Profile picture for elldee

Why is it Better to WAIT to Buy?

With no "delete" after the fact, somehow this was in the "Buying Process" forum instead of "Rent vs. Buy" where it belongs, so forgive me for the mess-up.  I'm refraining from submitting my own opinions at this time.  Although I expect plenty of realtors to jump in to protest, I'd like those who care to please give their opinions as to "why it's not a buyer's market" along with explanations.  Cut&Paste URL's with expert analyses are GREAT, as well as personal opinions.  Believing it's better to wait is not "gloom and doom", when it stands to save your savings account.  What could be more positive than waiting to buy lower?  (You don't need the proverbial "crystal ball" so many like to quote, in order to make educated decisions.)
  • March 14 2009 - US
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Answers (18)

Profile picture for elldee
Uh... OK, Pat, very deep.  Did you read the question by any chance?  Do we care what you "think"?  I think not.  How about giving some valid reasons for your answer?  Agent Pat Bourgo: "I don't think it is better to wait."
  • March 15 2009
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one thing i can say for myself is that i will not buy anything unless i can pay cash or get something with a very easy payment to make.
  • March 15 2009
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Profile picture for Randy_H
The answer is HSBC did all this research years ago.  Despite even all that, they still didn't manage to entirely dodge the bullet.  But musings about whether real estate recoveries were "flat" or not are mere ruminations.  Here is the real data, which you can break down by every MSA.  You can also relate to affordability, various ratios, interest rates, etc.

I don't just make this stuff up.  I actually have done quite a bit of research and analysis, some for professional endeavors.

Source -- HSBC
PDF
Excel
  • March 15 2009
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Profile picture for sunnyview
I totally agree that affordability and potential for community/job growth are both very important factors. It think what your market was doing pre bubble is also important. Mine was flat as a pancake due to a local recession and was appreciating about 2% year until 2002-2003. There was pent up demand locally from a previously soft job market. The market here peaked late summer 2006, but held very close to those levels through summer 2007. Prices now are back to about 2005 and falling. From our chart I would expect the prices to keep falling back to 2002-2003 at least. I think it all depends on your local market and the pressure on prices in the larger economy too.
  • March 15 2009
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Profile picture for Jon Petersen
your thinking is flawed. If you claim that 97 was the start of the bubble, that doesnt neccesarily mean that we will bottom out there. Plus, the bubble started in different times in different places. Where I am, I believe the bubble started in 2000, and it was because our early nineties bubble popped after everone elses in 93. Seven years was the magic number for negative information to drop off. Buying was cheaper than rent.
  While that timing that you chose is important because of the affordability factors, there is other more important information like how employment relates to then (it is currently worse), the availability of buyers,(ie. growth of the area), new housing being built compared to then, and many other factors that I probably dont even know.
  • March 15 2009
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From a construction viewpoint, or replacement cost view. In the Victor Valley,  barebones house costs around $60 per square ft. to construct, not including land. This is a good starting point on which to base your decision. If you can get into a newer house at that price, you're doing well, and the sooner you start paying on it the sooner you'll start building equity. For an older house, you would need to calculate the cost to make upgrades to bring it into newer code compliance--especially energy codes, as this can make a huge difference in your utility bills.
  • March 15 2009
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Profile picture for space_acer
titan - if you are down to 1997 prices + inflation, then yes.
         40-50% decline may not be enough.  Price can still be inflated.
  • March 14 2009
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Profile picture for Jon Petersen
very insightful pat
  • March 14 2009
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Profile picture for Jon Petersen
where are you, keith?
  • March 14 2009
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Here is a direct post from www.themortgagereel.com

Here is an opportunity to share with the World Wide Web where the bottom of the market is? Interestingly enough people are split 50/50 now. Those who are buying as first time home buyers are excited because the dollar power is stretched not only by low interest rates, also by the lower real estate values! There are also families who are looking to take advantage of buying up. We have a client right now who purchased four years ago, can sell his home for a profit, yes a profit, and use those proceeds for a down payment on a larger home and have a lower monthly payment. Why? Because of lower interest rates and reduced values. Sell low Buy low, Sell high Buy high. Real estate may be the total opposite of the stock investment rules but it is a reality.

This is a calculation that has proven to be correct:

There was a general calculation that many debate about, if you put 20% down on a home and the mortgage payment is more than rents in the market, there may be a floor/bottom that hit in values.

We want to hear what your thoughts are: Please be respectful of everyone's opinion. Some may just need to vent and others may post valuable information that others can learn from.

  • March 14 2009
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Profile picture for Jon Petersen

This graph is also inflation adjusted, so increases are harder to show than a decrase. If this were not inflation adjusted, the recoveries would show quicker increases. The only flat recovery in the 90's wasnt really flat if you look at it unadjusted. But once again, this is the median. When the banks know there is no more inventory coming, they will be more willing to sit on the houses and wait, instead of having the 80k deals like they have now.

Looking at the median doesnt tell you everything.

With all that in  mind, I dont think that if you miss the bottom, you will be priced out. They wont double in price overnight.

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Profile picture for Jon Petersen
Another thing to consider, this market has declined at a record pace. I believe this is due to the availability of information with the internet. With prices dropping at record paces, when history has shown it to be more gradual, it is also possible for the bottom to hit and come back(small amount) very quickly. The other thing is that the charts posted on here that many have interpreted as a flat line after a drop, arent looking closely. http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html

here is the link that I have seen referred to as showing flat recoveries, but it shows only one flat recovery in the mid 90's. After the biggest drop shown ending 1920, it showed a significant bounce immediately. Steep drop in 42 followed by HUGE increase in 43. drop in 49 recovered immediately.
  • March 14 2009
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Profile picture for Jon Petersen

first, I was simply posing it as a question to decide for yourself. If you do want to wait, its up to you. Some are ready now to buy and wont care about that 20k. That is because in some areas, rent is more expensive, plus the 8k credit. That is why some might buy now. I wont say that now is the time to buy.

titan, you're continuing to be narrow in your thinking, as though you honestly believe we will have only moments to realize the bottom is here and lose out forever. 

If you look at the median sales price, and conclude that there is a flat bottom to the housing market, that is flawed thinking, because it is the mean. There are many houses that are priced WELL below market. The house that I bought in april 08, I got for 80k below appraisal. Appraised for 350. I am refinancing, and my appraisal done 1 week ago came in at 315k, and Im in corona, ca, one of the worst areas. 
As the market flattens, the deals will dissapear, and there will be some that bought  a little earlier for much less, even though that is not reflected in the median as "the bottom". If the median "bottom" is 10% lower than where it is today in my market, I will have still bought at better than the "bottom" because I didnt pay market price.

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I don't think it is better to wait.
  • March 14 2009
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Profile picture for elldee
I'm not even going to try the edit button... "only moments to realize the bottom is here OR lose out forever"
  • March 14 2009
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Profile picture for elldee
Hoang, that was so cute and sweet, I almost wanted to choose it as best just because.  Well, your first might not cover the gamut, but the second section you should have begun your own thread with, since that isn't what I asked, except some of them did make me laugh.  However: "You believe that home's price will drop a litile more in future, and you don't care." was the cutest of all.  Maybe that's true of many more than we realize?

titan, you're continuing to be narrow in your thinking, as though you honestly believe we will have only moments to realize the bottom is here and lose out forever.  Well, I have read that on Zillow, so maybe that really is how you feel.  However, I'll bet there are also plenty of people who would be buying in that price range that would, indeed, care a lot... be thrilled... to save $20K.  I reckon I wouldn't mind too much if I really had only a few days to make a decision. 
  • March 14 2009
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Why is it better to WAIT ?
* You need save up the money for the down payment.
* You need improve your credit score.
* You believe that home's price will drop in future.
* Your rent is so cheap.
* Your employment is uncertainly because of recession of economy.
* your partner say so !!!
* SunnyView say so !!!
* K101 say so !!! 8)

Why is it better to BUY ?
* You have enough the money for the down payment.
* your credit score is for fair to best.
* You believe that home's price will drop a litile more in future, and you don't care.
* Your mortgage payment + tax will be cheaper or equal, even a little more than rent.
* You believe that you have the solid employment.
* your partner say so !!!
* You Want to do opposite to every thing of what SunnyView and K101 said ? 8)
* You want to buy some thing for no reason, like some one want go to the shopping.

  • March 14 2009
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Profile picture for Jon Petersen
While many areas still have a large decline to come, those that are nearing the bottom are the main places where this question is important. In the end, if the bottom is near based on inventory, sales, local economy, etc. the question is if a property was going to drop 200k from 400k, and you bought at 220 instead of 200, would you really kick yourself that much?
  • March 14 2009
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