida, which explains why socially liberal, creativity friendly cities like Seattle are attracting much of the world's capital (both financially and intellectually) and how it keeps our economy strong.
We have weathered the storm (no pun intended) up here in the rainy Northwest because of our diverse job market and strong economy. If you look at our history, we have never had the wild swings in home prices like much of the rest of the country, and that is proving true today. We have had a slight dip (1%) by most accounts, which most cities would trade their favorite sports team for at this point.
While we all have felt a slowdown in the market up here, homes that are priced right and ready to move in are selling and most agents I know are still busy.
I hope this helps. Let me know if you have any other questions.
Mark J Tillett
Some Home Buyers Should Buy Immediately--You're probably thinking: "Of course, she would say that. She's a Realtor, and agents always say 'Now is the best time to buy'." Well, here is why:
â€¢ If you are a seller who wants to move up to a more expensive home in a down market, now could be the best time. The longer you wait to sell, the lower the price of your home could fall.
â€¢ If you can arrange for alternate housing, a smart strategy is sell now, wait a few months, then buy your new home.
â€¢ If you sell and buy simultaneously, you'll still be ahead of the game because the price reduction on the purchase is greater than the loss on the sale.
Consider the "Loss" on Selling Your Present Home
For example, say your present house is worth $300,000, but because of high inventory and few buyers, you must reduce your price by 10%. So, instead of receiving $300,000, you would get $270,000 and "lose" $30,000.
Consider Your Real Profit--Say you bought this home 10 years ago and paid $100,000. You're still ahead $170,000, less costs of sale, aren't you? (This ignores monthly payments, but you would make those if you were renting, too.)
Consider the "Savings" on Buying Your New Home--If you are planning to move up to a $500,000 house, which is located in the same distressed market, you could probably buy that house at that same 10% discount or $450,000. This would mean you had saved $50,000.
Review of Selling and Buying Numbers--
1. So you "lost" $30,000 on the sale of your home
2. But you "made" $50,000 on the purchase of your new home
3. Doesn't that put you $20,000 ahead?
Don't Forget the Impact of Interest Rates--
Which way are interest rates moving? Are they moving up or moving down? If interest rates are near an all-time low and beginning to inch upwards, waiting could cost you more than you would think. You might not be able to afford to buy a home at any price.
â€¢ FACT: Each 1/2 point increase in your interest rate gives you $25,000 less in purchasing power.
â€¢ FACT: Each 1 point increase in your interest rate gives you $50,000 less in purchasing power.
â€¢ FACT: Each 2 point increase in your interest rate gives you $100,000 less in purchasing power.
Look at the Differences Among Purchase Prices versus Interest Rates
If you put down 20% and qualify for an 80% loan, here are your principal and interest payments on the following purchase prices:
â€¢ $425,000 sales price, at 8.25% interest, your payment is $2,554.
â€¢ $450,000 sales price, at 7.75% interest, your payment is $2,579.
â€¢ $475,000 sales price, at 7.25% interest, your payment is $2,592.
â€¢ $500,000 sales price, at 6.75% interest, your payment is $2,594.
â€¢ $525,000 sales price, at 6.25% interest, your payment is $2,586.
The payments are almost identical. However, the home you can afford to buy a 8.25% is $100,000 less than the home you can afford to buy at 6.25%. If you wait for prices to further decline, the perceived value could be lost due to higher rates.
A good strategy is to weigh all the pros and cons of real estate ownership before making the decision to buy or sell. Don't panic over newspaper headlines. Make an informed decision. Run your own numbers.
Cassie Davis, Colleyville (DFW), TX