Chandler

Rentals are expensive in Owings mills. Townhomes are being put on market for 1500. For that kind of money someone would rather buy the damn thing.

However, on the other hand, the property prices are spiralling downward in Owings mills. Foreclosures abound. I have looked at 3-4 foreclosures and couple of short sales in space of 3 weeks.

Its a very tricky situation. For $1500-$1600 you would rather pay a mortgage. However, are people willing to take the risk of losing equity? If no, then they will rent. But then why rent for that amount in Owings mills? You can also rent in Perry hall which has much better schools or even timonium (for little more).

I suggest looking at couple of properties to get a feel of the area. Ignore any realtor who says "buy now - before deal runs out". We have heard that one before! - Yesterday, 11:54

Charles

Chandler: I don't give "financial advice" I give my view of the market and how that might affect the value of a particular property
---------------
I think you read my posts its pretty clear that I am not asking you to give "financial advice" in the sense that whether you think Google stock is going to go up or down. Perhaps reading my posts will explain what I want realtors to do. Explain the concept of rate changes or how different loans work i.e 3, 5 yrs ARMS, 30 yr fixed etc.

Of course, I don't want repeat a million things I have said before and there is nothing I can add. Its OK if you disagree.

Deborah

http://www.realtor.org/ro/research/State051308.pdf

Is this the report you are referring to ?
I noticed the first quarter results are preliminary. So is it an estimate ? - Yesterday, 09:08

JR
"That is a slanderous TWIST of what the original poster said"

No its not. Its a logical conclusion from what the original poster. Just because you can put a spin on words and make it sound better does not mean that it is. He clearly said that he does not care what the person is earning, what his credit score is. The person comes to him to buy a house and he is going to sell him one. Plain and simple.

"you ARE supposed to give financial advice --- you're NOT supposed to give financial advice, we're damned if we do and damned if we don't."

You (as in realtors in general) are damned because you do give financial advise as to why people should buy but you don't advise them about the financial consequences of rate changes or interest only loans or negative ARM.

You will not be damned if you don't give advise on both fronts. And thats the point I m trying to make. Hope you see my statements in the whole context of point being discussed and why I think this is the realtor's responsibility to do that.

I m sure most realtors will not agree to it because suddenly it makes them accountable to a certain level of this mortgage mess.

Anycase, since you are not going to post here - I hope to see on some other thread taking other realtors to task who are doling out advises on buying. I hope you also send a letter to NAR to stop this "projection" nonsense because it only hurts their credibility (and in turn, yours). - Wed May 14 2008, 12:49

Elvis

"lambourghini salesman who sells him the diablo for $250,000.
"
Perfect. I m glad you came up with this analogy yourself. I didn't want to humiliate your profession by comparing to a car salesman. So if you are OK to compare yourself to a car salesman, then you shouldn't be surprised at the negative opinion people have about realtors.

However, let me differentiate you from a car salesman. When I buy a car, I know its a depreciating asset. The car salesman does not pitch it to me as "a good investment". A Car salesman does not go on about economists or the media being wrong. Car salesman association does not put out statement like "buying a car is better because you will get tax breaks and you will come out ahead in 3 years".

Bottomline - a car is a depreciating asset. The amount of money at risk is low. The person buying it knows that his money is "SPENT".

A house on the other hand is pitched as an investment. Tax breaks , better than renting etc. with all the economic incentives. I think you are taking my statements individually without taking into account the context they were made in. I repeat - Realtors HAVE a responsibility if they are going to go on putting out junk statements like "buy now". So don't take a clip out of my whole detailed response because it destroys the context it was said in. - Wed May 14 2008, 07:35

Chris, JR and Elvis

(reposting due to some errors)

http://realtytimes.com/rtpages/20080505_realtyviewpoint.htm

This is by an author who is recognized only by realtors (and no one else - I don't see her qualifications on the page. Nor do I see any awards by independent bodies). If your realtor body is publishing such pieces of junk and double guessing economists all over, I think it is well within a realtor's responsibility to warn/inform the buyer (and double guess their buying power). You might be exceptions so please do not post "I do not indulge in such things". Clearly, majority of realtors indulge in such stupid propaganda - media is wrong, we are right - "Stop listening to the media. Go buy a home. "

- Notice how she slams only the shiller index , however in the article data from NAR is also questioned. Further, even if account for anamoly because of decrease in sales of high price homes, it still doesn't explain the fall in price/sq. ft. Additionally, if fall in sale of high price homes artificially deflates the median price, then conversely in the boom it should have artificially inflated it as well right? But at that time, such data was happily used to determine current house prices. Let the media report jump in median prices - because it helped the bottomline of jolting people into buying a house as an investment. However, now we see the same data is skewed? Further it might not be that high price homes are not selling. It might be that the house sold at 740k is selling at 500k .So now suddenly it has fallen out of the high price home bracket.

JR

I m not sure what you mean by "now THERE's a twist for you" . Details would help. - Wed May 14 2008, 07:25

Chris

"I do not know what my clients earn, what their credit score is, or what they do with their money. It is NONE OF MY BUSINESS. That is between them and their lender"
-----------------------
So you are saying as long as you can close your eyes and walk away with the commission , you are not going to take any ethical or moral responsibility towards the welfare of your buyer. Your need and requirements are strictly restricted to getting him a house at the "market" price and just explain the process of acquiring house (that too restricted to immediate costs like closing costs).

While the above scenario works for you (as I have not seen you singing the "buy now" mantra), this is not the case in general. I see realtors asking people to buy now everyday. You have not addressed that part of my argument.

I am agreeing you are not a financial advisor - as long as your community stays away from making statements like "buy now" or trying to portray themselves economists with generic statements like market is at the bottom. Unless you are an economists or a financial advisor who is well versed with loans and has all the data, you (as in a generic realtor) cannot make statements regarding market bottoming out or "prime" time to buy.

Please refer to the part of my reply to Elvis. I will give realtors the right to advise on buying only if they accept the responsibility to explain financial consequences. - Wed May 14 2008, 05:35

Elvis

True. I m not in a position to advise. And I don't. I never stated that you are going on advising people to buy (I took care not to mention you - because I know you didn't). But here we are talking about realtors in general and not just you or Chris. So I m sure, you have noticed that most realtors on this thread (and many others) are providing similar advice.

You are right many realtors would take the bait but then shouldn't they qualifying their advice with statements like "i m not your financial advisor or I dont know much about economics"? On the contrary, lot of realtors actually go on and on about how in their infinite experience this is a good time to buy.

I m sorry that your own brethren have let you down. I would have accepted your argument about not advising people on financial consequences if only most realtors were like you. But unfortunately, they are not.

In short - I m willing to give the right to realtors that they can advise people about when to buy along with the responsibility of informing the buyers about financial consequences.

PS: Nice try with "home prices are at more affordable rates than in recent years". I noticed how it is politically correct. Recent years as in 2006 or 2007? Yes. Thanks ,thats a welcome relief to all buyers. I guess we should jump up and down that prices have fallen 20% after jumping more than 100% in 5 years. - Tue May 13 2008, 15:49

Chris

The Realtor is not the right person. If he is, then he needs to warn people not to: buy SUV's, eat at expensive restaurants, buy jet skis, new furniture, travel on vacation,etc etc.
----------------------------------------

I m not sure how you go from advising about houses and related payments to advising about cars,vacation etc. Perhaps it is this kind of attitude - "Oh! y the hell should we care if the buyer wants to buy" - that is the root cause of so much hostility towards realtors.

Nobody wants you to advise them about vacations. However, it is definitely within the realms of realtors responsibility to advise the buyer whether they can afford house payments. A house purchase is a single most important decision in a person's life especially for a first time buyer. Your argument that you should not advise is baseless. A first time buyer is not informed about all the pitfalls of a house purchase. So when a buyer comes to you saying I can afford $X , a reasonable realtor would ask - how did you come up with that figure? (mine did!) If you assume the rate of interest, can you afford the house if it rises and are you OK with increased payment? These are some of the basic questions which will also make the first time buyer make an informed decision.

I m not saying you should discourage them from buying. Lay down the facts and let them make a decision. It is their responsibility from that point on.

Elvis

but the person responsible for explaining the "financial side of things" is their lender, and/or financial advisor. Realtors are neither of those.
---------------------------

Then perhaps they should be. There are so many realtors on this thread , advising people to buy. Are they their financial advisors or do they have a degree in economics under their belt? If you think you are qualified enough to make an argument to advise someone to buy a house , then you should also take on the responsibility to tell someone when it is advisable to not to buy a house.

It is OK for realtors to go on sites and blabber about rates being low, house prices being "affordable" and all that crap but when it comes to explaining the financial consequences - Oh! it has to be "mom and dad". or a financial advisor. Thats laughable and quite a self-serving argument.

If you are not a financial advisor or a lender, perhaps then this thread is not meant for realtors. All realtors should just shut up and leave and let the lenders / financial advisors argue why we need to be taking a loan on a depreciating asset? Remember the question here is why buy in this market? If you are going to explain the economics of the situation then clearly you are informed enough to advise the buyer as well. Not advising the buyer is shirking responsibility and withholding information under the pretext of "its not my job" (which it is). In either case its quite deceiptful of you to do so.

So tell me - if you are responsible for only doing the transaction and informing about "closing costs", what is the value that you bring to this thread and why should anyone listen what you ,or for that matter any realtor, have to say ? - Tue May 13 2008, 13:55

(Reposting fue to formatting problems)

Elvis

It's not up to Realtors to be the house police, and it's not up to us to explain the "consequences".
_________________________

I have to disagree. I agree that realtors need to earn a living but "explaining the consequences" is one of your responsibilities as well. Most first time buyers do not know the actual cost of owning a house. A good realtor would explain the deal they are getting into. Realtors claim they are the domain experts, then how can an ordinary family have more knowledge of the costs that go into buying a house. Realtors also need to point out what would happen if rates jump.

After explaining , it is the buyer's choice to accept the consequences or reject it . In other words, the responsibility of making the final decision of buying or not rests with the buyer. I would agree to that part of your argument. But clearly, in so many of the cases we see everyday, this was not done. Buyers were not explained about the consequences or the overall cost that would go into the house. - Tue May 13 2008, 07:31

I have to be with JR on this one.
The thought that someone would think that they could walk away from their debts not caring is disturbing to say the least. I m not sure I would describe it as disgusting. Imagine if all of us started doing that. You bet the roof will fall down in no time. So definitely it is the wrong thing to do.

JR
I don't think Ryan and Ben would do something like that themselves. What they are merely stating is that, there are people who did that and they understand why they did. We need to understand that these are the people who do not have financial acumen. If they do not care what happens to their credit via foreclosure do you think they would really care about what happens to the country as a whole? I really doubt these people have that much knowledge to think on those lines.

However, I do disagree with Ryan that these people thought about foreclosure. It was not an option. They just didn't think this through. There might be few shrewd people who might have thought on those lines but it might be a very very small percentage. I have seen lot of foreclosures and short sale homes. These are families with small kids. I really doubt they thought about foreclosure. They thought they can afford a home and then flip it for some equity which could pay for their child's education or they could move up in life.

Ofcourse, you can describe this as greed. But I think all of us share this greed. Who doesn't want to do well? If I didn't know any better and had a family in 2004, I might have been thinking on those lines too. Not everyone is informed like so many people on this board.

Chris Freeman
You are right that if a buyer is bent on doing something they will do that. For example, look at buyers like me and ryan. We have decided to wait (or at least thinking on those lines). There are realtors who are telling us to buy but we are not buying into that argument (for whatever reasons).

I don't blame the realtors for this mess. However, the loan approval and explaining the consequences should be realtor's responsibility. They needed to explain people better. I know some of the realtors might have done that but clearly majority didn't. "Being responsible" is the phrase missing from the scenario. People talk about greed but realtors are people in the end with families. So I do give them some benefit of doubt - Tue May 13 2008, 05:54

Tim

You are right. It varies by geography. But Carl was making a generic statement which meant averaging over the entire market. So if you are including the entire market, then the percentage of "newer" homes on foreclosure list is higher (as is evident by my previous post - "the percentage of exceptions that you mention has risen tremendously.") - Mon May 12 2008, 07:07

Carl

Actually, these days the foreclosures are in great condition. These are homes built in 2001-2005. Ofcourse, nominal work might be required like changing carpets, getting some appliances but I have seen that homes for sale as well and not just foreclosures.

So in this market, the percentage of exceptions that you mention has risen tremendously. - Mon May 12 2008, 06:42

"Although you are hearing the normal doom and gloom put out by the main stream media," The media was also putting out the boom stories. So if the current doom is due to media, don't you think the boom was due to them too? You cannot have it both ways.

Tina (The realtor from baltimore)
I m not sure if we are staying in the same baltimore. Are you talking about the same baltimore which ranks in the Worst selling housing markets ?

http://promo.realestate.yahoo.com/promo/americas-worst-selli…

Also, are we staying close to the same Owings Mills area which suddenly is hot on foreclosures?

I m confused. - Sat May 10 2008, 22:20

Rob Banks (Well! I m not going to insult your parents.)

Unfortunately for you, I have a masters in Computer Science . My undergrad major was math. We work with Google and Microsoft and have done lot of research for them too. Perhaps you need to go back and read the link I posted. The whole premise of the blog you posted rests on "302 redirect" and the article documents that "302 redirects" unfairly penalize sites with 302 redirects.

However, lets assume the article is wrong. Perhaps you need to read my response to "Buster" again. No buyer searches with address. Only stupid realtors who want to know that their listing comes up in search , search with an address. Buyers search by zip code. But perhaps its too much trouble to think about buyers. You can continue to fret about a non-issue just to slam trulia.

Lets say Trulia doesn't allow Google to crawl outward links. So what? You are not making money off of it. Trulia brings buyers to your listings. How the hell does it matter how the buyer comes to you ?? - Fri May 2 2008, 04:29

Rob Banks (are you the same person as Buster)

I see you are posting the same link as buster on another thread. Perhaps the blog writer and you should perform a google search before posting such useless links . A 302 redirect would actually penalize the site sending the 302 redirect

http://www.seotoday.com/browse.php/category/articles/id/477/…

Let me repeat what I said on another thread

"Thats the dumbest blog I have ever seen. One of the comments has made it pretty clear why trulia pages rank higher. Its not because they block out going links, its because they do a URL rewrite (among other things).

Plus as a realtor do you really care how the buyer came to you. Through trulia or your own site? At the end of the day you are getting your commission. Plus nobody searches for properties directly typing their address (unless you have seen them before). Sites like trulia let new buyers start out their search and then also get in touch with prospective agents. (I got mine through redfin.com)

Believe it or not , sites like trulia actually do work for realtors better than their own sites. -"

Coming back to topic

Paul

Thats a really nice article. Thumbs up!!! for that ! - Thu May 1 2008, 21:06

Max A Vogt

To add to Richard's point.

Your analysis does not make sense to me. If rental market is booming and it makes sense to buy a property to rent it out, it means that the rent I get should be equal to or greater than the mortgage I m paying. However, in this situation you will only get short term renters who do not plan to stay longer than 1 year in that city or are new and want to rent before they buy. Apart from them I don't see why anyone would rent if the rent is higher or equal to mortgage.

Also this has been discussed earlier. You might want to go through some previous posts. - Thu May 1 2008, 06:54

Paul

You are right that MC and Visa collect transactional fees. However, if cards are maxed out and their usage will decrease and hence, the income from the fees. Plus maxed out cards means you will soon run out of credit cards without getting new ones. - Wed Apr 30 2008, 11:17

Dick Johnson,

The discussion is not about Ryan coming to a decision. Its about exchanging ideas and data , may be learn something new in the process. I m sure lot of realtors, buyers and sellers have found this thread helpful in understanding each other's mentality.

I m not sure why would you want a thread to "get over with". You are "just looking" so I assume you are buyer . This thread is probably the best thing for a buyer - whether you have already decided to buy or considering buying.

JR

Whom do we blame for inflated prices? Well, I don't think I would blame anyone. Lets face it. Everyone wants to make money and circumstances were created which made it easier for a section of people to make lot of money. Thats done. However, moving forward is it still reasonable to have the same mentality of flipping houses for profit? I see lot of houses for sale which were bought in 2000-2005. How come so many of people who bought in that period suddenly feel the need to sell? Are they suddenly more mobile , switching jobs, have growing families? While these reasons apply to some of them but the way I see it is lot of people just want to cash in on their equity. Again, nothing wrong with this. But if you bought as an investment then you should be ready for a loss.

Carl
You are right about the emotional aspect of buying a house. My current decision to buy one is more emotional than dictated by needs. Its more like I want to own rather than I need to. However, its the biggest investment of my life. In a flat or growing market, I can be emotional and pay little more for a property I want. But I don't think its wise to be emotional in this market. Lets face it. A house price is the single most driving factor for any buyer. You can be emotional by +/- 10k (over a 300k house). But if you end up paying 20k more then you either have lot of money or just dont care about your financial well being. In either case, you will suffer loses (and take few people along with you),

My dad says - Be thankful for stupid people. How can intelligent ones be valued without them? However, I think he underestimates the power of stupid people in a group. They can drive a market up or down. There is power in numbers and sometimes, even if you know a house is worth just $280k , you might be forced to pay $295k because there are idiots who are willing to pay over and above $290k. Its logical to hold out as long as you can but in the end you shouldn't deny yourself the pleasure of staying in your own house. - Tue Apr 29 2008, 18:25

Coming back to the issue.

While we have been busy discussing this, there are some houses which are selling in Baltimore county. I know one townhouse from 2003 which sold for close to $340k.

This just surprises me no end. I m not against buying in this market. My concern is are these buyers even researching before making such a big decision? If we take the realtors on this thread as a sample of real world investors, we can safely assume that over 80% of the realtors are still going out and advising people to buy because of "low rates and prices" and how we will "never have this opportunity again". For someone who doesn't research or read reports online (hard to believe in this day and age) its easy to not to question that stand.

The problem I see with not researching is that you will continue to pay astronomical asking prices. (The seller was himself a realtor. It certainly feels like the buyer got sucked into the deal. The street perpendicular to their street is horribly crowded and over parked at night. Houses next to this house sold for about $320k about 2 months ago.). Of course, a buyer is free to pay whatever he feels the house is worth and affordable. Also I do not know if the buyer went against his agent's call.

This has lot of ramifications.
1) It shows up as one of the comps. Gives a false bleep of prices rising and giving other sellers a reason to continue asking such ridiculous prices. Sure it would come back to curve after couple of other comps but it will definitely affect 2-3 buyers.

2) It becomes the "Market price". So now all houses listed below this price are suddenly "below market". It drives down the bargaining power.

My concern is if the market continues to have ill-informed buyers, then it might not fall as much as "sky is falling" concept. I for one , am not prepared to pay $20k above the inflation adjusted price or 2004 price. It is just disappointing that people continue to pay over and above 2005 prices. I m not sure if these people even read papers or watch TV.

PS: Before anyone jumps in with "real market is local" and "location" theory, this zipcode has seen 7-8% year over year drop and continues to see falling prices. There are tonnes of foreclosures and if the buyer had researched a little more, he could have bought a single family home for $40k less than what we paid.

Amazing. Disappointing. And all the best to the buyer (considering as soon as he bought it he had negative equity). - Tue Apr 29 2008, 05:24

Dann

We are open to positive things as well. In fact, buyers would love to hear something positive so that they can rush out and start living in their home especially buyers like me who are sick of renting.

However, the reason we are ignoring most of the positive comments its because most of them are generalizations with no sound data to back them up. Someone posted in chicago certain neigborhoods have seen price increases and had data to back it up. Thats good to know and is very helpful (and is quite consolating ) to buyers in chicago.

If you look at most of the comments on this thread, they are on the lines of low rates , buyer's market and long term investment. Most of the buyers on this thread are educated enough to know this. However, some of the realtors don't understand that if the rates bounce back upwards then the property prices will fall further. So in terms of monthly payments you would come out same and plus you would get more tax breaks( generally speaking).

Our frustration and negative outlook comes from the fact that very few people who are arguing from the other side back up their claims while we have been consistently putting up statistics, charts and market research to either back up our claims or debunk their arguments. - Sun Apr 27 2008, 06:59

Carl makes a good point . The median income to median price ratio. In my area its definitely inflated. Don't know about chicago though

Chicago prices are going up? Well. I m looking for jobs in chicago and there are none to be had. The companies are tightening up.
1) So who is paying all these prices?
2)Even if prices are increasing - have they slowed down as compared to 2006-2007? If yes, then dont you think it will be even slower heading into a slower economy, $4.5 gallon gas and numerous layoffs ?

I bet if you wait for 2 quarters you will see considerable slow down in chicago markets which are showing increases. Although I do feel when the market rebounds it will pick up faster. - Fri Apr 25 2008, 21:28

patrick

I understand that in long term buying is better for various reasons - not all of which are monetary.

However, lets say if I buy today . Would I be in a better position after 5 yrs if I buy today as I compared to if I buy next year? For example to be precise, will it be profitable or advisable to buy in 2008 and sell in 2013 or buy in 2009 and sell in 2013 /2014? - Thu Apr 24 2008, 20:44

http://money.cnn.com/2008/04/24/news/economy/builders_foreca…

And more of the same things we keep talking about.

Roger,
You did the right thing. I wish all sellers look at it this point of view. Your post brings a very interesting point which I have been thinking of posting.

In some other thread, realtors were encouraging the person who posted the question, to bid $50k below asking saying it won't hurt to low ball. Also they mentioned, they have sellers who would just love to see an offer no matter the price.

Aren't these the same realtors who "price" their home? Look at your example, your realtor listed about 15% over what you eventually settled for. The houses I m looking at , are overpriced by similar amount. So are the sellers really bent on their asking price or are realtors giving them incorrect appraisals and hence, the sellers are stubborn about their price.

The current thread mostly has buyers or real estate agents or investors. Hardly anyone is a genuine seller who has a property on the market. So does it mean that sellers are not researching enough or are they in denial? i.e Although they feel their property is worthless than the listing price , but since their real estate agent has approved the price they are going ahead and taking the chance that someone would meet it . (Note: I did see one person pay the listing price in November 2007 INSPITE of falling prices within the same community. People never cease to amaze me. How can you NOT haggle in this market). - Thu Apr 24 2008, 10:55

Is there any seller who would like to jump in this discussion? I would like to know why do they think they deserve the price they paid in 2005 or more. (In baltimore area most people are asking same price as 2005 and its in the top 10 states in terms of foreclosures).

Most buyers seem to be willing to pay 2004 prices which when adjusted for inflation from 2000 -2008 seem to be right. - Thu Apr 24 2008, 05:26

JR

I have to disagree with you with respect to the bottom of the market

People couldn't recognize peak because it was difficult for them for see the impending drastic fall. I mean if the financial companies couldn't foresee the impending (or may be they did who knows) , then you can hardly expect people to recognize the peak. However, people who weren't greedy took in some healthy profits in 2005-2006.

In my opinion its easier to time the bottom in this market. The reason being the prices are not going to rise at the rate they have fallen. Once the market becomes stagnant prices will lurk within +/- 1-3% of past quarters. So while you still won't be able to get the exact bottom you will be pretty close to it. In fact, it will be a long time before anyone sees any uptick in the prices.

So recognizing bottom will be far easier (relatively - only people who do some research will be in a good position) than recognizing the peak - Thu Apr 24 2008, 05:20

Rebecca

I have heard this argument about "throwing away rent money". Can we not consider the interest we pay on mortgage as "throwing away" money as well? Perhaps some numbers would help.

Say I buy a house for $300k with 10% down with a 6% 30 yr mortage. My loan amt is $270k with a monthly payment of $1650 or so per month. Out of this over a 3 yr period an average of $1325 per month goes towards interest and NOT towards capital. Additionally you have property taxes of say about $300 per month with $100 in home insurance and $100 for PMI. Thats a total of $1825 per month that doesn't go towards equity.

Lets say one third of this you get back in tax breaks. So you get $600 back and that leaves a cost of $1225 a month. Over 36 months that is a cost of $44100. So thats $44100 "thrown away" on interest and things that are avoidable if I had been renting. Ofcourse, I need to sell the house at the same price I bought - Add in another 6% of selling price - $300k so total cost is $62100.

Renting
Lets assume I rent an equivalent townhome for $1500 for 36 months. That is a cost of $54000. From this subtract the interest I can earn on my $30k (the down payment ) for 3 yrs. At marginal rate of 4% ( Check capital one online savings rate and there are CDs as well) , I can earn about $3600. Lets round it off to $4000 considering I will be saving even more per month since I m paying just the rent of $1500. So thats a cost $50000

May be I m wrong and missing something here. Feel free to correct the statistics

You can argue that the additional cost of $4000 per yr you can enjoy the benefits of staying in your own home and the freedom to do anythign with it and I agree you would be right. But those are intangibles that cannot be measured and you mentioned something about numbers.

PS: The numbers for the house's selling price and rent are bang on and I m using the numbers that are on market (craigslist and redfin.com) in maryland-baltimore area. - Tue Apr 22 2008, 14:33

Paul

I m not sure if I understand this. I do not know of any market where it is cheaper to buy than to rent. Only people with temporary residency status would pay more to rent than to buy for e.g. someone on a short term project in another city. A person with steady job or business - why would anyone rent if its cheaper to buy? I assume if such a situation arises, real estate prices will pick up in that area and you will find it difficult to rent .

I would assume if its a buyer's market and you do not want to sell, you can rent it but it will not be easy because clearly you cannot rent it at the amount you pay for mortgage. So you would still make some mortgage payments out of pocket, not to mention the amount of money that will go in maintaining the rental .

On the other point of negotiating in buyer's market, you are right buyer has negotiating power but thats not incentive enough. Unless someone can convince me that the property prices are not going to fall by another 10% (quite possible in baltimore area) that negotiating power does not cover the equity I would lose on the home. Your argument will hold if the amount of benefits given by seller outweighs the equity i risk losing. But then why would seller do that. If he is OK with losing that much equity he can just sit on his house .

I m not sure I m making a coherent point here. Lets say you buy a google stock at $410. In a sellers market you are saying, that if i had to buy it, i would have to agree to your price . Lets say your price is $500. In a buyers market , you are saying I can negotiate the price down to $470 and get you to pay for the broker commission which as a seller you wouldn't have done earlier. However, the problem here is you and I both know that the stock is going down and that you bought it at $410. So you are trying to unload your depreciating asset on me by offering me some fringe benefits but taking in a healthy again at the same time. As a buyer, even at $470 and commission waived, I m losing money in the transaction since I dont know when the stock will bounce back and will definitely decrease for the rest of the year.

So how is a buyer's market good for buyer ? Wouldn't be good if I can buy the stock close to say $430 where in you cut your gains and I limit my loses? Unfortunately, that is not happening today and that is what the buyers want.

Also it does not answer the point - when is it not OK to buy?

Lets say its a sellers market, Then I might not get closing help or negotiate off the list price. However, in a sellers market , I can easily recover this by flipping the house over. So I wouldn't care for such things either. You see the problem here . - Sun Apr 20 2008, 19:21

I m a buyer in maryland, and I have learnt a lot from this thread. One new thing that I learnt was looking the futures. That was an excellent link and reasonable indicator of investor confidence.

Also, I have visited many threads on trulia . Most of the people who post questions do not conduct any research on their own and just accept realtor replies at face value. I bet these are the very people who are buying properties are inflated prices even in this market. With all due respects to realtors on the board, their replies can conveniently be classified as (or will consist of) one of the following:

1) Its a buyer's market and rates are low.
Both things are true. But a market can be a seller's or buyer's market . 2 years ago they said its a sellers market - so we should buy because prices would increase further and that would make them unaffordable later. Now they say this is a buyer's market and there are lot of "Deals" to be had at low rates. If we don't buy now , prices might increase or interest rate might increase which would make them unaffordable again in future.
So can someone from the realtor community tell me when is a good time to not to buy ? In a stagnant market too, you are building equity in the house and its better than renting right? So no matter what the market is - your suggestion will be buy buy buy?!

2) Good long term investment
Not entirely true. But lets say this is a safe investment. Going by pure investment principle - you buy low and sell high. Most buyers today are like me or the person who started this thread. We want to know why should be buy this year or not next? So what is the reasoning behind buying this year as compared to waiting for next year? Do any of the realtors out there seriously believe that there will actually be a house appreciation? [This question does not apply to one realtor on this site , who said "prices will increase for sure this may." To any one who has this realtor as buyers agent, PLEASE look for another one.] Someone said that interest rate might rise. Lets say they rise by 1% and that amounts to about 10% of property depreciation. But if the house itself depreciates by 10% and you are buying at a price which is 10% less than previous year, it conveniently offsets the 1% rise in rate. Not to mention that you can put more for downpayment next year, continue to earn 2-4% return on your savings in an online savings account.

3)Real estate is local.
True but lending is not. With recession and lay offs, the no. of potential buyers is drastically reduced. Not to mention tighter lending means your potential buyer pool has been decreased. Its not like any of us is looking to buy in beverly hills, where the pool of buyers (and sellers) is not your typical average buyer and is more or less independent of the constraints that affect regular buyers and sellers.
I m not sure how real estate prices everywhere cannot be affected. The rate at which the drop might vary but they have to drop.

May be I have missed some of them but everytime I open a thread, its the same story again and again . Realtors don't put up any links or data which support their claim about bottom being reached. It just reduces the value of the forum as an honest discussion tool . To be fair there are couple of realtors who are saying that the market will continue to fall for a year at least. but they are exceptions.

I would definitely follow this thread to see if can learn something more. - Sun Apr 20 2008, 14:09

Thanks for the replies guys

All of you made similar point about getting a good title company and buying the title insurance. However, I chose Kelly's answer as she also mentioned the property taxes part of my question. - Mon May 12 2008, 06:38

Buster

Thats the dumbest blog I have ever seen. One of the comments has made it pretty clear why trulia pages rank higher. Its not because they block out going links, its because they do a URL rewrite (among other things).

Plus as a realtor do you really care how the buyer came to you. Through trulia or your own site? At the end of the day you are getting your commission. Plus nobody searches for properties directly typing their address (unless you have seen them before). Sites like trulia let new buyers start out their search and then also get in touch with prospective agents. (I got mine through redfin.com)

Believe it or not , sites like trulia actually do work for realtors better than their own sites. - Thu May 1 2008, 11:39

Ah! I hate to break this to you but asking such questions on a real estate website is not the right way to go about making your decision. As you can tell from the realtor responses - buy, buy, buy is all you will hear. Low interest rates and market being the lowest. Needless to say its all bull.

Having said all this Mansur's answer is pretty good and he makes a strong case for renting.

Rent . Its not that difficult . In this market you are not "throwing away money" . Save at least 20% of home value you wish to purchase. Put 10% down and save the other 10% for the "blue " days. - Mon Apr 28 2008, 20:35