I want to buy a house in huntington beach, CA. When should I buy and based on what?

Asked by Ravi Pallipamu, Tue Dec 23, 2008

I want to buy in huntington beach, CA. My rationale is to wait to see an increase in sales price paid for a couple quarters, then buy. Anything wrong with this rationale? It makes sense to me. In this market, two quarters of an increase in say 2-3% is fair to begin believing a trend is occurring. I'd rather see an increase by 2-3% then a decrease of 5-10%. Then kick myself for not waiting.

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Michael Barr…, Agent, Irvine, CA
Wed Dec 24, 2008
Hi there Ravi , Good question and many buyers are curious about this.
Nobody has a crystal ball and can accurately tell you when is the best time to buy. It is up to your personal needs. Most buyers want to get a great deal and when the prices start to increase again then you have missed the sweet spot. A good question to ask yourself is , Is it better to buy when there are less buyers out there or more buyers?
Another qood question to ask yourself is how long do you plan on living in the home?

The previous answer regarding Interest rates is what buyers should be more concerned about if they plan on getting a mortgage for the home. If the homes prices dropped say $ 100,000 and we had a 1% increase in interest rates then it would nullify out.
The facts are :
Right now the orices have dropped about 27% in OC
Interest rates are at the lowest in 37 years
Home affordibility is highest in many years.
Many sellers are desperate to sell
There are record numbers of REO properties on the market.

Another suggestion would be to work the numbers with a lender on some different scenario's such as
Loan with todays rate and calculate the payments also review the tax benefits
Loan with say .5 or 1% higher rate which the experts say will have to happen to stave off inflation increases.

Tis might help you once you see the numbers

Hope this is helpful to you
Kind Regards
Michael Barron
First Team Real Estate
(714) 552-6817
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Jeremy Lehman, Agent, Garden Grove, CA
Tue Dec 23, 2008
Timing any market is difficult. I think it's best to buy when you are comfortable with purchasing a home. A lot of buyers have the same outlook as you. The upside is you will be comfortable feeling like the market has already hit bottom and are purchasing at a price that is about as low as it can get. The question is, what will interest rates look like then? What loan programs will lenders have available? What will down payments have to be to get those loans? Another thing to look at is will other buyers be jumping in at the same time? If that happens, the best homes and best deals will be very tough to get. We already see this on many desireable REO properties. In the past few months, I have worked with buyers that want to wait and those that don't want to wait. All of them have felt that home prices will be up in 5 years. The ones that bought did so because they wanted to get into a certain neighborhood or take advantage of low interest rates. I just closed escrow today in Northern California. It was my clients dream home.

Bottom line, if losing value on your home will make you lose sleep, than now is not the time to purchase. If you believe what you read, than 3rd Qtr of 09 is the time many experts have foreseen the market to change direction, the same time the recession is expected to end. In reality, nobody knows. It's all best guesses.

It's best to find out what your payments on that home would be today, and what that same payment would be like if interest rates went up. A good lender can do the math for you. Depending on the price of the home, the payment can be much higher with a lower purchase price but a higher interest rate.

Best of luck either way. If you have any other questions, let me know. I would be glad to help, and work through the holidays.

Jeremy Lehman
Century 21 Beachside
0 votes
Thom Colby, Agent, Irvine, CA
Tue Dec 23, 2008
Ravi -

It's great that you're thinking carefully about making this purchase and looking for an upward trend. However, the days of a 2-3% upward trend over a 90 or 180 day period are over and likely never to be seen again. The days of double-digit increases are certainly finished. The national trends never really move more than a few points over the course of a year. Record-low mortgage rates cannot last over the longer term. Banks are losing money (as we see from the baliouts) and have to make up for their losses someplace, so rates will have to increase soon. Typically when the Fed lowers the "Fed Rate", fixed 30-year rates increase as they did this week.

If this is a property you are going to use as your primary residence, why not buy now while rates are down and prices are great. The tax benefits you will gain over the period you are waiting may outweigh any small downward movement in prices but check with your tax advisor on it.

Anyway - it's great you're moving towards the right decisions.

Best of luck,

Thom Colby
Broker & Realtor
Web Reference:  http://www.thomcolby.com
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