Do you think this is a sound financial choice to buy now or wait 6 months to see if it drops more? Would we?

Asked by Joey, Montrose, CO Fri Jan 2, 2009

potential lose money buying now over waiting?

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Phyllis Harb, Agent, La Canada, CA
Sat Jan 3, 2009
I want to purchase a home because:

*I am tired of moving

*I need a tax break

*I want a place to call my own, one I can personalize to my taste

If you don't answer yes, proceed with caution; prices ARE down, rates ARE low. BUT no one can predict the bottom of the market. By the time we hit bottom, we are on our way up.

The short answer is if you are buying a home, buy when you find the right one, if you are buying real estate as an investment, proceed with caution. Even IF prices continue to decrease, they will not decrease too much more, buy when interest rates are favorable and you find the right home that you can afford. Best of luck
3 votes
Voices Member, , Benton County, OR
Sat Jan 3, 2009
Joey, Phillis has given you great advice..Take the time to review why you want to buy, then move forward if that is your choice. As long as you become informed, consider the economy, your income security and ability to pay, you will make the right decision. It is your decision, so when you can answer the question you asked, then you'll be ready.

Best of luck, Dunes
1 vote
Suz A, Agent, Longmont, CO
Sat Mar 12, 2011
Hello Joey!

You should speak to a local Realtor, someone who has knowledge of the area.

As you know, the real estate market has been in a protracted downturn. There are opinions in the press on when the national market will turn with home values overall and sales trending higher. Usually the press tracks the 25 to 40 largest metropolitan markets. While there is a considerable amount of information available, for practical purposes, the information is not useful from one market to the next. Over here in Boulder County, the local economies offer different and sometimes contrasting stories. And for a host of reasons, the city of Boulder has fared better than most of the nation, including most of Denver.

Timing the market would be extremely difficult in any case. The upshot: You should consult a knowledgeable professional, most likely your local agent.

A sensible approach offered by others here: You should look at whether you are ready to enter the market and act when your situation and "the right house for you" line up.

My advice for buyers who want to get their ducks in a row:

1) Examine your credit. Contact the credit tracking agencies to see if there are any mistakes on your history. And you might want to read up on improving your credit profile. Experian, Trans Union and Equifax are the three reporting agencies.

2) Get your financing lined up beginning with a pre-qualification letter from a lender. This will help save you a lot of time before you begin working with a real estate professional. It is very important to know how much house you can afford before you put in any footwork.

3) Look for a neighborhood that meets your needs. Look at schools, shopping, fire protection and similar considerations. In smaller markets, there may be few choices. But, in metro areas, there are considerable differences.

4) Determine whether you would be happy living in an HOA neighborhood. If you are unfamiliar with HOA living, you should speak to people who live in these communities to get feedback. Go online and familiarize yourself with the covenants. The financial condition of the HOA is important, too.

5) Start shopping online.

6) Hire a good Realtor who will represent your interests as a buyer. If you are new to buying, you want someone who can give you an assist with everything from locating bargains to negotiating a contract. Notice, I didn't say price. Price is but one aspect of many real estate deals.

If you're considering these questions now and you haven't done your due diligence, you might not even be ready to act for months.

BTW: I like that part of the state. Very rugged in some places, very accessible in others and all quite gorgeous. I wish you the very best.

PML of Longmont, CO
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0 votes
Nick Zappa, Agent, Montrose, CO
Thu Jan 7, 2010
The answer to your question has many parts. What are your motivating factors, are you looking to make a quick buck which will only happen in a distressed property purchase and the margins for profit may not be worth the effort. Is it a first time home buying situation and you are entering into home ownership and all of its benefits, are you upgrading to a larger or higher priced property.
Your question is so general that your motivating factor needs to be addressed to give alternatives that best fit your situation. If you are basing your decision on the market being at the bottom we might be close, if we are close and you wait to save a few hundred dollars on the purchase price you may end losing thousands on the other side by the interest rates going up. I have heard more and more anaylists agreeing they will begin to rise.
If you have found a property you like, can get financed and can purchase it at a good number find a Realtor that knows the market and do the deal.
Nick Zappa
RE/MAX Alpine View
0 votes
Ninah Hunter, Mortgage Broker Or Lender, Montrose, CO
Mon Jan 26, 2009
I have no argument with Home Buyer 101. That's why I said, if it makes financial sense to you, this is a great time to buy. And he/she also raises a good point about letting others run your credit report. Each inquiry can affect (i.e. lower) your credit report. You, as a consumer, can get credit information and your score without it counting against you as an inquiry. That's why I advised you check yourself on all 3 credit reporting bureaus (it will cost you about $8.00 per bureau to get your score). But you can "pre-qualify" yourself with any lender letting them know your income, debts, and credit score without them running your credit report. Any pre-qualification will be conditional upon providing documented verification and satisfying any other conditions. Keep in mind qualifying right now is a moving target as underwriters are constantly changing their criteria. Whether to accept the loan amount your given, or divide it by 2, or reduce it otherwise, is up to you. I like Buyer 101's conservative approach, however. I myself have been prequalified, and qualifed, for a lot more and chosen to do much less. I will also add that although in general terms its a great time to buy, for me personally, for various reasons, it's not.
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0 votes
SanFran, Home Buyer, Broomfield, CO
Mon Jan 26, 2009
Oh I do want to add that I am not a financial, real estate, personal advisor. This is only my personal opinion on a blog/forum. You should definitely read all opinions, judge what is best for you and take action.
0 votes
SanFran, Home Buyer, Broomfield, CO
Mon Jan 26, 2009
The best time to buy is when its best for you. If you can afford it, you should buy. If you can't afford it, no matter how good the market is, its not the best time for you.
The other thing to consider is how long you want to own the house. If you buy now and sell 6 months later, you may/may not have a loss. If you buy now and sell 5 years later, you will be in profit.
What you trying to do is spotting the bottom. Even the most accomplished economists and financial gurus haven't been able to pinpoint the bottom. Someone here says by the time you spot the bottom you are out of it. So when to buy....go back to the first line.
Another note: Some answer here suggests you need to get yourself prequalified. I have also read so many articles that say you need to get prequalified. But as a buyer myself, I advice to not have lenders run your credit report unneccessarily.
Get your credit scores and reports. Call your checking/savings account bank. Ask to speak with the underwriter. Tell them everything about your finances and yourself except your SSN and birthdate. Ask them to give you pre-approval for max loan you would qualify for. Take that loan amount and divide it by 2. That is your limit. I am sure I am gonna get some slack from everyone but I believe this is a different strategy.
All Agents are going to ask you to pre-qualify yourself. Why wouldn't they? They don't want to spend time with someone who would later get denied a loan for a house both of you spent time looking.
Getting a prequalification also puts emotional pressure on first time buyers and forces you to quickly jump on a place you cant afford.
An agent cannot ask you about your credit score, your salary, your savings,etc....

There is never a best time to buy. There is a good time to buy. You buy when its best for you personally.
0 votes
Brian Burke, Agent, Highlands Ranch, CO
Mon Jan 26, 2009
I am glad a Local Realtor was able to Answer this Question.
0 votes
Ninah Hunter, Mortgage Broker Or Lender, Montrose, CO
Sun Jan 25, 2009
Joey, In my opinion, this is a fantastic time to buy, especially in the Montrose, Colorado area, if it makes financial sense in your situation. Right now, home prices remain flat, with minimal depreciation, and there is a fair amount of inventory to allow you to be choosey. And of course, interest rates are at historical lows, which gives you more buying power. Here are additional reasons I keep hearing from national and local pundits for buying now: (1) lower-priced inventory will get bought up first. As such inventory disappears, that will tend to increase the values of remaining inventory, since there is less competition, and builders are not building new homes right now, or, not as many; (2) lenders are continuing to tightnen qualification criteria (e.g., minimum credit scores), in some cases, significantly, making it harder to qualify for the loan amount you may need, or any loan amount, for that matter; and (3) interest rates may or may not see any further significant reduction in the near future, while the opposite may be true within the next 6 months to a year, which, of course, reduces your buying power. Even if they do drop some more, you can play the timing game as to when to "lock" your loan--be sure you get a savvy, attentive lender to watch the market and advise. Other reasons from my perspective is that Montrose and the Colorado Western Slope in general are some of the fastest growing areas of the country, both residentially and commercially. This area is a "destination" place that attracts residents, investors, developers, retirees, and second home owners, because of the quality of life and the fact real estate is still relatively affordable. That will change as more people relocate and buy real estate here.

As long as you treat your real estate purchase as a long-term investment, it should be a good one if you buy now, since I project you will see some respectable appreciation in real estate values within the next 5 years. In the meantime, you'll enjoy the tax benefits of real estate ownership not availble to other investments, such as being able to right off mortgage interest and property taxes, (avoid or reduce capital gain tax upon sale, depending on the circumstances), and as an investment, produce income (rent) and write off depreciation. See your tax advisor for more information about these benefits. Of course, one of the most important benefits is fulfilling the dream of home ownership, having something that belongs to you to do with as you please, and not have to answer to a landlord and pay somebody else's mortgage payment.

If you're serious about buying, your first step should be getting a copy of your credit report and score, I suggest from all 3 credit reporting bureaus (Transunion, Experian, and Equifax). Then, meet with a reputable, competent lender who can pre-qualify you, i.e., tell you how much of a loan you could get, which, in turn ,will tell you the maximum house you can afford to buy. You may decide to buy less. And you may discover there is some credit damage to repair that you can work on before you are ready to buy. Your next step is to team up with a competent real estate professional who can advise you as to the market and match you with appropriate prospects to see if the home of your choice exists, then guide you through the buying process once you find your perfect home. Bear in mind it could take you 6 months to get through this process, and to become familiar with the market. So, don't wait to start looking and preparing yourself to buy when the timing is right and the right house comes along. Good luck!
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0 votes
Bill Eckler, Agent, Venice, FL
Sun Jan 4, 2009

This depends on your personal needs and the opportunity that presents itself.

Our recommendation is to commit yourself to being an active buyer, seeking your "best opportunity." You will be able to recognize it when you find it.

The biggest mistake you could make it to remove yourself from the "hunt."

Good luck
The Eckler Team
0 votes
Brian Burke, Agent, Highlands Ranch, CO
Sat Jan 3, 2009
That is a good Question. Since no Realtor has a Crystal Ball so there is no answer to this Question. You should seek out a Local Expert and consult them on this. A local Realtor will be intune with the local area and help you the most. You need to go with your gut feeling.
0 votes
The Kinslow…, Agent, Centennial, CO
Fri Jan 2, 2009
That's quite a question! Realtors can give you all of the information you need to see what's happening now, what's happened in the last 3 mths, 6 mth etc. A Realtor who has lived in the area for a long time could tell you what's happened over the years in the area. A Realtor can tell you what is in the plans for the area but then you have to take all that information and make your best guess as to what will happen in the future. Add in all of the things going on in the country with peoples investments, jobs and politics and who knows what's next.

I spend major amounts of time in the Colorado mountains, much of it around Blue Mesa and surrounding towns. Prices seem to keep getting higher year after year, it's one of those if only I would have bought when I was young type of things. I doubt you could ever make a bad investment in Montrose. Alan's right there in Montrose, you should give him a call or call another local Realtor.
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Jan 2, 2009
You receive annual tax benefits. Why wait if you can qualify interest rates are low locate a home below market with equity, It takes approx. 60 days - or + locate a home. You make the landlord richer everyday. In the months April - July are busy buyers months when families are searching to move. Not many buyers are searching now during slow months.
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0 votes
Alan Brown, Agent, Montrose, CO
Fri Jan 2, 2009
If you are buying a home to live in it for the next few years then now is the time to buy. House prices in Montrose are not going to drop by very much if at all in my opinion, the average price of a home has only dropped by $3000 over this time last year. Interest rates are at 37 year lows with a 30 year fixed rate currently at 5%. 5 years from now home prices will be considerably higher than they are today. Waiting isn't going to gain you anything in the long run.
0 votes
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