If you can comfortably put 20% down on a home, your mortgage would be 80% of the value. That's 20% equity reserve. In order to go upside down, the value would have to drop 20%. It is difficult to "time" the market precisely (as many broke stock investors can attest), but it is unlikely home prices still have that far to fall. Pittsburgh has held up well compared to most other places in the country. Prices are remarkably stable here, and do not fluctuate wildly (as in Florida or parts of New England, where they rose and dropped 50%).
Houses are selling in Pittsburgh if they're priced correctly for 2009. Unfortunately for many sellers, "correctly" doesn't mean height-of-the-bubble 2005 prices + 10%. This is good news for you as buyers, though.
You have a convergence of three factors that may not recur again in our lifetimes: depressed home prices, historic low interest rates, and an $8,000 tax credit -- which now is truly a credit that you don't have to pay back.
If you are in a good position to buy now and do not, you may regret it later, particularly if inflation starts rapidly pushing up rents, and interest rates again begin to rise. (They really have nowhere to go but up.)
As always, be prudent! Don't buy more house than you can comfortably afford (e.g., on one income). This will likely be less than you can get pre-approved for. Make sure you have a 3-month cash reserve, beyond what is necessary for closing costs, so that you have a cushion for unforeseen expenses. And make sure you don't have any consumer / credit card debt.
For responsible first time buyers, this is definitely the time to become a home owner! Good luck.
Thanks for the question. There has never been a better time to purchase and probably will not be for quite some time with the low interest rates, high inventory and non-refundable tax credit. As far as going upside down, that is tough to do because home values in Western Pa are down only around 1% according to Trulia. There is a saying that the Pittsburgh RE market never "goes to the party and gets drunk so we never have the hang over" and it is true, our homes hold their value. That is a nice size down payment depending on the size home you want of course.
Regarding homes being on the market for long periods of time, there is a plethora of reasons why that can be from priced too high to unreasonable sellers and things I can not see from the computer so please do not use that as a barometer of the Pittsburgh Market. I am having a record year so far.
Bottom line is, if you choose a great Realtor, you will be in good hands. Hope this helps.
Just like any other investment, a house can go up or down in value in the short term, but over the long term the prospects for appreciation are pretty good. There is no way to know when things have hit rock bottom. No one has that crystal ball and hindsight is 20/20 as they say. What anyone CAN tell you is that home prices are selling for a lot lower than they have been in the last 5-10 years in a lot of areas and there are some good tax incentives out there for first time homebuyers right now. If you are speculating short term then yes your down payment may be at risk, but as long as you dont put yourself in a positions where you NEED and you can wait things out your investment should be safe
What area(s) are you looking in? I specialize in the East End (Squirrel Hill, Shadyside, Greenfield, Regent Square), and in these areas homes that are priced to reflect their condition are selling within a reasonable timeframe. That's not to say that there aren't homes in this area that are sitting on the market: definitely, there are those, and almost without exception it's because they are priced too high given their condition.
In the last few weeks, there's been a significant uptick in activity among first-time homebuyers, and there has been an increase in homes in the first-time homebuyer price range that are going under contract.
So, in areas with reasonable demand, as long as you get your home for a fair price AND you're planning on staying in your home for at least 2-4 years, it is extremely unlikely that you'd have negative equity. Even in areas with weaker demand, if you buy for a good price and stay in your home for a reasonable period of time, your equity should stay steady and likely begin to grow.
There are 2 additional factors working in your favor: firstly, you have a nice downpayment, and secondly, if you qualify for the $8000 first time home buyer tax credit you could use that to pay down your mortgage to further increase your equity position.
Make sure that the agent you choose to work with is knowledgeable about your area, and that s/he takes the time to review comparable sales in your area so that you are educated about home values in your area. The more homework you do and the more knowledge you have, the better position you'll be in to identify and take advantage of the opportunity that is right for you and your wife.
Houses are selling when they are priced right and in good condition. FInd a real estate professional in your area and they can show you the trends in your neighborhood.
With rates under 5%, there are plenty of people out there buying, taking advantage of affordable houses at low rates. Talk to a real estate professional and a mortgage professional and see if it's the right time for you.
If you buy the way people used to buy a home........more for a long term residence and less for short term investment purposes, you will be able to see things in a completely different light.
The key will be not over paying and staying within your means. History has shown real estate in the long term to be a stable venture.