Is it a good time to buy Real Estate?

There are lots of people wondering if this is a good time to buy Real Estate?  Rememeber the old saying " Sell high and buy low"?  Well with record low interest rates and record low home prices - Now is the time to buying and investing in Real Estate.  Don't be in the group later on that wishes they had bought some Real Estate Today.

  • November 06 2010 - Milwaukee
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (58)

Profile picture for sunnyview
People in this market need to seek real value and not compare today's comparatively "low" prices will the ninja loan bubble prices of old. The bubble is not coming back anytime soon so buyers need to evaluate their market to see if buying makes sense for them today. 
  • November 06 2010
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I agree with sunnywiew. I know it is the our job to be optimistic about the future, but there is a time where it can become too unrealistic. Yes, interest rates and home prices are at record lows, but we need to be careful when we tell people to "buy low" because we really don't know when that "sell high" point is going to be.
  • November 06 2010
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Well I certainly think it is a good time to buy (at least in the San Diego area), I also caution anyone that they should be buying for the long term.  Five years would be a minimum,...and, I personally think seven is better.  With an approximate 10% cost of sale and little (or no) appreciation, I don't see a break even point if they needed to sell sooner
  • November 06 2010
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Profile picture for Fxdlmatt
Under what metric are prices at a record low?
  • November 06 2010
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An absolute yes.  In fact, there were great buying opportunities two years ago in some specific markets.  All real estate is local.  The low rates and large inventory of residential housing makes for a perfect storm of opportunity if the local economics make sense.

What are you waiting for?  Don't wait to buy real estate - Buy real estate and wait!
  • November 06 2010
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Profile picture for sunnyview
Spoken like a salesman. Congratulations. As you say real estate is local and it does not make sense to buy in all markets. Buyers should do their homework before they jump in blindly.
  • November 06 2010
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Another slow day on the used house lot.
  • November 06 2010
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Jerry, before you post nonsense like that I would suggest you cruise the boards for previous posters who have stated the exact same thing ad nauseum and see how most consumers and even a few agents react.

Do you really think you said something that hasn't been said by a bunch of RE salespeople a gazillion times before?

Do you really think a consumer is going to see your post and think Yeah, that's right.  This RE agents says its a good time to buy and by golly, that's what I'm going to do! 

How many times do agents think that they need to repeat the low interest rates, low prices, buy now mantra?  How many consumers do you actually think haven't seen or read this repeatedly at this point?

Give it a rest and post something useful.
  • November 06 2010
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Profile picture for sunnyview
All any good used house needs is the right price and a few flags to liven the place up.

  • November 06 2010
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I've always been told.. and heard... that the Best Day to Buy Real Estate was...
YESTERDAY!
  • November 06 2010
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Profile picture for hpvanc
I think that the buyers that are capable of obtaining financing today, are as a group more rational, than they have been in the past.  As a result they don't respond to agents attempting to create a sense of urgency. 

By making and agreeing to the perception of urgency to buy posts, you are actually keeping buyers capable of closing a loan from contacting you.
  • November 06 2010
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Prices are DOWN, Rates are incredibly LOW, Inventory (choice of properties) is UP. 

What is the question?
  • November 06 2010
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Best time ever! With the record low interest rates, and the lowest housing prices in decades. This is the time that people will look back at and say they should have made the move. My area is a seasonal area, making the sellers even more apt to working through an offer!
  • November 06 2010
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Profile picture for SteadyState
To Jerry and all the other REAs who cannot (have not) read recent posts and have an intellectual deficit. Counter each point below with data to prove you have graduated from high school.


A Germantown, WI Realtor can/will -

1. Say this is the best time to buy from one side of her mouth while telling someone else this is the best time to sell
2. Get edgy when commissions are low and will spam message boards with NAR propaganda
3. Tell you that prices are low but will not say they will be lower next month, next quarter, next year, etc
4. Tell you she does not have a crystal call but will say that this is the best time to buy!
5. Tell you that there are multiple offers on a home when you walk in to see the home
6. Not tell you that you are about to commit financial suicide
7. Not tell you that you are overpaying for the home
8. Will tell you to get professional representation from members of the NAR while blindly spewing NAR propaganda
9. Will tell the seller that the buyer pays the commission and tell the buyer that the seller will pay the commission
10. WILL INCREASE THE TRANSACTION COSTS OF HOMES BY 12%

I hope you have a fall back career. The days of  tax-payer supported career suport for uneducated REAs is over. (Yes - this is how I feel about most (> 99%) of REAs these days)
  • November 06 2010
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With interest rates at historical lows...and there's only one direction from here and that's up....I sometimes wonder why everyone isn't out there scooping up a new home! Although no one can predict the future, I'm a firm believer that anyone locking in a 30-yr fixed at today's record lows will be sitting high on their horse 5 years from now when interest rates could be who knows how high.
  • November 06 2010
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Profile picture for Fxdlmatt
Diana,

If interest rates rise without a proportional increase in wages, what happens to home prices (assuming borrowing standards stay reasonable)?  

--Matt
  • November 06 2010
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Profile picture for the_country_hick
It is a good time to buy real estate IF you can get a no job, no income verification, no provable assets kind of loan.

Can't do that? Then it is not a good time to buy a house.

Increasing foreclosure activity, a bad economy, tight lending standards, no bribe (a free $8k) exist now, buying activity is at a low level not seen in many years. And do not forget, prices are in a downward trend with no signs of stopping as foreclosure activity is only increasing.
  • November 06 2010
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4 years and running of "the best time to buy a home" advice on zillow.

No shame, no brains, and no ability to learn from history...
  • November 07 2010
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Profile picture for Cautious Buyer
It is good time to buy if you are prepared to lose 10 to 20 percent of your investment in the next two years.  You will find yourself underwater and it will take another 5 to 10 years just to get back to the price you bought at today.  NEVER trust a real estate agent. 
  • November 07 2010
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I am a real estate agent as well as a real estate investor. I am buying as many houses as I can get my hands on right now. It is true that the market might not bottom out for another year or two, but there are a few good reasons to buy now:

1) Interest rate are low - If you can still qualify for a loan, you should get a loan now while the rates are still low. When the price of the house is low in combination with a low interest rate, this is a very rare opportunity;  investors can easily make huge positive cash flow by renting out the property, this is not possible in the up market. There is no better time to implement buying and holding strategy than now, start crunching your financial calculator.

 

2) There is potential risk of huge inflation is fairly high, investing in properties helps hedge against inflation. If inflation occur as we speculated, the money that we used to buy a property today will have much greater buying power than the buying power or worth of the future money that we use to pay back the bank. It is to our advantage to borrow from a bank if we anticipate inflation, and it is to our disadvantage to offer financing to a buyer if we anticipate inflation. If rate of inflation is greater than the interest earn, it is not advantages to the lender.

 

3) The market now has fairly low competition; we get plentiful of options to choose from. We get to select areas that we like to invest in and wait for a good deal to appear, we will steadily buy as the opportunity presents itself, it is worth the additional investment to buy at where you want and start accumulate wealth now.

 

The housing price might not be at its lowest, but do not forget about the opportunity cost of not making the positive cash flow today if we don't buy. If we are buying foreclosure, REO's, Government Own, Fennie Mae, Freddie Mac, Auction homes; these homes are already at a discount from the market price, how much more impact does an additional 5% to 10% discount make? We need to ask our self this…….. Can we make more profit with the positive cash flow that we earn for this year, or can we save more by the 5 to10% additional price drop that we anticipated for not buying?  And how much resource do we have?

 

Francis Lee

Agent/Investor

Solid Source Realty Inc.
  • November 09 2010
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Profile picture for SteadyState
Give that even REA are acknowledging that prices will remain flat for the next 2-5 years which is better:

1. Buy with 100% cash and 0% loan
2. Buy with 90% cash and 10% loan
3. Buy with 80% cash and 20% loan
...
n. Buy with 20% cash and 80% loan

The buyer is better off the higher their cash down payment contribution. (The "tax savings" in interest payment is offset by ultra-high property taxes and parcel tax fees these days).
So buyers should accumulate more and more capital not rush in like fools with stagnant and/or falling prices.

  • November 09 2010
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Profile picture for the_country_hick
Francis, "1) Interest rate are low - If you can still qualify for a loan, you should get a loan now while the rates are still low. When the price of the house is low in combination with a low interest rate, this is a very rare opportunity"

It is true that low prices and low interest rates do not normally come at the same time. That only suggests that as interest rates rise house prices will fall more and more.

 

"2) There is potential risk of huge inflation is fairly high, investing in properties helps hedge against inflation."

Not really. Look at how inflation impacts the price of housing. If interest rates rise with inflation and wages do not increase much if at all house prices would plummet.

A 30 year $200,000 mortgage at 4.25% costs $983.88 monthly.
A 30 year $80,000 mortgage at 13% costs $995.58 monthly.
A 30 year $50,000 mortgage at 25% costs $1,042.29 monthly.

Did you notice how hyper-inflation kind of interest rates just decimated the buying power for future buyers? We can NOT count on hyper-wage increases. With competition from China, India, and many other low wage economies our wages do not have the room to grow that much.

I see this to mean that hyper-inflation will be demanding house prices drop tremendously. Houses will lose a vast amount of value with hyper-inflationary interest rates.

"If inflation occur as we speculated, the money that we used to buy a property today will have much greater buying power than the buying power or worth of the future money that we use to pay back the bank."

True, but I still do not want to pay back extra value-lost cash on a property that lost value since I bought it. Turning a $200k house into under a $50k house by hyper-inflation interest (and it could be much worse than 25% rates) is a bad investment no matter how you look at it.
  • November 09 2010
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Profile picture for Lady Chattel
Prices are low......well, relatve to 2005-2008 and the answer is no, these prices are not low and they are not in symbiosis to incomes. 

I guess REAs walk into a retail store and go hog wild when they see a sign that says ON SALE FOR $19.99, Reduced From $39.99.   Smoke & Mirrors.
  • November 09 2010
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This is the time of year that when I want to make a purchase like clothing or electronics, I wait until Black Friday and get a better deal than I can get today. 

Some folks don't want the hassle of waiting and hoping are are willing to shell out a few more bucks for the pleasure of owning that toy a few weeks earlier. 

The same might be said for buying a home. Chances are there will be better deals in six months to a year. But some people don't want to wait and are betting they will still get a good deal in a declining market.
  • November 09 2010
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Profile picture for Lady Chattel
I hear ya Mike.  I guess for me it is all about value and what I am willing to pay for something.......if a shoe is marked down to $75 from $150 it seems like a good value but unless the shoes are crying out to me and I know damn well I will use and love them I won't buy them even if they are what on the outside seems like a deal.  I see a lot of houses, many of which are comparable to my current rental and I don't see the prices as reasonable or rational, still, even though the prices have come down $200K. There have only been 2 homes in recent months that I felt were a value and I would be willing to purchase.  Not easy.   If I can't find the right shoe to match my outfit I don't buy it, no matter what the price. 
Sorry for the comparison to retail shopping.....I am a Lady.....
  • November 09 2010
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Kudos to Chad J for an honest answer. 

Generally, when it comes to RE Agents, it's ALWAYS a good time to buy.  At the very least, the fact is that this is not your last best chance to buy.  And many signs point to this market going lower... maybe a lot lower.

The best lesson from this mess is the understanding that the real estate market is not one void of risk.  Clearly there were risk in the market from '03 - '08 and there are still risk today.

Always know this, for agents there are no risk as long as you close and they get paid.  Therefore for agents, now is always the best time to buy!

  • November 09 2010
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Profile picture for the_country_hick
Actually, if you look at interest rates over a 200 year time frame they are NOT at record lows. They are low but not exceptionally so. People just got used to paying higher than normal rates over the past 30+ years so they do not realize the history of interest costs long long term.

As far as houses being at record low prices you would have to explain to me how a house that would have cos $100k in 2000 is still trying to be sold for $200k or higher. With about 30% inflation since then the house is still overpriced by historic norms.
  • November 09 2010
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Profile picture for wfamilyman

When it makes sense for you and your family.

  • November 09 2010
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I am currently located in Atlanta, Ga., there are parts of areas here where property used to sell for $90,00 to $140,00 are now selling for $20,000 to $70,000.

If you purchased a house for $35,000 with $15,000 Rehab cost for example, your total cost is $50,000. If you finance that with an investment loan of 20% down and 6% interest, for 30 years for example: your payment will be at $240 per month plus $50 insurance(estimate) and $150 (Tax Estimate), your total monthly cost is $440. (Excluding misc cost of vacancy, maintenance, & etc.)

If you know that the rentals for the is going for $850 average, than your gross positive cash flow is $410 per month or $4,920 per year. You invested $10,000 as down payment, and will make half of that back in one year. 49% return on investment in one year is not too bad, get your money back in 2 years.

When our strategy is to buy and hold, we are less concern about the short term market price changes. We are more concern about the rental rate changes. If the hyper inflation does arise, it will drive up the rent and we will increase our rent according to the market. I kept my lease at one years terms.

I am doing deals that is better than this scenarios in my area, if you are interested, I can find you properties like this, and provide you all the supporting data before you purchase. I do not have enough resource to buy them all, that is why I am trying to help others succeed. I purchased 3 properties this year and working on the forth before the year end. That answers the question if real estate agent are buying properties in this market from another blog. When the price drops further next year, I will pick up a few more.

  • November 10 2010
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Profile picture for RobScott1
Investment properties should be purchased after a careful analysis of cash flow.  I would look at cash flow assuming no appreciation for the next 5-10 years.  If the rental income less all expenses provide you the risk adjusted return on investment you desire then move forward.  You can get a very high ROI on rental property right now if you carefully choose a property but there are many bad deals as well.  I only buy based on ROI and sold all properties before the crash due to this.  Do not use recent sales to see if you are getting a good deal on investment properties at this fullfills the greater fool theory not investing.  Buy based on cash flow to make sure it provides you the cash flow you desire.
  • November 13 2010
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