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Is Now the Time to Buy?

Buyers waiting for prices to drop lower may see interest rates surge higher, putting some homes out of reach.  The rates are at their lowest since the 50s.  They are not likely to get lower.  With the federal government printing money, inflation can not be far behind.  A $150,000 loan at today's low rates would yield a principal and interest payment of roughly $780 (less than most people pay in rent).  If the rate drifts up one point while you are waiting on lower house prices – the same loan would cost you almost $100 per month on the same loan amount! Ouch!

Some of that money that Uncle Obama is printing will be going to first time home buyers - $8,000 each!  But that is only through the end of 2009.  So we will likely see an unusual surge of activity (perhaps even a modest sellers' market?) towards the end of the year as procrastinating buyers rush to claim their tax credit.  Americans want to own their own homes.  They are not waiting indefinitely to purchase their piece of America.  As the economic picture improves, pent up demand for housing will swing the market pendulum towards higher prices. If you dream of owning your own home, NOW is the time to strike!  Interest rates and home prices are astoundingly low.  And you can put $8,000 in your pocket, courtesy of the American tax payer.  Are you ready to take advantage of the best buyers' market in our lifetime?  Please consider this 3 bed brick ranch with a private in-law suite -
$50k Under Value!, 3 Bed Brick Ranch with In-law Suite in Smyrna

Enjoy your new home!

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May 22 - Atlanta

Replies (48)

Profile picture for vandyrobert
I am flagging your post due to spam...It is against Zillows "Good Neighbor policy.  Also, if interest rates happen to rise one point, which direction do you think prices will go?  Where do you think prices will go after the 8K tax credit disappears?  
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May 22
vandyrobert,After reading your comment, I reviewed the good neighbor policy to see if I had indeed violated the community standards.  I respectfully request that you (and other readers) also review it - my posting did not violate any of the terms under the policy.I offered my opinion. I have been a real estate investor for 10 years and that is the advice I am giving to anyone sitting on the sidelines.  Buy low - sell high is a proven principle that offers a path to wealth.

Your points about the interest rates and tax credit are worthy of consideration.  In a rational market, those inputs would have a negative impact on prices.  The real estate market has not been rational for years.  Before the crash, people were paying too much.  Now some folks are afraid to take advantage of great deals that they CAN afford.  The pendulum has swung to the fearful side.  It will soon corrrect towards rationality. I do not think that prices in the Atlanta market will drop much lower.

John
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May 22
Profile picture for vandyrobert
John,
Your new around here...You will soon realize that your post was more than just your opinion.  It is your opinion and SELF-PROMOTION, which zillow considers spam.  You cannot post your phone number or e-mail address in the thread.  Your NAR talking points aren't going to get you very far on this forum.  
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May 22
Profile picture for eotaxin2000
Now is the worst time to buy a house. Unemployment is skyrocketing, 80% of house prices in free fall, interest rates to reset in the near future. These are toxic liabilities. Housing bottom will be reached around 2012. As of now, you're looking at valuations 30% above long term trend. Do you want to pay 30% more than what a house is worth? Even with the 8K tax credit, it's not worth it.
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May 22
Profile picture for doobie57z
Contributions: 1032
You called my president Uncle? is he your Uncle? I've been reading this same pathetic drivel (NOW IS THE TIME TO BUY !!!) for a year and a half. Your opinion is self serving and quite frankly obviously wrong. The good news is this will not preclude you from your next step on the r.e.a. career path, Walmart greeter. Goodluck!!
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May 23
Profile picture for nvchaz
Contributions: 1617
I really don;t think it was very self-promotional: its his opinion and he makes good points.

Maybe we can do without the contact info at the bottom. The moderators will strike that though. If people want to contact you they can click through to your profile.
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May 23
Profile picture for Lady Chattel
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The original post hascontact info......it is spam at its finest........you have been flagged.
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May 23
Profile picture for Lady Chattel
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GA has unelmployment over 10%.....that house will be half off next year........
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May 23
Profile picture for Tap012
Contributions: 220
People always exaggerate the unemployment rate. Even if it is at 10% vs 5%, that leaves about 90% employed and 90% that can potentially buy a house. Experts don't expect the national rate to go higher than around 10% and then jobs will come back.

If you are financially stable as many probably are now with layoffs leveling off, there is no reason to be scared of a 10% unemployment rate that probably won't affect you.

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May 23
Profile picture for nvchaz
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I've always wondered why the doomers put such heavy emphasis on unemployment as though the unemployed suddenly do not need housing.

I suppose they are all to squat in the desert somewhere.
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May 23
Profile picture for White Picture
Contributions: 1956
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Since March 2009

In California, at the 1992-1996 period, unemployment rate is 12%, if the peoples, who bought the house at that time, they was make big money, even with today deteriorate market. that is the rule, buy low and sell high. No body make money when buy in the inflated market.
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May 23
Profile picture for nvchaz
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That house in Smyna he linked to would go for $275K here in Reno in a heartbeat.

Local, local, local. Nice nouse, trouble is I'd have to live in GA.
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May 23
The Atlanta Regional Commission projects that metro Atlanta's population will increase by two million new residents by the year 2030.  These people will have to live some where, so property values in the Sunbelt states should increase over the long term.
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May 28
Profile picture for jal74
Contributions: 969
John

Answer me this riddle.  When is it not a great time to buy?

Go back and read through all the REA posts for the past two years.  They all say the same thing.  Its a great time to buy.  However, none of those posters come back and apologize when, lo and behold prices have dropped 19% year over year and they continue to decrease and they have complete egg on their face.

Please take your promotion elsewhere.  The purpose of this forum is about discussion of ideas and to answer questions.  If you want the ra ra chearleader promotion forum - trulia this that >>>>>>> way

Regards
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May 28
Profile picture for SoCal BubbleBrain
''These people will have to live some where''

The new 'They are not making any more land'.
Gotta love these tards.
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May 28
Profile picture for jal74
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Myers team

How many vacant housing units are there right now in GA?  Its entirely possible that there are enough vacant and underused housing units to last Georgia much of that 20 years before another house needs to be constructed.  This of course would imply that house price appreciation would be negligible for much of the next 20 years, no?

Also - those population projections can be very wrong - just ask california and florida, who are now seeing net outflows when all the pundits for the last decade said that these states would see only population increases for the next 50 years

Regards
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May 28
Profile picture for jal74
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A $150,000 loan at today's low rates would yield a principal and interest payment of roughly $780 (less than most people pay in rent). 

John - are there no property taxes in Georgia?  What about maintenance?  What about HOA fees, I guess they don't have to pay those in Georgia.

Also - john, what happeneds if the price drops 10% over the next year and the person loses their job?  Don't forget to tax on that additional 6% selling costs.  Might that be putting someone at tremendous risk of financial disaster?

What benefit could there be over the next 12-24 months of buying a house versus renting that same house instead.
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May 28
I did not say now was the time to pay full retail, just that the long term demographics are good for the southeastern part of the United States.  When was the last time you heard of someone retiring to move up north.
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May 28
Profile picture for dacolan
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People always exaggerate the unemployment rate. Even if it is at 10% vs 5%, that leaves about 90% employed and 90% that can potentially buy a house. Experts don't expect the national rate to go higher than around 10% and then jobs will come back.

The "official" unemployment rate is a bad joke. The U-6 measure of unemployment, which is closer to the truth, was 15.8% in Apr '09.

And, of course, before the auto industry (due to GM/Chrysler bankruptcy) and gubment (due to crippling budget deficits) job losses are "officially" measured and recorded, there's this:

Unemployment Claims: Continued Claims at Record 6.79 Million

So, what effect does unemployment have on the residential RE market?

Prime fixed-rate mortgages given to the most creditworthy borrowers accounted for the biggest share of new foreclosures at 29 percent, and prime adjustable-rate mortgages were 24 percent, Brinkmann said. It shows the mortgage problem has shifted from a subprime issue to a job-loss problem, he said.
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May 28
Profile picture for Pasadenan
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If I was going to buy in that area, why wouldn't I just buy a house in Mississippi for $10k and pay cash?

Everytime we look at the Zillow trends for the areas suggested, we see one thing; values are still rapidly dropping, so that $8k incentive will "disappear" in less than 3 months.

I've said it before, and I'll say it again, it is not a good time to buy in an area until:
1) Less than 7% of total Ownership housing units are on the market at any given point in time.
2) Less than 7% of the ownership housing units that are on the market are "foreclosures".
3) Average TOTAL days on market for the ownership housing unit sales is less than 180.
4) Z-index "values" have remained CONSTANT for 3 months straight (horizontal line, not downward slopping line).
5) Z-index 10 year trend line has dropped below the 7% annual inflation curve AND likely below the 4% annual inflation curve.
6) Cost to own with a 30 year fixed fully amortized mortgage plus maintance, insurance, association fees, and property taxes is less than or equal to renting the equivalent in the same area.
7) Unemployment is decreasing
8) No backlog of 90 day lates nor loan "resets" that will create 90 day lates.


Of course Chaz is also right that one needs to consider individual price ranges and not just lump the entire area into the same "trend".

But when you do this, in many cases the low price homes are dropping much faster than some of the median priced homes.


Remember, though the Z-index only tracks median value for the area, Zillow's quarterly report breaks each area into 3 price ranges with the same number of units in each range, and then provides a median trend for each of these price ranges.
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May 28
Profile picture for Pasadenan
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And really, who cares if employers are not firing people as quickly as they were before????  If they are still firing people and still not hiring, there still is an increase in people that don't have work.

We have been tending towards households of one in housing designed for 5 to 7.  The trend is now moving the other way with more people sharing the same housing.

Where are they going to live?  With parents, with children, with brothers or sisters, with cousins, in Single Room Occupancies, OR they will rent a room, or live in their car, or live under a freeway bridge, or in a tent, or they will move out of state.  People have been doing these things for centuries.  Where is your creativity?  Of course they will not be buying a house if they don't have money to make the payments.  Nor will they rent a house nor apartment that exceeds their income.  That is just pure foolishness!

It is like saying the Gap will never close any stores since people always need something to wear!  FOOLISH!  They are going to go to the store without wearing anything???  They have "something" to wear, and they can get something used at a good price at a yard sale or thrift store.
  Americans have never needed all the "stuff" the marketiers always claimed they needed.
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May 28
Profile picture for Pasadenan
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Regarding interest rates; I know several people that got 3% fixed interest mortgages about 25 years ago.  And I also know of many lenders that are doing Refis or modifications at 2% fixed interest now.


And credit card companies were giving 0% interest rates for well over a year, for the past 3 years.


Though mortgage interest rates may eventually rise, the federal government has made it clear they will continue to drop them for the near future to try to liquidate foreclosures.  I fully expect to see fixed rates below 4.5% before the end of the year, and maybe even as low as 4%.

So, lock in now and pay that "extra" $100 per month interest plus thousands of dollars extra in principal!  (Ouch!)  And just remember, since you will be underwater on your loan, you will get to bring extra money to the table in order to close if need to sell.
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May 28
Profile picture for Myersteam_1
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It is a good time to buy when your payments are less than you can collect in rent.  You can have someone else make the payments for you.  You should start out with a good positive cash flow to allow for any vacancies.
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May 28
Profile picture for Pasadenan
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"..buy when your payments are less than you can collect in rent." -

Myer Steam -
That is OBSURD!  You already mentioned the vacancies which completely contridicts that statement!  One dollar more per month is going to cover NOTHING, not even a one day vacancy, let alone a more typical 30 day vacancy or longer.  And what about repairs?  The tenant isn't going to pay for a roof repair or a water heater replacement, or a broken faucet, or replacement carpets!  And what about normal upkeep, such as yard care?  You really expect the tenant to do it for "free"?  It won't happen; it comes out of your pocket!

And if the property declines in value 20%?  Who is underwater, you or the tenant?  So you will take all the risks and expense and let the tenant have the property for only the mortgage payment plus property tax and insurance?  Either you've never owned income property, or you have never learned basic elementary school arithmatic.

So you will do that with a car too; buy it to rent it out, then rent it on a daily basis for only 1/30 of the dealer's required payment?  No rental car business would ever survive using such foolish practices.
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May 28
Profile picture for CORONA NICK
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DONT BUY NOW....LOL  RATES GO UP, PRICES MUST GO DOWN...LOL
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May 28
It's hard to make such blanket statement... now is the time to buy. It certainly could be the time to buy somewhere. However, you must consider that real estate values to some degree have no bearing on what the rest of the country is doing. You have to consider what is going on in the neighborhood.

Here in Portland, OR things are great city-wide, however there are pockets of places that are just awful to buy. You can literally have one neighborhood selling like hot cake, then yet another that has 11 listings that are 6+ months. You need to find a local expert, plain and simple.

My 2 cents,
Michael
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May 28
Profile picture for real estate mike
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Having read every single reply to this post, my two cents is I'd rather be a buyer right now than a seller.
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May 28
Profile picture for Lady Chattel
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No doubt M. Russell.....but it would be wiser to be neither and happily sit on the sidelines and when there is blood in the streets it is time to buy a home.
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May 28
Profile picture for RandolphLSmith
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Inconceivably profound, are the depths of man's stupidity,

when seeking to find prosperity, he forsakes his liquidity.

RLS
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May 28
Profile picture for nvchaz
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That's pretty good, Sir Randolph.

Where'd you get that? Can I use it?
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May 28

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