Looking to buy, but is the right time?

As a Realtor, I get that questions asked often and sometimes I hear people asking that question of others as well.  It is of no surprise to me when I hear many say yes.  But today my answer might be a surprising no.  I just had a tenant come into my office this week and inquire about buying a house.  My response was wait.  Of course it goes without saying that each situation is different, meaning income level, credit history, availability of funds for down payment and closing costs, family needs, etc.  But as we are heading toward the holidays and winter months, I can tell you this.  The market has slowed down in terms of inventory.  Many people don't want to deal with the stress of selling their home during the holidays.  So from about mid October till February, people don't want to list their homes and have others going through their home during the holidays.  As we all know the holidays are a busy and stressful time of the year let alone deal with getting a property ready for sale.  Of course this is not a rule but a general observation.  Also in January people look to relax and put the holidays and New Year's Eve behind them and prepare for taxes.  Some people like to file early so they can get their returns early if they are expecting a return so they can have added cash for their down payment.  Long story short, if you are considering buying a home, take your time.  Make a wish list of the things you want in a home.  Drive around the neighborhoods where you would want to live and get to know them. Enjoy the holidays and get ready for Spring.  Chances there will be more inventory available then. So until then, Merry Christmas and happy new year from this Realtor to you and yours. 

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December 10 2010 - Turlock

Replies (28)

Interesting post and definately one that nobody truly has the answer to.  Without a crystal ball I think its best to share the pros and cons with buying now or waiting.  While I agree that come spring there should be more options as the inventory will go up, there is the possibility that sellers currently on the market are more motivated to move their home now.  Given the fact that they also expect more competition come spring, they may be inclined to take advantage of any offers that make it their way and this includes banks.  I suggest if the home that is ideal is available now, don't wait for what the unknown has in store for you, there is no guarantee a better option is going to be there.

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December 10 2010
Profile picture for GoldsmithRealty

Adrian,

About the only thing you've said that I agree with is that it depends, client to client, as to whether this, or any time is a good time to buy.  If the individual client's situation dictates that they should not be out in the market (credit, lack of income, lack of money to put down), then that client should be given whatever advice best serves that client.

However, discouraging people from even FINDING OUT if the market is best for them right now is a misstep.  Threre are throngs of people who would be best served to be in the market right now, be it the low rates or the soft market conditions, or any of a number of other factors that make buying a home a good idea at any time. 

Were your crystal ball as clear as you'd like it to be, might you not be actually encouraging people to wait until a point in the future in which conditions would not be so good as they are now, based on your perceptions, which I honestly don't really agree with?  Might it be that come spring that the rates aren't as good as they are now, or that inventory might shrink, driving prices up, because more people are buying?

Fact is that can't be determined, because the future hasn't happened yet.  In my opinion, the only option people ever have in front of them is to find out how to make the best decision for themselves RIGHT NOW, and to not be afraid of whether that means it's a good time now or a bad time now.

The mistake isn't to wait or not wait.  The mistake is to stick your head in the sand, hoping things are better, when you can find out if they are in fact better NOW.

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December 10 2010
Profile picture for So Cal Agent
I say, GET OUT THERE BEFORE YOU HAVE TO COMPETE AGAINST EVERYONE AND THEIR BROTHER!

Sorry... But I always look out for the best interest of my clients and in my opinion, now is the time to buy. Of course the inventory isn't the greatest this time of year, when you consider standard sales and some short sales.

REOs and listings that have been on the market for a while are still there... Get out there before the crowds do. With the way of thinking that there is nothing on the market is great for you. That means listings are posting and there is less traffic and multiple offers are limited if not eliminated.

Come this January, the traffic will pick up again, listing agents will be to busy to return calls and you will be competing against multiple offers again.

Who wants to jump on the freeway during rush hour traffic? Isn't it better to be on the freeway during the off hours?

Of course agents thinking in the best interest of their client will discourage their clients from listing from October to December, this is the time to buy, when sellers are most negotiable, this isn't the time to sell... at least until January 1st...

The media says the market is flooded with foreclosures and short sales... I don't see it neither do my clients... This may be your last perfect opportunity to get a deal of a life time. October through December are the best months to be a buyer... It is December, and it is closing fast...
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December 10 2010
Profile picture for Real Estate Geek
Adrian,

Agreed that every situation is different and I answer it's time to buy when you feel you are ready and have the financial resources.  That said, winter has the lowest average prices in several markets that I looked at around the Boston area.  Some of the numbers are on my blog.  Yes, there is less inventory but that's the tradeoff for lower prices.

Cheers,

 Rich
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December 10 2010
Profile picture for klarek the realist
Most markets and most tiers are priced at levels that aren't sustainable by the market fundamentals.  The tax credit did a good job of convincing people that the market had bottomed out.  Now we're seeing the next shoe drop.  Prices are tanking again.  No rational reason to buy a house while this is happening unless you know that the particular house you are buying isn't being paid for at an amount greater than what the fundamentals support.   Of course, many agents simply want to create a sense of urgency when none exists, such as Robert Walker.
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December 10 2010
Profile picture for LUXURY HOME LOANS CA
You have to consider where Adrian practices her profession. In a rural community of a little more than 70k, honesty is the best policy. It's not too difficult for her to get the pulse of the local market.

Happy funding, Rudi
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December 10 2010
Profile picture for dacolan
With house prices declining in most major metros according to the most recent Case-Shiller index, now is likely not the best time to buy.
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December 10 2010
Profile picture for Dunes....
Seems that perhaps the Public has decided that the "Urgency" to buy suggested to them by Agents may be more self-serving than credible expertise if there is any truth to this..
Link



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December 10 2010
Profile picture for So Cal Agent

Hello klarek:

I do believe there is an urgency to get an accepted offer within the next three weeks, especially if you are coming in with a large down or paying all cash. Short sales at this point might as well be taken right into next year.

My client placed an offer on a REO that was listed at $479K and was accepted and closed at $410K. She was so happy that they decked the house out for the money that they saved.

Now try that from mid January to August... No one knows what the market will do, for all we know homes can be selling for $2 each or buy 5 for $8 next week. Or then again something can cause the market to shift the other way and they can have double digit increases.

To each his own... 2012 is what has been predicted in the media to be the time of recovery... I know of many who are still waiting for the millions of foreclosures that were suppose to hit the market a year ago, also predicted in the media. I watch those numbers go up in the tax records and then watch the numbers drop, but they never hit the market.

This leads me to believe, bulk sales get rid of ugly homes when they are tied to other more desirable homes. 

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December 10 2010
Profile picture for dacolan
Hurry up and buy now while prices are still falling!
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December 10 2010
Robert and other like-minded agents,

Who knows, maybe in your market you're right-  now is the best time to buy.

Just curious, what were you saying several years ago when interest rates and house prices were higher and people who bought then currently own houses that have lost value?
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December 10 2010
Profile picture for So Cal Agent

Hello Joan...

Actually during that time I was listing the properties and dealt less with buyers.

One question, I fully disclose that I do not have, nor does anyone else have any clue what the market is going to do. Do you?

I even, and have for years, have the Market Conditions Advisory (MCA) atached to my profile, do you?

I have had three clients and one visitor decide they wanted to become agents after purchasing and selling homes through me because I love to educate and they knew real estate extremely well after that... One is a top producer in her first year and continues to be one...

If someone wants to buy or sell and you strongly advise them otherwise and you are wrong, where would that place you? Just curious...

In Southern California, I cover San Diego, Orange, Los Angeles and Riverside Counties and there just so happens to be an article placing these counties as being the strongest growth in California, so your comment about being in my market could be right on the nose.

http://latimesblogs.latimes.com/lanow/2010/12/california-saw-slow-population-growth-in-last-year.html

Not challenging anyone or being smart, just stating the way I see it. Others are welcome to see it anyway they would like. I support freedom of speech...

Good luck out there :o)

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December 10 2010
Profile picture for SteadyState
Robert -

 Sales pitches are not freedom of speech. Now lets take your words at their face value:
"One question, I fully disclose that I do not have, nor does anyone else have any clue what the market is going to do. Do you?"
Now reconcile the above statement with your previous one:
"Sorry... But I always look out for the best interest of my clients and in my opinion, now is the time to buy." Do you see the contradiction in the previous two statements?
Of course both of these contradict your other statement:
"If someone wants to buy or sell and you strongly advise them otherwise and you are wrong, where would that place you? Just curious..."
A true professional would not back away from his trained judgment. Imagine a doctor not telling the facts because the client does not want to hear the truth about his condition.
These are logical arguments about you making contradictory statements. Now some facts please:
1. In your are is it cheaper to rent than buy?
2. What is the inventory of homes in your area?
3. What is the rate of sales and what is rate of new homes coming into the market?
4. What is the impact of rising interest rates on home prices?
5. What rate of appreciation do you anticipate for homes in your area?
6. What will be the impact of CA state cutbacks in your area?
7. What is the unemployment rate (and underemployment) in your area?
8. When is CA unemployment rate going to drop below 10%?

Each of these questions can be answered.Is this a good time to buy? I will consider your decision to buy if you give us some facts/numbers and not rhetoric.
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December 10 2010
How could anybody possibly know what the market is likely to do, unless they understood:
1. supply. Up 15% nationwide since last year.
2. Foreclosures, being delayed as Bank of America and other in widely published data have suspended foreclosures. In Phoenix this has led to a 25% drop in foreclosures being placed on the market, for now, but they will be coming in the future.
3. job creation: mediocre at best.
4. current demand: down 20% from last year, for both new and existing homes.

So how can real estate sales agents have any idea about what might happen in the future? it's not like you could expect them to think? Or understand even the simplest principles of market dynamics!

 you've seen them call the bottom and tell everyone to buy on here for 4 years running, without a delay ever! Why should today be any different?
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December 10 2010
Profile picture for Pasadenan
"for all we know homes can be selling for $2 each or buy 5 for $8 next week." -

What can I say?  That Realtors® must be much more unethical than even I could imagine?  That it should be mandatory to take and pass a statistics course before being allowed to get a Real Estate Agent license?  Someone needs to file an official complaint with the state and local board?  That someone is planning on lobbying congress to make property owners 100% permanently responsible for all hazardous waste conditions on a property, and are planning on substantially increasing the hazardous materials list?  That someone is planning on Nuking those houses to get the value down and that FEMA will not be allowed to step in?  That someone is thinking about paper houses for a board game where the paper money is worth substantially more than monopoly money?  That someone didn't even pass 1st grade math, let alone 4th grade math?


For someone to make such a foolish and ignorant statement, perhaps they can at least explain one possible economic and political scenario to allow such a thing to take place?

I certainly wouldn't want to do business with any person who states that that may be all they know.


Or is it just supposed to be a funny joke?  If so, I'll interpret most of what the person says as a funny joke.  Perhaps I'm a bit ignorant about certain forms of Hyperbole?
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December 11 2010
Profile picture for So Cal Agent
Hello Pas... Please note there were two extremes I believe would never happen, and I believe anyone reading it would know that, and to narrow it to $100K up and down would be more of a prediction that someone may believe and make a decision on to purchase or not to purchase. My explanation meant that no one knows which direction the market may go, that is why I always refer to the MCA form which describes market conditions. All I can do is present as many unbais facts as possible, but there will always be facts that out weigh one side or the other; the media does it all the time.  

I used this statement as a example as to explain that we just don't know what the market will do today or tomorrow. I do believe the market will wave up and down for the next couple of months and increase as the demand increases toward the summer months (but since every market is very localized, the city next door to me can be totally different and my statement may not apply)... But that is my opinion, I could be wrong or I could be right, know one has a crystal ball, otherwise our country wouldn't be in the situation as it is.

Just like I don't try to explain why there are cracks in a foundation or a sag in a roof, I will point it out and STRONGLY suggest a professional check them out. I am not an economist so I have no clue which way the economy may go, even though I have my personal belief or opinion in which way it may go.

Believe me, I point out more negatives when someone is interested in buying a house than positives simply because it is my belief that when someone purchases a house, many times they fail to see the negatives.
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December 11 2010
Profile picture for Pasadenan
Well, I can at least come up with a political scenario where there would be 11% inflation in the housing sector in the first 6 months of 2011.  The Congress and Fed would be extremely stupid to implement such policies, but such stupidity didn't stop them when it came to tax credits and other foolish policies that NAR lobbied for.

But to have 99.9993% deflation in one week and to say it is equally probable is simply stating one doesn't understand statistics at all!

The effects of pyramid schemes are well know, which is why they usually are considered illegal.  The effects of intentional market bubbles are not that much different, even though not illegal.

There is a such thing as cause and effect relationships in most things.  It is not at all "random".  Those that paid attention to the markets knew what was going to happen, even if they didn't time it to the day or week.  Even so, the indicators were clear for anyone watching, but of course those that profit from such things intentionally chose to not see the signs of the times.  Even Jesus warned about such foolishness...  (Mt 16.3).
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December 12 2010
Profile picture for PaulBurton
Definitely an interesting post, but I have a different opinion on the matter.  If someone is ready to buy and wants to look, there is no time like the present.  If you don't find your perfect house, then that's ok.  You have time, but if you wait, you might miss the right one for you. 
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December 12 2010
Profile picture for rianmuleback
I too get asked this question a lot and hear others being asked it as well.  My answer is always the same: it depends on the individual.  If you have no job, no money and no plan than now isn't the time to buy.  If you have lots of money then investing in real estate with the proper exit plan may be a good idea for you.  Just because home values are cheap does not mean it is a good time to buy.  It's always funny to me how people view low prices as a good deal.  For example, when home values were high and people were selling like mad, they made some money off their home only to go and pay an inflated price on another home.  When home values are low, they sell their home for a low price and make very little only to go buy another home. If the profit spread is always the same in an up or down market, or close to it, then are you really gaining or losing much?  There are obviously many answers to this question but I always responding to this question with a question:  do you need to buy a home?
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December 12 2010
Profile picture for Pasadenan
Absolutely nobody "needs" to "buy" a home.  Anyone that thinks otherwise either doesn't know what the word "need" means, or doesn't understand anything about housing in the United States.

As for missing the "one that is right for you"?  That is a very conceited statement.  When it comes right down to it, there is very little difference between most homes and NONE of them are "perfect", even if custom built for a given party.  There are trade-offs with everything, and you may think it is "right" now, but find it is completely inadequate in less than 1 year.

And those Realtors that claim they don't know or understand the future certainly are not the ones to be suggesting what you might want or need one or two years out, or even what you might like, especially with no experience with select features.

What will more likely happen with such a Realtor is that a person would NOT get the house that they really want, as that one wasn't going to be on the market until 2 years after the Realtor sold them the wrong one!
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December 12 2010
Profile picture for the_country_hick
Rian, " do you need to buy a home"

Can you please explain to me some situation, any situation where someone NEEDS to buy a house instead of renting one?

I need housing. I need a place to stay. I prefer to own or to rent. Needing to buy is a theory not a reality right?
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December 12 2010
Profile picture for Pasadenan
Well, I see that Ryan answered the question on another thread, but not here.  He seems to think an investor needs to buy or they will not have any money.  Why an investor should be buying when it is time to sell, I have no idea.
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December 13 2010
Profile picture for So Cal Agent

I think this would be a good time to sell then buy for saving on taxes and since the interest rate is low, since prices are low enough, there is a less chance of getting hit with capital gains, being that a married couple would have a $250K exemption each if they sell their personal residence and finally they may be able to get a home that is already upgraded with tiled floors, granite counter tops, with a pool, or prime locations within the community.

If a couple were to purchase sell their home now, they would save on the capital gains, that can become possible in a seller's market. When they purchase the new home, because of prop 13, the assessor's office would only raise the value 2% per year, unlike purchasing a home in a seller's market and being assessed at full value until the next crash (and I won't throw any time frames out to be twisted, LOL!)

As for anyone having to buy or sell... I think that is based on their own personal preference. I am one that buys once and plans to retire and die in my single story home. But that is my preference. If everyone had the same preference, we all would drive a VW; or whatever other car you would like to use as an example.

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December 14 2010
Profile picture for Pasadenan
My car is over 60 years old.

But what that has to do with houses, I have no clue.  In most cases houses close to 100 years old are better than the ones built today, but one does need to check the foundation, piping, electrical devices, and connections.

"buy for saving on taxes"?  You've got to be kidding!  If you have the exemption on capital gains, what was the point?  Certainly not the interest deduction that is less than the standard deduction.  It would make much more sense to give your money to a 501C3 organization of your choice than to just give all that interest to a lender for no reason!

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December 14 2010
Profile picture for ReneeKische
If you are basing your idea of waiting because you think prices are going to decrease, in my opinion, I would say now is the time to buy. In the immediate Los Angeles area, I have not seen prices decrease much. Now, let's explore what I mean.  Buyers will often say, "yeah but I see house X just went down in price" to which I say, how long has that property been on the market. In many neighborhoods throughout L.A. if the property is what's desired and priced at or below market, agents are consistently see properties go into escrow quickly and at times over asking. Contrary to the buyers waiting and saying the prices are decreasing I would say, "is it the price coming down or was it over-priced to begin with since there were no immediate offers".  Of course every property is different and there are many conditional issues, but from what I'm seeing with historically low interest rates and homes price comps at a comfortable resale, YES it's a great time to buy!
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January 30
Profile picture for Sherri Bloom
Hi. Good question. The quick, simple answer is that no one really knows for sure. But based on certain indicators relating to the economy, the real estate markets, house inventories, interest rates, etc., you can make an educated guess. No one knows if the markets have truely hit bottom yet. No one knows for sure if the interest rates are going to start to go back up. The better question is whether or not it is a good time for YOU to buy right now or not. With it being a buyer's market right now, all the above indicators are in your favor, for the most part. I suggest you meet with a lender and see where you are at financially, and see if it makes sense for you to move forward or not. Good luck!
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February 14
Profile picture for ReemaSharma
It is a great time to buy in NYC but it depends on many variables
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February 14
Profile picture for Tajada Weldon
It is an excellent time to buy in the central valley.Interest rates are increasing along with MPI so, I would buy now to take advantage of low rates and low prices.However, each area is slightly different and there are other variables to consider.
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March 30
 
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