Zillow Advice: Buying Process - First Time Buyers

also adding to what mike ...

Tue, 24 Mar 2009 18:35:00 GMT

also adding to what mike said, 2008 was probably higher for arm resets than 2009 will be, but in 2010 there is still expected to be a huge wave of foreclosures... so far as i know, so the market may well find a bottom, just to roll off another cliff next year

if you are expecting prices ...

Tue, 24 Mar 2009 18:28:00 GMT

if you are expecting prices to drastically spike in any timeframe, ie if you expect, lets say a 10% recovery inside 1 year, i think you need to re-evaluate RE... that is simply faulty logic.

now, there were 2 questions here. the first one is about house prices spiking, the second is interest rates. interest rates are dictated by many many things, and could very well go up. my personal opinion is that they wont be much higher than they are now, (though as you know even small changes to the rates can have large costs) but the eventual prices of all homes in your area will eventually reach equilibrium, not with some intrinsic value that homes have, but with the amount of dollars that the average american decides to plug into their mortgage every month. if banks and agents win you will see prices flatten soon, but if fear continues to hold the market hostage, you may see people who put less than 25% of their disposable income into their house, or better yet people who plan to pay off their mtg early... responsible borrowing would of course lead to much larger drops in house prices, and that trend would probably follow interest rates higher... making rates a double whammy to prices.

i continue to believe that home price will be the most important mechanism for this situation to resolve itself... and yes, home prices are falling

Good point Mike. Mark you're ...

Tue, 24 Mar 2009 18:25:00 GMT

Good point Mike. Mark you're from Texas (Midland) correct? Texas may or may not have a "winter home" type season like Florida does.

It depends on your market. ...

Tue, 24 Mar 2009 18:20:00 GMT

It depends on your market. In Florida the home selling season begins in December and drops off in May, due to the excessive heat. In Minnesota the home selling season begins around March and is pretty much done by late October. The good part about waiting towards the end of the season is prices drop, the bad part is that inventory dwindles especially around the holidays.

Because of the number of 'resets' on ARM's, it's unlikely we will see any increase in home prices for at least another year, but that's just a guess.

I would listen to your loan ...

Tue, 24 Mar 2009 18:13:00 GMT

I would listen to your loan officer. It's refreshing to hear one say that, unlike the NAR herd.

In fact there is plenty of ...

Tue, 24 Mar 2009 17:22:00 GMT

In fact there is plenty of trend/seasonal data to suggest that prices will be even lower 6 months from now. The spring market always draws plenty of buzz. Buying in the spring is not only an after winter "I want to feel good&be reborn" thing, but it's also a preferred timing regarding school transfers. The spring market sets up for early summer closings & kids have a yearly transition rather than a mid semester interruption.

As someone without kids, I'll be targeting the fall of whatever year that we end up buying in (whatever year the fundamentals are back in order).

As for interest rates, that one is more of a roll of the dice & without such a convincing stance to suggest. Rates sure are low now & they can't be kept artificially low forever. The Fed, via liquidity infusions like the one last week, still has some ammo left to fire (though the quiver is getting thin). I'd expect the Fed to take whatever "heroic" steps are needed to keep rates low through 09.

That said, I'm looking for an inflation hedge for our "dry powder" that will be used once we're comfortable on making our move.

No, I don't think prices ...

Tue, 24 Mar 2009 14:57:00 GMT

No, I don't think prices will spike in that 6 months at all. You have time to save and research your local market without worrying about being priced out. As for interest rates, nobody really knows what will happen. I think that they may rise a little from where they are today, but now so much that you would not be able to buy 6 months from now. So save up more of a down like your loan officer suggests and you'll be in great shape to buy soon.