Question:

When is it the right time to buy a house considering the Housing market problems? Are we at the bottom yet?

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I mean if I buy a house or a Condominium now and the prices drop even more like another 10% or so, that is a lot of money. Should I keep renting and buy in a year, two or a few months? I hope someone has the right answer for me. Everyone is saying different things. My Realtor is saying now is a good time since the inventory is high. Friends are saying, wait, it will drop more...anyway.. Thanks.

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4 ANSWERS


  1. If I knew the answer to this one I could become a very rich man. I also wouldn't tell everyone. You pay your money and you take a chance.


  2. I follow banks and the housing market all day long in my job.  The housing market correction will continue into 2009 and likely beyond.  There is way too much oversupply, and the oversupply is underestimated by the fact that a lot of people who want to sell know that conditions are so bad, that they don't even bother to have their houses on the market (me included).

    While you might be able to get a better rate now that in the future (lower payment), consider that you could get an even lower payment in the future because the value of the house goes down even more.  In fact, higher rates will drive prices down.  Both oversupply and higher rates will depress prices.

    But, if you can't stand to wait and you buy a place now, buy something new from a builder, because you will get a better deal (builders are selling almost at cost, whereas a homeowner's cost basis was marked up well over the builder's cost).  Stay away from foreclosue properties, because you won't know what kind of a mess you might be getting into.

    DO NOT LISTEN TO YOUR STUPID REALTOR!!!  Consider that your realty makes money when his/her clients buy/sell houses, but not a lot of that is going on right now, so the realtor will tell you anything to get you to put money into his/her pocket.

  3. No one knows the future.  No one.  I predict that the realty market will fall for 3 more years.  But if you need a home today, why wait 3 years to save $10,000.  And the interest rate may be 8% in 3 years.

  4. Generally, I agree with the first two answers here.  It all depends on you and your desire to have a home.  As I heard it put the other day, we're not at the beginning of the end, we're at the end of the beginning.  You have not seen the last of the bank writeoffs, there will be more foreclosures and the market will continue to be saturated.  This should equate to home prices going lower, but your playing chicken here, while values are going down, rates are moving up.  Yes you may lose 10k in a home if you buy now, but if you wait and pay 10k less but buy at a rate of 8% your not gaining anything either, ex

    100k, 6.5% 30yr fx, 632.07 principle and interest per month, 227,545.20 total

    90k, 8% 30yr fx, 660.39, principle and interest per month, 237,740.40 total

    So the 10k really isn't worth anything here as you give it up in the back end anyways.  And this is where the question lies, where will rates be.  I could be correct and rates will be higher, others can be correct and rates will be lower, it's a guessing game, but the days of 4-5% on a mortgage are over for awhile.  A realtor can't tell you to buy, either can your friends, only you can decide.  Remember a home is not an atm, it's an investment vehicle, and like all other investment vehicles, they fluctuate over time, but generally gain more than they lose.  There are also ways to structure the loan so that you can write off a tremendous amount for the first year on your taxes, hopefully allowing you to put down a big principle payment in order to pay the loan off quicker.  It's your dream and your money, sit down and evalute, and do what's best for you, hope this helps, good luck, and feel free to ask questions

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