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Replies (27)
- Stewie Griffin, "griffinstewie"
- Contributions:26
Where is the answer to this question??
- klarek the realist
- Contributions:7044
Tell me: why SHOULD anyone buy a house? The darned thing would lose another 20% in value within a year.
- sunnyview
- Contributions:25139
They should buy if they can run positive cash flow on the property with very little money down. If you can put 5% down and get 10% over your rental expenses, great. If not, wait for the market to stabilize before you buy.
- mina36
- Contributions:3478
Well, you need someplace to put all those get-rich-quick books !!!!!Â
- Tim Kunze, "TimKunze"
- Contributions:61
We must get back to the basic decision point of "what's the reason for buying a house" in the first place. The recent history of rapid appreciation is gone for the foreseeable future. Prior to those crazy years (do you remember back that far?) people actually bought a home because they were going to live in it. Historically, there has never been a period of six or seven years during which homes did not appreciate.
So, if you are looking to invest in a house, DON'T!! If you are buying your next HOME, then any time is a good time and this is an especially good time with prices AND interest rates DOWN. So what if it looses another 2%? I can't see any way it will lose 20% (klarek). Those areas that have been hit really hard in California are already on the way back up (SLOWLY).
So, if you are looking to invest in a house, DON'T!! If you are buying your next HOME, then any time is a good time and this is an especially good time with prices AND interest rates DOWN. So what if it looses another 2%? I can't see any way it will lose 20% (klarek). Those areas that have been hit really hard in California are already on the way back up (SLOWLY).
- klarek the realist
- Contributions:7044
Oh, Tim. You were sailing so well up until "this is an especially good time".
- DR. WARBUCKS
- Contributions:24
On there way back up, is this guy serious?
- sunnyview
- Contributions:25139
If you don't view a house as an investment, you should not buy at all. A house should pencil out (or come very close to it after tax benefits). If it does not, you are better off putting your money in another place and renting. You should have more respect for your money than to throw it down a hole just for the privilege of calling yourself an owner.
- jamhie
- Contributions:42
House price are still Way High compare to just 4 year ago.
Houses that were priced $200k back in 2004, now is priced at atleast $400k and this are already 20% down and were hitted really hard.
Tell us why the same house that was under $100k back in 2001 but now is priced over $400k is a real good time to buy right now??
Houses that were priced $200k back in 2004, now is priced at atleast $400k and this are already 20% down and were hitted really hard.
Tell us why the same house that was under $100k back in 2001 but now is priced over $400k is a real good time to buy right now??
- SoCal_Engr
- Contributions:5667
Klarek, Sunnyview, et. al.,
You all have perfectly good reasoning and arguments, as long as people are willing to view the world through your particular lens.
However, there are a whole range of value/belief systems, and these color the way people view life and life choices. Buying a "home" (vice "house" or "rental property") is one of these things.
This does not negate nor dilute your arguments, provided these are maintained within the context of your world view. However, that also does not negate the opinions of others who may have a different perspective on what they want out of life.
Personally, I was taught to never view my primary residence from an "investment perspective". By no means does this mean that I was taught not to use good common sense, either. But it does mean that I may take a longer-term perspective on the issue, and intangibles like "permanence", "ownership", and "belonging" have a value to me beyond the pure financial.
Somewhere in the middle ground (i.e., between the "bottom line financial" and "emotional and intangible" perspectives) is a reasoned decision point where it makes sense to purchase.
You all have perfectly good reasoning and arguments, as long as people are willing to view the world through your particular lens.
However, there are a whole range of value/belief systems, and these color the way people view life and life choices. Buying a "home" (vice "house" or "rental property") is one of these things.
This does not negate nor dilute your arguments, provided these are maintained within the context of your world view. However, that also does not negate the opinions of others who may have a different perspective on what they want out of life.
Personally, I was taught to never view my primary residence from an "investment perspective". By no means does this mean that I was taught not to use good common sense, either. But it does mean that I may take a longer-term perspective on the issue, and intangibles like "permanence", "ownership", and "belonging" have a value to me beyond the pure financial.
Somewhere in the middle ground (i.e., between the "bottom line financial" and "emotional and intangible" perspectives) is a reasoned decision point where it makes sense to purchase.
The question of whether it is a good time to buy shouldn't include those who do not care if it will appreciate or depreciate, and have the means to buy "just because".
SoCal_engr brings up a good point about individual perspective. There are many factors to consider when counseling a client. That is why counseling your client is so important.
In this market one reason I would argue to buy now is scarcity. Fairly specific product that is not easily available. We are talking about "I need to buy on "x" street" or "oceanfront" etc. If the scarcity of a product creates a moment in time right now where you might not see a similar piece of product available in the foreseeable future then "yes" its a good time to buy.
Also of consideration if buy<rent with normal or nearing normal inventory. Then possibly good time to buy.
Of course the current interest rates play into the equation, but far much less then many people have been making it out to be. If rates jump up that will only put further downward pressure on pricing, so interest rates are only a consideration when included with other outstanding factors.
SoCal_engr brings up a good point about individual perspective. There are many factors to consider when counseling a client. That is why counseling your client is so important.
In this market one reason I would argue to buy now is scarcity. Fairly specific product that is not easily available. We are talking about "I need to buy on "x" street" or "oceanfront" etc. If the scarcity of a product creates a moment in time right now where you might not see a similar piece of product available in the foreseeable future then "yes" its a good time to buy.
Also of consideration if buy<rent with normal or nearing normal inventory. Then possibly good time to buy.
Of course the current interest rates play into the equation, but far much less then many people have been making it out to be. If rates jump up that will only put further downward pressure on pricing, so interest rates are only a consideration when included with other outstanding factors.
- CubsfaninWA
- Contributions:567
To socal_engr: a round of applause and the next round is on me! a very direct way of putting my own thoughts. My primary residence is not an financial investment to me, it's more of emotional and physiological investment within the context of a financial purchase. I want a house that will become my home, something that my family can grow into over then next 18-25 years. Do I want the house to appreciate in value over that time, well of course I do but if the house has the space I need and the immensities that I want and it is priced at what I can afford and I think it is worth, then this “house†will become my “homeâ€.
- HomeSand.net, "White Picture"
- Contributions:4398
Hi Gaclaudy.
My thoughts is same like your, when I bought my first home,
" My primary residence is not an financial investment to me,
it's more of emotional and physiological investment within the context of a financial purchase".
However, My house give to me the chance that I never dream of since I set foot on America soil.
And the good result is give to the one, who dare to take the opportunity, that even he don't know what is happen at the end of his venture.
My thoughts is same like your, when I bought my first home,
" My primary residence is not an financial investment to me,
it's more of emotional and physiological investment within the context of a financial purchase".
However, My house give to me the chance that I never dream of since I set foot on America soil.
And the good result is give to the one, who dare to take the opportunity, that even he don't know what is happen at the end of his venture.
- klarek the realist
- Contributions:7044
"I can't see any way it will lose 20% (klarek)."
Are you joking? That's how much it fell in most areas in just ONE YEAR. In my area it fell even more than that. Most economists predict that it will in fact fall much more than 20%.
So how is it that you can't see ANY WAY it'll lose 20%? I'm sure a year ago you were saying the same thing.
*Fingers in ears* LALALALALALA
Are you joking? That's how much it fell in most areas in just ONE YEAR. In my area it fell even more than that. Most economists predict that it will in fact fall much more than 20%.
So how is it that you can't see ANY WAY it'll lose 20%? I'm sure a year ago you were saying the same thing.
*Fingers in ears* LALALALALALA
- Stewie Griffin, "griffinstewie"
- Contributions:26
The real question is: when is a good time to buy a house? What are the indicators that would tell us this is a good time to buy?Â
- Tim Kunze, "TimKunze"
- Contributions:61
Klarek,
Real estate is a microeconomic deal. That means that it is VERY local and each small locality has its own "reality". Even a zip code is not a small enough economy when you're trying to determine trends. However, since I live and work in it, I've been tracking 92646 (Huntington Beach) since 2000.
In January of 2000, the average price per square foot was $185. By the end of the year, it had increased to $216; by the end of 2001, to $230; 2002 $300; 2003 $335; 2004 $413; 2005 $488; 2006 down to $455; 2007 down to $424. As of the end of November, the average price per square foot in 92646 was $364. That was an increase of 62% from 1/00 to 12/05 followed by a 25% decrease from 12/05 to 11/08. Overall, from 1/00 to 11/08, an appreciation of 48% in 8 years.
Real estate is a microeconomic deal. That means that it is VERY local and each small locality has its own "reality". Even a zip code is not a small enough economy when you're trying to determine trends. However, since I live and work in it, I've been tracking 92646 (Huntington Beach) since 2000.
In January of 2000, the average price per square foot was $185. By the end of the year, it had increased to $216; by the end of 2001, to $230; 2002 $300; 2003 $335; 2004 $413; 2005 $488; 2006 down to $455; 2007 down to $424. As of the end of November, the average price per square foot in 92646 was $364. That was an increase of 62% from 1/00 to 12/05 followed by a 25% decrease from 12/05 to 11/08. Overall, from 1/00 to 11/08, an appreciation of 48% in 8 years.
- Tim Kunze, "TimKunze"
- Contributions:61
On a personal note, we bought a home in January of 2007. Since then, it has lost 6% of its value. It is based on these observations that I state that "I can't see any way it will lose 20%".
None of us has a crystal ball. There are way too many factors involved for anyone to make an accurate assessment. As the joke goes, if you ask 10 economists the same question, you will get 10 different answers. Or, the other one that if you lined up all the economists in the world head to toe, they wouldn't reach a conclusion. There is a quote made by the economics department of Chapman university to the effect that, "We can understand why people don't place a great deal of value on our predictions when we've been wrong so often". Remember that Chapman's prediction for the year Orange County saw 26% appreciation was for something like a 7% decline. They missed it by about 33%!
I admit I've always been an optimist but I'm well aware of that and do my best to temper my optimism with some reality. However, I refuse to get caught up in your self-fulfilling prophesy. A dose of true realism might do you some good as well. Remember that the run-up in house values in Orange County was caused, partly, by exuberance to the tune of your "realism".
None of us has a crystal ball. There are way too many factors involved for anyone to make an accurate assessment. As the joke goes, if you ask 10 economists the same question, you will get 10 different answers. Or, the other one that if you lined up all the economists in the world head to toe, they wouldn't reach a conclusion. There is a quote made by the economics department of Chapman university to the effect that, "We can understand why people don't place a great deal of value on our predictions when we've been wrong so often". Remember that Chapman's prediction for the year Orange County saw 26% appreciation was for something like a 7% decline. They missed it by about 33%!
I admit I've always been an optimist but I'm well aware of that and do my best to temper my optimism with some reality. However, I refuse to get caught up in your self-fulfilling prophesy. A dose of true realism might do you some good as well. Remember that the run-up in house values in Orange County was caused, partly, by exuberance to the tune of your "realism".
- aapostrophe
- Contributions:593
oh really, tim? you saw your house has lost 6% since you bought it. how do you know this? have you tried to sell it and successfully commanded that price?
related- have you seen the article posted on zillow recently that presented homeowners as of the opinion that everyone elses' homes declined in value but not theirs?
related- have you seen the article posted on zillow recently that presented homeowners as of the opinion that everyone elses' homes declined in value but not theirs?
- rachelbross
- Contributions:14
The challenge I have with the SoCal market is the rent <-> mortgage ratio is still WAY out of wack in the areas I'm interested in (Santa Monica bay - MDR south to Torrance), and the prices are still really high. We recently compared the list prices on some houses to their Jan 2006 prices, and some were still listed for within about 15%. Logically the numbers don't make sense, but the short sales and the REOs are impossible to get and the straight sales result in bidding wars....we're thinking about Panama!
- Candy Wall, "River Role"
- Contributions:40
Mark,
A person should buy a house now because they have saved and did not get into the past wigged out market. Those with cash and willing to spend it will get sellers, and lenders to snap into their gear (buyers can have it their way), vendors, licensed pros will be called upon, title companies and agents will spread the word that savers/investors are confident again.
Paraphrasing or pondering: We normally don't go swimming when the shark is in the water. We are not confident the shark is dead so no one goes swimming. (Is it time to close the beaches? no way I love Waikiki)
If you or someone you know has cash earning low interest somewhere, perhaps they are ready to dive into an immense real estate inventory pool. It will be an event that pays and benefits the bold.
You'll see our vision of this market will change it has to,
Candy Wall
A person should buy a house now because they have saved and did not get into the past wigged out market. Those with cash and willing to spend it will get sellers, and lenders to snap into their gear (buyers can have it their way), vendors, licensed pros will be called upon, title companies and agents will spread the word that savers/investors are confident again.
Paraphrasing or pondering: We normally don't go swimming when the shark is in the water. We are not confident the shark is dead so no one goes swimming. (Is it time to close the beaches? no way I love Waikiki)
If you or someone you know has cash earning low interest somewhere, perhaps they are ready to dive into an immense real estate inventory pool. It will be an event that pays and benefits the bold.
You'll see our vision of this market will change it has to,
Candy Wall
- Jack Wadsworth, "Jack Wadsworth"
- Contributions:11
This is a wonderful time to buy if you are planning on staying in your home for at least 5 years. Money is cheap and sellers are willing to work with you especially with all of the tentative buyers out there. There is the theory that the time to buy is when everyone else is afraid to. That is called buying when the market is down and being a contrarian. Smart.
Contact me if you need to find an agent in your area that you can depend on!
We can find reputable folks for you to interview.
Contact me if you need to find an agent in your area that you can depend on!
We can find reputable folks for you to interview.
- Mitchell Mallahan, "Money Man Mallahan"
- Contributions:51
Because of the exceptionally low values and mortgage rates. One thing that you as agents can do is inform your clientle database about the unbelievably low interest rates and that now would be a good time to refinance. This would be a really good reason to touch base with them and also ask them about buying. Just a thought...
- Pasadenan
- Contributions:21466
"You'll see our vision of this market will change. It has to." -
I agree that YOUR vision of the market has to change! But I don't agree that I'll ever see it. Your vision is still NAR propaganda, and history revisionism of Oceania.
2 years after the thread was written and even more people have lost out due to false NAR pressures, and you are still pushing the same old stale line about your personal power of positive thinking so that you can collect more commissions in violation of the oath you took to a code of ethics.
The most positive thing that could happen is for about 60 thousand Realtors® to abandon NAR and form their own association built on actual market tracking and lack of propaganda to put NAR out of business.
I agree that YOUR vision of the market has to change! But I don't agree that I'll ever see it. Your vision is still NAR propaganda, and history revisionism of Oceania.
2 years after the thread was written and even more people have lost out due to false NAR pressures, and you are still pushing the same old stale line about your personal power of positive thinking so that you can collect more commissions in violation of the oath you took to a code of ethics.
The most positive thing that could happen is for about 60 thousand Realtors® to abandon NAR and form their own association built on actual market tracking and lack of propaganda to put NAR out of business.
- Pasadenan
- Contributions:21466
"This is a wonderful time to buy if you are planning on staying in your home for at least 5 years" -
Where is your math??? You can't even cover the 10% to 16% transaction costs in 5 years. It typically required 7 years. But in this present bubble declining market, and expected long-term "flat" market, it will take 14 years to "break even".
(I know, no math is required to become licensed and a member of NAR, and NAR prefers that you make up data rather than actually checking).
Where is your math??? You can't even cover the 10% to 16% transaction costs in 5 years. It typically required 7 years. But in this present bubble declining market, and expected long-term "flat" market, it will take 14 years to "break even".
(I know, no math is required to become licensed and a member of NAR, and NAR prefers that you make up data rather than actually checking).
- Linda Strasberg, "L Strasberg"
- Contributions:2315
If not now, when?
- NTETS, "Mr Caveat"
- Contributions:6436
There is the theory that the time to buy is when everyone else is afraid to. That is called buying when the market is down and being a contrarian. Smart.
contrarianism is not smart in its own right. in fact it is generally quite foolish to let other people's decisions sway you in either direction without spending your own time and doing your own research. what you have just said is a complete characterization of value investing and is terrible advice. which is why you are a salesman and not an investment analyst, huh?
Baron Rothschild, is credited with saying that "The time to buy is when there's blood in the streets, even if the blood is your own" at some point during the 18th century and it is the most commonly referenced phrase that i am aware of in investing anywhere. this contrarian theory is referred to "value investing" and, for simplicities sake, we can characterize it as the exploitation of market irrationality or the idea that the best deals are made when the markets are down.
if Warren Buffet is not to be known as the best value investor of all time, he can certainly be called the reining king of value investing, and he has a quote of his own: "You pay a very high price in the stock market for a cheery consensus."
but it is thoroughly misguided to assume that value investing is fullproof. value investors need to be extremely cautious because the market is not making it up. sure some people invest on pure gut or momentum trading, but every frienzied, bloody market that i have ever seen has been full of at least 5 times as many bad risks to good so why not offer some advice that is actually helpfull like how to compare prices to rents so that you can actually do well with value investing in a down market.
contrarianism is not smart in its own right. in fact it is generally quite foolish to let other people's decisions sway you in either direction without spending your own time and doing your own research. what you have just said is a complete characterization of value investing and is terrible advice. which is why you are a salesman and not an investment analyst, huh?
Baron Rothschild, is credited with saying that "The time to buy is when there's blood in the streets, even if the blood is your own" at some point during the 18th century and it is the most commonly referenced phrase that i am aware of in investing anywhere. this contrarian theory is referred to "value investing" and, for simplicities sake, we can characterize it as the exploitation of market irrationality or the idea that the best deals are made when the markets are down.
if Warren Buffet is not to be known as the best value investor of all time, he can certainly be called the reining king of value investing, and he has a quote of his own: "You pay a very high price in the stock market for a cheery consensus."
but it is thoroughly misguided to assume that value investing is fullproof. value investors need to be extremely cautious because the market is not making it up. sure some people invest on pure gut or momentum trading, but every frienzied, bloody market that i have ever seen has been full of at least 5 times as many bad risks to good so why not offer some advice that is actually helpfull like how to compare prices to rents so that you can actually do well with value investing in a down market.
- Pasadenan
- Contributions:21466
"If not now, when?"-
When the bubble has finished deflating, and when the government stops propping up the market, and when the market has had a chance to correct for the government interference.
Typically 3 to 8 months are needed for prices to adjust due to removal of government interference simply because owners and agents are not willing to lower prices immediately, and they need to "see" the market effect before changing the asking price or accepting lower. But in places like California, it is delayed even more simply because the State replaced the Federal pricing intervention.
When the bubble has finished deflating, and when the government stops propping up the market, and when the market has had a chance to correct for the government interference.
Typically 3 to 8 months are needed for prices to adjust due to removal of government interference simply because owners and agents are not willing to lower prices immediately, and they need to "see" the market effect before changing the asking price or accepting lower. But in places like California, it is delayed even more simply because the State replaced the Federal pricing intervention.
Why should anyone buy a house now?
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- 0.0/5.0
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