Charleston, SC Posts

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If You Don't Buy a House Now, You're Stupid or Broke

Have you read this article yet? It was featured in Business Week.  My first thought, wow! what a blunt andbroke harsh statement! But the writer, Mark Roth, uses this headturning title to get your attention to make excellent points for those who are on the fence.  Namely that interest rates are at an all time low, in fact, the lowest in 40 years. He noted that in the late 70s, rates hit a high of 18%! Can you even imagine buying a house at 18%?  I personally can't fathom it as I bought my first house with an FHA loan while I was in college for 7% in 2001.  In the 80s, when rates dropped from 12% to 9%, my parents practically danced their way to the 1st refinance of their home.  Generation X'ers probably would never dream of purchasing a home above 7% given all we have ever known are super low rates hovering between 5-6%. Mr. Roth points out the history of previous interest rates as well as the impact of rates on one's purchasing power. I happen to agree with his prediction that as the economy becomes more stable, interest rates WILL rise to hedge inflation.  My prediction has been that by this time next year, rates will have risen 1-2% at a minimum.

In Charleston, the average sale is $250,000. Assuming a 5% down payment at 5% interest on a 30 year fixed, your monthly principal and interest payment would be $1275.  If rates rise to 7%, your payment increases to $1580/month.  Some buyers may be on the fence because they fear prices may drop further. falling pricesConsider this. If there is a 10% decrease in price and the $250,000 falls to $225,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422.  You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.  Real estate appreciation is always a cycle and as the economy stabilizes, values will level out.  Steve Harney is already analyzing data this is happening in many markets and that this will occur by 2014 in many states. Making a home purchase is still a decision that should be weight carefully and is not for everyone.  One important consideration will depend on how long you plan to stay in the home.   

Mark Roth summed up the article, "What I'm trying to impress upon everyone isbecome a homeowner in Charleston, SC that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime."

The Charleston Relocation Experts team specializes in helping families make good decisions.  We do NOT think you are stupid or broke if you don't buy a house right now.  But if you are considering purchasing a home and would like a FREE consultation, we'd love to sit down with you and help you weigh your options and direct you to a qualified, caring mortgage professional that will help you with the numbers. 

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We are approved by Boeing 3rd party relocation company as Charleston Boeing Relocation Specialists with Carolina One Real Estate in Charleston, SC.  Visit us at www.CharlestonRelocationExperts.com. Contact Top Real Estate Agents, North Charleston, SC Relocation Experts,  Licensed Realtors® in South Carolina at 843-849-5217 or info@CharlestonRelocationExperts.com to list your home for sale or to purchase a home in Charleston, Goose Creek, Summerville, North Charleston, Hanahan, Mount Pleasant and the surrounding areas in Charleston County, Berkeley County or Dorchester County. The Charleston Relocation Experts Team specializes in relocations, first time homebuyers and creating marketing exposure to sell your home in the Charleston SC Real Estate market.

 

Michele Reneau, ABR, GRI, CRS

www.CharlestonRelocationExperts.com

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Comment balloon 111 commentsMichele Reneau • December 10 2009 05:52PM

Comments

Michele, anyone needing to put a roof over their head that can afford it should consider taking the plunge.  My belief is that they'll be looking back 10 or 15 years from now and realizing it was definitely the right move.  Add the Tax credit to this scenario and it just makes sense.  Thanks!

Posted by Kevin J. May, Serving the Treasure & Paradise Coasts of Florida (Florida Supreme Realty) about 8 years ago

I like the bluntness of the original article. I've written a lot about how buyers need to get off the fence.  They're thinking and thinking and thinking, and then rates will be up at 7-8% again and when they could afford one price range, they can now only afford this lower range, and less house.  Domino effect if they don't buy.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) about 8 years ago

Hi Michele ~ Thanks for the link to that article - it's great.  It's really too bad that so many let fear get in the way - and only want to buy when everybody else is - and end up paying more. This is the golden age of homebuying.

Liz

Posted by Elizabeth Bolton, Cambridge MA Realtor (RE/MAX Destiny Real Estate Cambridge, MA) about 8 years ago

Michele -

Thanks for the post and the link to the original article. If people are waiting for lower prices and lower rates than what we have now, they are living in dream world.

Posted by Joel Prince, Hixson/Soddy Real Estate Broker (The Principle Group, Inc) about 8 years ago

Kevin-I couldn't agree more! Just like Warren Buffet says, "Be fearful when others are greedy and to be greedy only when others are fearful."

Donna-I just recently spoke to a girl who missed her opportunity to buy due to the loss of 100% financing programs. Carpe diem! I know she is wishing she would have seized the opportunity when she had it.

Elizabeth-When I bought my 1st house--my parents thought I was crazy.  I still own that house 8 years later and its now a rental.  I don't regret that purchase.  The house will be paid off in 7 years and someone else has been paying that mortgage for 5 years and the property is worth about 35% more that what I purchased it for.  If only I would have sold it in 2005, it would have topped out at 50% but I'm still happy with 35%.

Joel-I agree, many will be sorely disappointed.

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) about 8 years ago

It is a fantastic time to buy a home, interest rates are at a historic low and prices are making it more affordable than any time in the past 10 years

 

 

Posted by Andrew Monaghan, CRS, GRI, EPro Associate Broker (Your Phoenix Home Source) about 8 years ago

Great points!  Agree...it's a no brainer.

Posted by Tom Vuong (Franklin Run, LLC) about 8 years ago

I think buyers are running out of time. In the Tucson market the inventory is down and homes are selling. Which means higher prices will be coming.

Posted by Richard Lecinski (Long Realty Company) about 8 years ago

I think buyers are running out of time. In the Tucson market the inventory is down and homes are selling. Which means higher prices will be coming.

Posted by Richard Lecinski (Long Realty Company) about 8 years ago

Michele, you make an excellent point.  My first loan was at 6 and a half percent, I can't even imagine a loan at 20%.  Some of my fellow agents remember when they bought their home in the eighties and paid a rate in the 20's...  You're right, it's inevitable..The rates are going to have to go back up sometime...

Chanda panda

Posted by Chanda Barrick, in referral (Keller Williams Indy Metro Northeast) about 8 years ago

Thank you for sharing this. Gret motivational piece!

Posted by Frank Mancino, Frank Mancino (Finance of America Mortgage) about 8 years ago

That is a really dumb article.  If buying a home is a great idea because rates are low, what happens when rates are high?  I will venture to answer: home prices will decline.  Therefore, since rates are so low it is actually a bad time to buy due to prices being pushed up by what we know are artificially low interest rates.  It is much better to buy a home at $100,000 when rates are 10% then that same home for $150,000 when rates are 6%.  If you pay less for the home when rates are high then you can always refinance or sell when rates are lower since it will "be a great time to buy."  However, if you buy that same home with an inflated price because "rates are low", how do you sell when rates go up?  The answer: a short sale.  That is why this problem will persist for years to come.  The housing market is no longer based on the historical fundamentals of jobs and incomes, but, rather debt (or more accurately the availability and price (i.e. interest rate) of that debt).

Since interest rates are going to increase dramatically (not my opinion, but an economic certainty) due to:

  • Record deficit spending.
  • Total national debt.
  • Government money printing.
  • Lack of any non-government subsidized secondary mortgage market.  The government's $1.25 Trillion mortgage securities buying program and the tens of billions given to Fannie Mae and Freddie Mac to do the same will end in April 2010.

AND

  • The real unemployment rate (i.e. one that is calculated comparably to the method that yielded the 25% Great Depression figure) is over 17% and will not likely decline much over the next year.
  • A new wave of foreclosures is coming due to the Option ARMs coming up for refinance in May 2010.
  • The large number of loan defaults right now that should be foreclosed, but are not since they are being pushed into the near future due to government actions and loan modifications (most of which fail).
  • Home prices still exceed historical norms for price to income rations in many markets.
  • The tax credit will expire in April 2010.
There is no way that it is a great time to buy a home.  I predict that the fall of 2010 will see further home price declines.

Posted by Jim McCormack, Nashville Short Sale REALTOR - Stop Foreclosure (Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343)) about 8 years ago

Just do it!  So much inventory, so many great deals, and as the article mentions: killer interest rates

Reminds me of the Dr. Seuss book "Marvin K. Mooney Will You Please Go Now" - which ends stating the time had come so he went.

The time has come to buy! 

Posted by Laura Sargent (Carolina One Real Estate) about 8 years ago

When I got started in 1985 interest rates were at 13.65 percent and we were in the middle of a sales boom for new houses because interest rates had come down. We also had to order credit reports and wait for them to be delivered, but that is another story.

As far as the article is concerned, I agree that IF you are thinking of buying now is a good time in many areas. Although values may actually still fall for a while, interest rates may go up substantially and wipe out any benefits of waiting until the very bottom to purchase. And who knows exactly where that bottom will be, anyway?

On the other hand, (I know this is almost sacrilegious to say in a real estate community) buying a home is not a universally good investment. Many people are better off renting for less monthly expense and putting their extra cash elsewhere. Values will most likely never again rise at the rate they have been for the last 15 or 20 years as they have been pushed up by artificial stimulus from the government that cannot be kept up unless we want to sacrifice our country's future for a little profit and political gain now.

Posted by Carl Pruitt, http://FHALoanAdvice.com (FHA Loan Advice) about 8 years ago

Thought provoking article and so is the comment from James above. Lets not forget the old adage: location, location, location. The interest rates make it an ideal time for buyers who have saved up 10-20% downpayment and who intend to stay in place a certain number of years to purchase a good deal in some areas, but not in others. So, is it a good time to buy a home? Answer: it depends!

Posted by Dana Scanlon, Bethesda MD- Award-Winning Bethesda Realtor (Keller Williams Capital Properties) about 8 years ago

I am sorry... but with a title like that... I would just tell them to take a hike.  Sorry... I do not suffer "stupid" very well.

And... again, I am sorry... but I have not seen a first-time buyer with 20% down... in years.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) about 8 years ago

When the replacement cost is cheaper than the price of the property it is a good time to buy.  In some cases the buyer has less-than-perfect credt.  Good topic!

Hannah Fliegel

415-999-9348

Posted by Hannah Fliegel about 8 years ago

Hi Michelle,

Nice article!  You and James both have valid arguments (concerns) yet what would James or you rather due....rent or own?  I can't believe James will attract too many buyers to him if he continues to think like that (right or wrong....there are a lot of "ifs" in both scenarios)

Dick Beals

Posted by Dick & Sandy Beals (Wilmington Real Estate 4U Wilmington, NC) about 8 years ago
The trouble with this article is I AM QUITE sure the author has been saying this for the past two years. This is just one of the reasons why much the general populace sees us as car salesmen. I told prospective buyers in APRIL to come back in the Fall. Why would I tell them to buy in April when I knew millions more foreclosures were coming into play?
Posted by Tim about 8 years ago

I said [if you don't buy a house now, your stupid or broke] to somebody while I was waiting for my coffee, it started a conversation between us. But, now we are out looking at houses!

Posted by Bill Buettner, Your Real Estate Connection (Keller Williams Greater Columbus) about 8 years ago

Sure, buying now is a great idea.  However, because of the new over-regulation and mismanagement of the appraisal process, it is almost impossible to bridge the gap between buyers and sellers.  The vicious cycle that has been created in the last two years has appraisals low because of the lack of comparable sales which in turn has stopped the banks from lending required amounts.  Sellers are getting the shaft even when they have buyers ready to paid their listing price.  We will have to fix the appraisal problem before the market can recover!!!

Posted by Bob Venard about 8 years ago

One thing I have learned in my short time being a REALTOR.......some Kool-Aid is good to drink and I spit the rest out.

Posted by Tim about 8 years ago

The title sure grabs our attention and the article in Business Week provides the info we all probably know...being Real Estate Professionals and all, right?

I personally would not pass it on to any potential homebuyers unless of course their sense of humor is sorta sick, like mine. 

So Realtors....How about letting this article get YOU off the fence and drum up some new sales. Get out there and encourage qualified HomeBuyers to SHOP 'TIL THEY DROP!

Good Luck to everyone.

 

 

Posted by Deborah Endres Camacho about 8 years ago

What about... you are stupid if can't afford it tomorrow and more stupid if you are speculating to afford it? The only factor to consider when buying is...job security if you are borrowing. Jobs are none existence today and the manufacturing base in America is none existence. We are borrowing through the roof and expect different results every time. What is the point of buying when in actual sense you are not going to afford to keep it the next day? Let us all rent our homes from China and live happily ever after! Free is not affordable anymore and cheap is in the gutter. Let us be realistic. How did we get in this mess in the first place? Was it not looking for the American dream in the wrong places and by all means unnecessary? Dream on America! Well, yesterday was an American dream but today hand-outs that are ruining the US credit stand in the world. My point is, let us stop enhancing speculations. Let us be honest to our beliefs and all our manifestation will be well founded and in  existence tomorrow and the next day.

Posted by Kaunda Matoke about 8 years ago

It seems to me that there are plenty of smart and "not broke" people who are not buying homes.

I would prefer to work with buyer clients who know their finances and needs and who create their own sense of urgency.  I would rather not be branded a mindless sales drone pushing everyone in sight to jump into the market.

Posted by Mike Jaquish, 919-880-2769 Cary, NC, Real Estate (Realty Arts) about 8 years ago

How do some of you feel about homes you sold for $700,000 a year and 1/2 ago and those SAME houses are now only $500,000? How do you think those buyers feel now? SOMETHING TO THINK ABOUT!!

Posted by Tim about 8 years ago

It really is a great time to buy.........seems like a "no brainer" to me............low rates, low prices, AND the $8,000 tax credit......I call it the "triple play"......it will not stay like this for much longer. 

Posted by Linda Zawislak about 8 years ago
Bottom line: If you are looking to buy a house in the next year or two, you have more buying power when rates are low, and now would be the time to buy.
Posted by Michael Barrow, Realtor, San Diego CA Real Estate (Keller Williams Realty - San Diego Metro) about 8 years ago

I LOVE the article and the post.  What a great way of putting what I have been threatening...okay predicting all this time.  These buyers need to get off of the fence and realize the time is now. 

Here in Phoenix, AZ, the buyers are out but some are still holding back waiting for that pot of gold at the end of the rainbow that is not going to show up!  Get realistic people!

Posted by Katie Halle (Scottsdale & Paradise Valley, AZ -Team Evolution - WEST USA ) about 8 years ago

Michele,

I happened to be reading Business Week last night and I saw the article...great points and thanks for the discussion.

Posted by Ron and Alexandra Seigel, Luxury Real Estate Branding and Marketing (Napa Consultants) about 8 years ago

I was ready on go to bash the article until I read the post by James (#12).  Then it occurred to me although we are all tired of doom and gloom, articles like this one will not make buyers get off the fence.  If anything it will solidify their position that the market is still stagnant and that James is probably right.  They will continue to wait.  Out in the country we call it the "herd behavior".  The significant portion of the country do nothing until they see everyone else buying.  Of course the best deals will be gone by then.  I don't believe calling anyone stupid, broke, or just scared will get the results we need.

Posted by Chris Walters (Edisto Realty Edisto Beach,SC DiscoverEdisto.com) about 8 years ago

Great way to present it. I always try to show them the money, it seems to make more sense when you calculate it out forthem. Simplify so they understand, great post.

Posted by Dianne Hicks (Realty ONE Group) about 8 years ago

In Toronto, Canada, it seems that Buyers are well aware of the low interest rates and definately NOT sitting on the fence.  Our market, especially for first time buyers, is extremely active, even as we enter the holiday season and snow is already on the ground. 

Posted by Donna Webber (ArcRealty Inc., Real Estate Brokerage, Toronto, ON, Canada ) about 8 years ago

One should buy when it's the right time for him to buy.  It would be a great time to buy right now...IF...it's the right time for the one buying.  Rates are good, prices are good.  The hesitancy, where it exists should be respected...Broke maybe but stupid is a strong word.  I have learned that many writers tend to be broke themselves.  Obviously they don't consider themselves stupid.  LOL

Posted by Frank Castaldini, Realtor - Homes for Sale in San Francisco (Coldwell Banker ) about 8 years ago

When I bought my first house, the rate was 12.5% and after the first year it went up to 13.5% - FHA ARM.  I didn't know that the interest rate was high or if rates had been going up or were supposed to be coming down - I was working in the insurance industry at the time.  All I knew was that it was time for me to stop renting, I had found a brand new development I wanted to live in with a townhouse I adored and could afford, and that was the rate!  So I bought the townhouse - I loved that little place.  It was a great time to buy!  Don't overthink it.

Posted by TERRY DRISCOLL, REALTOR - Buy or Sell in Any Season! (MAINE HOME REALTY) about 8 years ago

There are some very serious people who believe we still have another dip in real estate coming, and that it might be deeper than we have today. I tend to think they might be right. When all the government handouts stop.....that will affect the lower price range of our market. But then who knows where interest rates might be in the spring....it's a crap shoot...but stupid and broker, I'm not so sure.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) about 8 years ago

I saw the article and put it on my FB page.  I may have a sale out of it.  This article is written for people who are thinking and can afford to buy a home.  They may be in the sidelines waiting for prices to drop more.  There are plenty of articles written warning buyers of buying more than they can afford.

Posted by Tere Rottink (CoastalVa Realty Inc) about 8 years ago

Great Title as it certainly grabs one's attention. But is also many many times true. If you are thinking that you are going to be making a move in the next 2-3 years. You would be crazy not to take advantage of THIS one and only shot you will have. This is your moment, SEIZE IT!

Posted by Scott Baker, Realtor Homes for Sale in Cincinnati, West Chester, Mason, OH Area (www.eHomeReports.com Coldwell Banker West Shell) about 8 years ago

Richard-So glad to hear about the Tucson market.

Chanda-I agree, we just starting building a house and got a 5.25% rate on the construction loan. While I realize prices might drop 3-5%, we know we are going to be in this home for the long haul and would rather starting enjoying it now.

James-I think you have some good points.  Buying a house certainly depends on your market. That's why we offer a free consultation to buyers to see if it is a good idea for their family. In my market, Charleston has been touted as the leader in future economies.  We've had several large industries relocated, namely the largest being Boeing annoucement to expand its current plant offering countless jobs which will offer a trickle down effect in our area.  Additionally, Moody's Economy and other sources have sited our market's price stability despite the foreclosures and short sales. I agree that more will come but we have not seen 33% drops in prices like you suggest in your example.  I'm not happy about the current state of the economy and do not agree with the decision made, but I'm confident that America has seen worse and that we will prevail and come on the other side of this.  Homeownership is still the American Dream. I have client who have experience foreclosure or short sale and they are working hard to clean up their credit, do things right i.e. save up a nice size downpayment, have an emergency fund, etc because they can't wait to have a place of their own again. It's all about location, location, location so buyers need expert advice from a real estate professional to help them make the best decision for their family. Sometimes, that means now is not a good time.

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) about 8 years ago

Interesting article and interesting points. But let's face it, all of this is still artificial. A double dip recession IS coming. Gov't games such as Cash for Clunkers and the home owners loan extensions - all are trying to artificially stimulate spending at a time when jobs are still being lost.

Anyone on the fence are probably on the fence because THEY don't know if their jobs are secure or not. There are tons of stories of people out there who used to make a 6-figure income and now are struggling. And they aren't just white collar workers. Others who were foremen or plant managers - non-white collar tenured workers who made 6-figures - have also been laid off.

The economy is recovering but only on paper. There's only 1 bull market right now and that's in the equities market. The one thing I absolutely hated about real estate were all the realtors who know nothing of financing or economics who tried to push real estate as an "investment", better than the stock markets. Wrong. Wealth accumulation through real estate is a side benefit (since you can't turn it over easily like the equities market).

But the reality is that while some real estate markets should and will grow, overall, there's too much inventory. Too much existing homes inventory and newcon can't, won't and shouldn't start up again (Tolls Bros baaad 4Q loss)

Until jobs are created and job creation sustained - there is no valid reason for the real estate market to "take off". Sitting on the fence is a good thing.

In the stock market, wisdom says that on a macro level, you buy on strength and sell on weakness. The execution of that is you buy when there's a weakness in pricing (for example recently Aple traded at $189 per share, down from trading above $200; Apple is not a weak company so you buy into the weakness in price but you are buying into a strong company). Likewise, until the real estate market itself show strength on a macro level, inventory is too high, prices are still too high, and sitting on the fence is a good thing, regardless of interest rates. Why buy into a weak market that still needs severe adjustment?

Posted by John Smith about 8 years ago

Me and my investors are buying as many houses as we can!

Posted by Peter Burr, Regional Manager. Atlanta, GA (The Buyers Agency, "Empowering Atlanta Home Buyers") about 8 years ago

My personal thought is that borrowers should not be purchasing unless they have 20% down...that is part of the reason for so much irresponsibility on the borrowers side.  It has caused such a mess for everyone....and allowing less money down had made it too easy for homeowners to walk away. And they did.

I am uncertain that the bottom for real estate is in place. And I live in an area cesspool of worst hit in US declining values:  Cape Coral/ Ft Myers FL.....Borrowers beware.

For areas like Charelston SC & Raleigh NC, you all have yet to feel the crunch as badly as it may become....and I hope you don't have to!  : )

Posted by Kathleen Garvey, Denver's Neighborhood Expert - Listings & Sales (Cherry Creek Properties - Denver) about 8 years ago

if you can buy afford to buy a home and you are waiting ,, you are stupid .... you get 8k ,,, rates all time low .... what the hell more do you want

Posted by Gene perez (Greater Mortgage Solutions & Valley Hills Realty ) about 8 years ago

Thank you for your post. I have have sent your piece out to about a dozen of my fence sitters. The most important thing today is to make sure the potential buyer understands the real estate market - from there it is there choice as to what to do.  I will let you know what repsonses I receive.

Thanks again!

Posted by Warren Schutt, Helping People with Their Moves for over 36 Years (Warren Schutt Real Estate) about 8 years ago

I was happy to get 10.5% interest on my first home.  I have paid up to 12.875 interest for a 4-flat I owned.  Those rates were good at the time.  When I got a home for 8.5% I was elated since that was the lowest interest I ever paid - up until recently.

I am selling my current home and moving into a little larger one.  We love our house and thought it would fit us (my adult daughter moved back after 11 years with her daughter, now 7).  We simply need more space and we feel now is the time.

I am happy with what we can get at the price right now.  We will be staying in our next house for a long time.  We know prices might continue to drop but we're pretty sure interest rates will increase.  We don't want to wait around to see what happens, we need more space now.

Posted by Judy Orr, SW & Near West Chicago suburbs (HomeSmart Realty Group) about 8 years ago
There will be plenty of people on the local news in a few years complaining that they can't buy a home,(interest rates too high, too much competition, etc) buyers need to take action immediately to avoid that fate. Now is the best time to buy a home, period.
Posted by Stephen Garner, Hub Media Company (Hub Media Company) about 8 years ago

Laura-Nike's slogan fits appropriately here. :)

Carl-I agree it may not be for everyone and I'll be the first to advise a client of that.

Dana-It does depend.

Karen-I don't think the author's intent was to offend as much as it was to garner one's attention. I have worked with 3 1st time buyers this year that had a 20% downpayment.  I think one thing we will see in today's economy is people getting back to the basics. Live below your means. Already the percentage of people saving money has increased and using credit cards has waned. My husband and I at age 30 become completely debt free-no car payments, no student loans, no credit cards.  We rented cheap for a year and saved up a 20% downpayment as well as an emergency fund. 

Hannah-We've been seeing that in our market for a while now.  When inflation hits, prices will soar to catch up with the cost of building materials, etc. 

Dick-It'll always be the American Dream to own, but there are times when renting is a better solution.

Tim-I have buyers that bought 2 years ago and they don't regret that they have been able to make use of their home, paint what they want, decorate how they want, do what they want, when they want because they won't be bothering the neighbor below or upstairs.  Prices have fallen since then but for those that plan to be in a house long term, they don't want to hold out forever.

Bill-It's definitely a conversation starter!

Bob-There are a lot of other issues impacting the real estate market. The powers that be have swung from one extreme to the other and we need to get balance back. Sales were up over 10% in November from last year at the same time so someone is buying a house and I bet they are getting a great deal.

Deborah-I agree that a buyer could get offended and you need the right sense of humor.  The local board here has put up billboards around town for the last year or so saying "Smart People are Buying Now" and "Someone else is loving your rent money."  I hope this does help realtors show buyers that are qualified, ready, willing and able, that plan to be in a house for the long haul that this is a great time to do it.

Kaunda-The unemployment numbers are harrowing, but there are lots of people who have good job security that can make the move.  There are people who want to downsize and now is a good time.  There are qualified buyers that want to do something but are paralyzed by analysis paralysis.  They need to see if the numbers work best for their situation.  Homebuying is not for everyone. It is NOT an entitlement.

Mike-Me neither. That is why we offer a consultation to help buyer decide if it's a good idea for their family.

Linda-All good things must come to an end.

Michael-Buying power...that's the ticket!

Katie-I think as rates rise, we may see more buyers get off the fence in a panic and they will wish they would have made a move earlier. 

Ron-It's interesting to see how media has changed its perspective over the last 2 years.

Chris-The funny thing is that all buyers want to know when the bottom is and will wait for true indicators, but by the time that happens, we'll be on the upswing.  You are right that the best deals will be taken.  Again back to Warren Buffet infamous quote: Be fearful when others are greedy, be greedy when others are fearful. Again, the author wasn't trying to offend IMHO, but I bet it got a lot of people's attention.

Dianne-Buyers just need an advisor to help them and sometimes calculating out the numbers helps.

Donna-Great for buyers in Toronto! I'm so glad to hear it.

Frank-All good points.

Terry-I bought my 1st house at 7% in 2001.  I'm glad I didn't think about the interest rate.  I still own that property 8 years later as a rental and although value has spiked and dropped, I'm still up about 30%+.  Real estate is still a good long term investment.

Karen-I also think we'll see some price dips but in my market, they are not so dramatic. Foreclosures and short sales are on average at a 20% discount and that has been pretty steady over the last few years but we have many resales still at strong prices.  Foreclosures and shorts sales often need work and they are not for every buyer.  Some buyers realize the time and investment cost of buying a fixer upper and decide to pay a little more for something in move in condition. It does depend on each market. 

Tere-I'm glad to hear it's moving some people off the fence.  Good for you for being brave to post it!

Scott-Getting buyer's attention is exactly the point! Carpe diem!

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) about 8 years ago

Great information.  We keep asking ourselves here in Virginia "What are buyers thinking"?  It is already being predicted that interest rates will begin to rise again in mid 2010.  The length of time it sometime takes to close buyers need to get off the fence and get started.

Keep up the good work.

Posted by Dave Shockley, Putting my clients needs first Roy Wheeler Realty (Independent Contractor) about 8 years ago

For what it's worth, let's keep things in perspective by applying the relativity factor....we bought our first homes in the late 1970's. The price of the first one was $17,000, older, but in good shape and about 1200 or so square feet, with a detached garage and fenced yard...interest was about 11-12% then, as I recall. The second one was a large (about 1800') brand-new all-brick bi-level with a view of the valley below, for $50,000; it came to us at a signifcantly higher interest rate, probably around 15%.

Posted by Karen & Doug Parker, From Hilliard to the Hocking Hills Ohio (Sorrell & Company Realtors) about 8 years ago

Many reasons I disagree with the blunt title. First of all, millions of people's credit has been ruined during this economic disaster due to loss of employment etc. So that can't buy a home no matter how badly they would like to.

Second, people don't own homes. Homes own them. You couldn't pay me to buy a home today. Why? Because nothing is for sure in this economy. What if you need to take a job 400 miles away and need to do it suddenly? What are you to do with the house? (being a landlord sucks, and you can't count on selling it either)

I always looked at home ownership as the american dream. Now I place it in the category with all other possessions. You don't own stuff..stuff owns you. And even if you think you own something, just try not paying your taxes one year and see how long you own it.

Having said that, you can understand why after 12 years I am taking a long sabatical from the real estate business to do the only other sure thing in this world other than death...I'm going to be a tax preparer. :)

Posted by Kimberly Luna about 8 years ago

"Stupid or Broke" I don't like it either but let's face it, the title gets your attention. I guess it does depend on where you are buying and whether the prices are still inflated or not as to "good time to buy vs bad time to buy". In my neck of the woods it is definitely a good time to buy. I just sold a house to a young couple with 3 children on a FHA loan. Their payment will be far less than any rent they could ever find plus they will get their tax credit and plan to pay down on the principal. The house where I grew up in Gatlinburg Tn cost my Father $17,000. to build in 1966 or 67. 43 years later you can buy a house for under 100K. In today's market, you can find very nice homes at very affordable prices. Sorry James but I totally disagree with you. Everyone needs a dry roof over their head whether they rent or buy and it is our job as a Realtor to help find that dry roof suitable for our customers/clients. If you qualify for a loan and your payments will be less or the same (or close to) as the rent you are paying now then BUY! It doesn't make $$$ sense not to. Regardless, we all have to have a place to live. If you don't qualify for a loan then hook up with a Realtor and a mortgage broker that will guide you through the process on how to improve your credit. There are a lot of us who are broke but I don't think anyone is stupid. Common Sense rules this discussion.

 

Posted by Marcie Lanz, Realtor - East Tennessee (Jackson Real Estate & Auction) about 8 years ago

Al- I'm certainly not the expert in finance or eonomics but I do like to read what the experts say. I thought this chart from Steve Harney was interesting. All investments whether stocks or real estate should be looked out over the long term. While the real estate market was inflated, it's still interesting to see how the stocks compared.  My parents bought their home in 1980s for $50K. They still live in that home and even now in today's market, its worth about $175K.  I'll bet my parents will say, it was a good investment over paying rent for 30 years.

Return on investment real estate vs stocks 

 

Peter-Good for you. I know of lots of other investors doing the same.

Kathleen-I agree that there has been much irresponsibility on both side of the lending and borrowing game. Each area has different dynamics. Charleston has experienced a decline in prices, some suburbs worse than others. Last year it was a 4% decline in appreciation. Local economies definitely will impact the real estate market. There are lots of factors in play that determine the strength or weakness of each market. As they say, Real estate is LOCAL!

Greater Mortgage-I don't know what more either...Real estate just like the stock market is a risk. It's not for everyone.

Warren-Would love to hear the responses you get!

Judy-Kudos to you for weighing the decision and making your move. We are in the same boat in moving up. We lost about 10% in selling our home, but even if we take another 10% loss, because of the move up in price point, we are still making out on the positive side.

Stephen-If it's not one complaint, it will be another. Gotta pick your poison.

Dave-It's a good time for buyers to consider it and at least start looking so that they know a good deal when they see one.

Karen & Doug-It's always relative!

Kimberly-The author points out very quickly there are lots of reasons that people can't or don't need to buy. Again, the title is meant to grab one's attention for those who can but are on the fence.  Homes do not have to own people.  This is where good decision making and financial planning is necessary.  There is a movement happening with people counting the costs. I recently worked with a young man in his 30s that had been saving up for a house.  After weighing the costs, he could own a home for about $150 more than his rent after putting down a 20% down payment.  What 30 year old has a 20% down payment you ask?  I know this might seem like an anomaly and I think it is more rare than common, but my husband and I also are part of this movement to be debt free which we achieved 2 years ago after looking around and deciding we can't afford to keep up with the Jones's.  I owe several rental properties and love it about 85% of the time. It's not for everyone but again homeownership is a risk, just like the stock market and it should be a calculated risk.  Good luck in your new career!

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) about 8 years ago

It is a great time to buy -- with one qualifier.

It is a great time to buy if you are buying a house to live in it and stay in it for a while.

If any Realtor is encouraging people that this is a great time to buy because they'll be able to flip and make some cash in the foreseeable future, the odds are that it will come back to bite him.

I've been telling my clients and my blog readers and my newsletter subscribers for a while that it is a great time to buy - but I go further.  I ask them why they want to move.

I ultimately put it into a converse statement like this --  If you have a valid reason why you want a new house, the current market conditions are such that there's no reason to wait. Whether it's space, commute, or other factors doesn't matter - do you need a new home is the question.

I use myself as an example.  

My wife and I bought a new condo 2 years ago.   Where we were there was only 1 parking spot, which wasn't even anywhere near where our unit was.  Our second spot we had to buy monthly in a town lot 2 blocks away.  

We sold, bought a new condo with a two car garage that opens onto the main level of the house.    

Since we bought it, the prices in our new complex have come down by almost 20%.  I don't care!  For the last two years my tired old knees have not had to endure climbing a set of rickety wooden steps in all weather to walk from the puiblic lot 2 blocks away every time I came home. 

The complex where we sold has come down about 18%.  So why should we have waited?  We had a valid reason to move and it was the smartest thing I ever did. 

Had I decided to wait until after "the bottom", I'd still be in the old place.  If the "bottom" comes two years from now and things slowly start to rise and I held off until then, my equity exchange would be about the same as when I made the move.  And I would have been miserable for an additional four years.

So it is a GREAT time to buy if you have a good reason to do so.

 

 

Posted by Rick Schwartz (William Raveis Real Estate) about 8 years ago

Both sides of this argument have their points.  The truth is, however, that no one really knows for sure.  Real estate is a market.  Once the tax credits are gone, prices for homes in the price range that qualify may have to adjust $8,000 down to compensate in order to sell.  As the economy improves, interest rates are sure to cycle back up and homes may become less affordable. The market will decide.

The role of the agent is to "educate" the buyer (and seller) to make the best decision for THEM. That means giving the consumer ALL of the information they need.  For too many years, many agents have sounded like a broken "pollyanna" record ... "Now's the best time to buy," "Now's the best time to buy."  Chances are that today might be the day for all of the reasons mentioned.  But, many have lost "trust." Up-front, honest education will go a long way.

Posted by Jeffrey Howard (Winning Sales Habits) about 8 years ago
Michele, maybe people don't buy a house cause they are content and just in today's economic climate think the timing STILL is not right. I wouldn't call it stupid, but comfort level. I call it gut feel. It us ok. You don't have to buy a house!
Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 8 years ago

I like the direct approach of the article.  For some time now the Fed has bascially been telling people to get their personal financial house in order before rates rise.  And part of that process should be buying or refinancing their house if possible.

Posted by Stuart Dobson (eLoanRates.org) about 8 years ago

Nice post -- I am confused when everyone says that prices are good. They are good relative to 2007 I agree but are they good relative to 2011? Of course we do not know. Human behavior is based on “did I get the best deal”? Many are waiting in the Northeast – I suppose – because prices are still dropping. Comps are difficult because of shorts and foreclosures. Tough call… great discussion..

Posted by thomas dineen (RE/MAX House Values 4) about 8 years ago

I'm sorry to be another wet blanket on the party here, but the fact that responses to this article are at least 10-to-1 favorable is exactly why so many people have a dim view of Realtors.

The agents telling people that they are stupid not to buy now are the same agents who were urging everybody to get into real estate during the boom years because they thought the party would never end.  The truth is that it's a great time to buy for SOME people -- those that can make the down payment, make the monthly payment, and stay in the property for a long period of time.  This is not the time for buyers who can barely qualify.

On a side note, although I have been a member for about a year this is my first post to Active Rain.  Am I the only person shocked by the poor grammar and spelling of so many agents?

Posted by John Diebel (Real Living Helios) about 8 years ago

I'm afraid James is correct. It sure sounds like a good idea to have buyers flock into the market when rates are low, but over the long term, how can this possibly be good for them when the rates shoot up as they eventually must?

The self-interest side of real estate professionals might be tempted to push buyers toward a sale now but would that really be in their best interest?

 

Posted by Rick Fisk (DriveBuy Technologies) about 8 years ago

I'm glad to see that not every Realtor is buying into this notion about "Perfect Time to buy Real Estate". It's only perfect if you have a boat load of cash, and you (the buyer) can afford to take the plunge knowing your current and (hopefully) your future economic situation.

Sure I'm here to sell homes to buyers, but I'm not here to convince them to disregard their common sense if their local economy is in shambles and don't appear to be recovering.Sometimes it just makes sense to RENT until you have an (educated feel) on which way your Local Economy is heading. It don't matter much what is happening in other parts of the country, your Local economy and your financial future should determine what the right thing is to do, not some guy writing for a magazine, a Realtor pushing houses, or a Mortgage Broker wanting to loan money.

In Jackson, Michigan where I'm from, I think renting benefits more of the population than we care to admit only because, jobs are still leaving and the ones that are here are not as stable as they used to be. Renting gives you the option to pack up and move (on a moments notice) without having a house you can no longer afford holding you back from possibly getting back on your feet elsewear.

 

Posted by Ray Logan, Facts and Results, not Hype and Excuses! (RE/MAX Platinum) about 8 years ago

I am considering forwarding that article to some particular fence sitters who are waiting for the "bottom". 
While I don't want to offend some potential buyers, my thought is that if they keep on waiting for that elusive bottom, then it will pass them by and they won't ever be willing to buy because they will wait for the next bottom.
It is interesting that the author, Marc Roth, originally titled the article "A Gift of a Lifetime".  Would we even be discussing this article with that title?
I wrote a similar article a couple of months ago, without the shocking title.  I don't think it moved any potential buyers to do anything.
Different people require different motivations.  Some need subtle logic, while others need a big shock.
I have one fence sitter in my database who has been waiting for 20 years for the prices to be low enough.  He has lived in the same apartment all this time, paying rent.  He has a high paying job, more than the cost of a house in savings, and he still wants to wait for the bottom.

Posted by Bob Willis, Orange County & L.A. County Real Estate Agent (Berkshire Hathaway HomeServices California Properties) about 8 years ago

I like the way you put that Gary "Comfort Level". I failed to mention that not everyone is ready to buy a house. I agree with Franks comment too. Everyone should use their best judgment. IF you are ready to settle down now IS a good time to buy. If not, follow your heart. LIVE LAUGH and BE HAPPY!!!

Posted by Marcie Lanz, Realtor - East Tennessee (Jackson Real Estate & Auction) about 8 years ago

I can think of plenty of buyers that would feel much more comfortable in buying (myself included) if all of the games by the lenders and the Govt. were not being played.

Inventory being held off of the market, Forced loan modification reviews, Deed for Lease programs, etc.. etc..

If the market was a true market then the article would have more merit but the author has failed to even mention the market tampering currently taking place.

As for a "Stabilizing" economy.... then why are all of the programs being extended / government feel it's neccessary to continue out of control spending and actually requesting to raise the debt ceiling? Why did unemployment benefits have to be extended... again?

If housing has stabilized as the normal "it's always a good time to buy" cheerleaders suggest, then why were they so adament in screaming that we need to extend / expand the first time homebuyers tax credit?

Are people really stupid for not buying now? Are banks really stupid for not lending their own money? Why is the Federal Reserve the only buyer of Mortgage Backed Securities? Are the truly savvy investors that typically purchase Mortgage Backed Securities not buying them today because they are stupid?

Hmmm....

After 9/11, the Fed tampered with interest rates to stimulate spending (more debt) and look where we ended up...

Today... the Fed is tampering with interest rates to keep those same artificially high prices - high.

Buyers qualify for loans based on the monthly payment... if rates go up... their purchasing power goes down. Unless current incomes rise (no chance with what is currently taking place as small businesses continue to get hammered) prices will go down and the Fed knows it.

On the Flip Side...

For my current area... I certainly think it's a good time to buy because prices were decimated long before the tampering began --- If you can find anything decent. 41% of all the closed deals last month were CASH deals and that is REAL stability.

I'm also a Broker in another state and I certainly would not buy there right now -- no matter what the interest rates are because I think the prices are too high considering the overall fundamentals. 

Certainly a very interesting article and thank you for sharing.

However... when I see the interest rate sales tactic being used, I see inexperience in basic economics.

For anybody who really thinks the economy is just fine and stabilizing... then contact your Representatives in Congress and tell them to stop the out of control spending with borrowed / printed money. ;)

 

 

 

 

 

Posted by Paul Francis, Las Vegas Real Estate Agent - Summerlin Homes (Francis Group Real Estate) about 8 years ago

Heck the title got my attention.  some good insight on the current market!

Posted by Brian Hurt, ABR, E-Pro (Keller Williams Premier Realty) about 8 years ago

I love the post, well put together and you make a number great points.  Agreed!  ~ Brad

Posted by Brad Calef (Coco Plum Realtors) about 8 years ago

I agree Ray! A good salesman/woman would never sell ice to an Eskimo.

Posted by Marcie Lanz, Realtor - East Tennessee (Jackson Real Estate & Auction) about 8 years ago

Thanks for linking us to the original article.  Wow, this is really eye-opening!  It inspired me to doodle a chart with the principal and interest payments for loans in increasing increments of $25,000 at interest rates ranging from 4.75 to 6.5.  Pretty interesting stuff!  Thank you!

Posted by Melissa Brown, Realtor - South Charlotte NC Homes for Sale (Helen Adams Realty) about 8 years ago

I have found that we only find out that we are stupid by looking in the rear view mirror. We can look at our checking account to find out if we are broke.  Those of us who bought at the wrong time turned out to be stupid. Those of us who buy today might also turn out to be stupid -- but I doubt it.

The time to buy is when you find a house you like that you can afford. Today's low interest rates make it possible to afford more house -- assuming that you are secure in your income stream.

Predictions come at us from all directions. Some of us think the housing markets will improve and some of you think they will continue to deteriorate, and you know what -- some will be right!

IMHO "This is a great time to buy a house."

Akron, Ohio

Posted by Thomas McCombs (Century 21 HomeStar) about 8 years ago

I dont put a gun to anyones head if they want to buy or sell. I am merely a tool to be used for the process.  I agree - it's a good time to buy and sell.

Posted by Teresa K. Nelson (Windermere Real Estate/HLC) about 8 years ago

50/50 article meaning it is half correct (IMO). The first half was fairly correct. You have low rates, low prices, and a tax credit. Certainly a good time to buy.

However that is where the author should have left good enough alone instead of playing math teacher. But now I'll play the same math teacher role....lol. On the 2nd half of the article speaking about lower prices with higher rates this is incorrect. It always make sense to buy as low as possible even if the rate is higher. I would tell someone to buy for $200 at 7-8%, makes more sense than to buy at $300k for 5%. Why, because you can ultimately refinance and get a a lower rate but you cannot refi and drop your loan amount. Ultimately the $200k person will have paid less in the end. Not to mention WHAT IF in 5 to 10 you had to refi to pull a little cash out for emergency. Now you loose your wonderful little 5% and still have a high loan balance. Make sense. Always buy as low as possible.

I won't even open another can of worm about the economy side of this philosophy! =)

Bottom, line keep it simple when explaining to buyers: low prices, low rates equals safe/good time to buy.

Posted by Joey Arce (NUllennium Realty/NUllennium Lending) about 8 years ago

That was a great article by Roth.  Lots more numbers in the read that are very interesting. 

I however can see that many are not ready to buy.  With unemployment at 10% nationwide and 15+% here that means that 85-90% have jobs now.  But many of these people may be looking at future layoffs as well.  I have had the experience of wishing I had remained in a rental myself when I needed to sell and could not get what I owed on my home. 

I also agree that with prices down by over 50% on many homes here if you have a good stable job and are planning on staying here for a number of years there may be no better time to buy.

Posted by Jackie Cross (Real Living All Florida Realty) about 8 years ago

Great blog!  I think the title says it all, and you make some good points in your blog as well.  Thank you for the good summary of the current marketplace.

Posted by Tim Duvall (Area Manager at Guaranteed Rate, Inc) about 8 years ago

Yes, mortgage rates and home prices are low. However, any potential "Average" home buyer sitting on the fence, who is watching the unemployment rate,  has had family member(s), friend(s) and/or neighbor(s) lose their job(s) and possibly their home(s) to foreclosure can NOT and should NOT be described as having a lack of intellectual acuity, or skint.

  

Posted by R Grodin about 8 years ago

So many differences of opinion!  Thank you for the great blog post though.  I wrote one that was similar to this.  I guess my two cents are that we have to have the courge to tell our buyers the facts and we have to educate them about what is going on. If they understand it and trust us they will buy.  The will stop listening to Uncle Tom and they will get their home now while they can get a 1500 sf sfr vs 1000 sf condo in a year because prices went up and so did interest rates.  Now I am not suggesting that we force a client into a purchase they cannot afford or are not ready for emotionally.  But if they listen to the media and all the talking heads instead of us, their Realtor, they will never buy!

Posted by Wendy Rich-Soto Realtor,Real Estate Coach & Consultant, "Bridging Your Way Home" (Keller Williams Realty, LA Harbor) about 8 years ago

I keep telling people this but so many are waiting for the next crash.  Even if prices head down some the interest rates cannot stay this low.  I think the price decrease is not just because of foreclosures, but the over pricing that went on for a few years.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) about 8 years ago

Wow! This is a hot one! I read the article as well as all the comments that followed on the Business Week site, and it was fascinating!  You definitely have to appreciate both sides here for their historical perspective.  While I do believe it is a great time to buy, it really is only a great time to buy for SOME people.  Most of the first-time homebuyers who are hesitant to commit are those who are worried about the future of their jobs.  And with unemployment rates as high as they are, it could strike anyone without warning.  Excellent post for discussion.

Posted by Peggy Chirico, REALTOR® 860-748-8900, Hartford & Tolland County Real Estate (Prudential CT Realty) about 8 years ago

Once Upon a Time first timers Buyers could not get in, now they can. If you can afford to buy a home vs Renting then buy. "Rent < Own" however I believe the worst is far behind us now and now is a good time to buy even if home values dip a little more in some markets. It will recover and some markets are showing it!

"I happen to agree with his prediction that as the economy becomes more stable, interest rates WILL rise to hedge inflation" Agreed.

Posted by Brett Dalbeth, Laguna Agent (iPro Real Estate) about 8 years ago

I love the title to the article is grabs your attention, we need as agents and brokers to grab the b buyers attention and let them know hey this is serious stuff, you need to move on this or it is your loss! Being blunt in my opinion is a good thing as long as it comes from the heart and is delivered with a definiteness of purpose & tact.

Rick Borden

Posted by Richard M. Borden (The "Borden Real Estate Network") about 8 years ago

     Great article Michele! And you also attracted some great feedback and comments. Way to GO! I lived through those years myself.

Posted by Pat Argo, CRS (Keller Williams Realty of Brevard) about 8 years ago

With low prices and low rates, it's a good time to buy. However, if you can negotiate an even lower price, so much the better. For 1st time buyers, the tax credit is a great deal! Whether it's a great deal for those taxpayers who get to pay for it is another question...

Posted by Bob Krus, What About Bob? For All Your Real Estate Needs! (Keller Williams Foothills Realty) about 8 years ago

The best answer I feel you can ever really give anyone in this business, until you know specifics, is "it depends."

I'd like to address what James McCormack had to say:

The author of the article argured his point from a rate stand point and he makes his point clear using a couple of assumptions:

  1. $200,000 home price
  2. 20% down
  3. buyer will stay in same loan for 30 years

Each point increase in rate will cost a buyer nearly $50,000. A 10% decrease in price would mean a $20,000 difference to a buyer. Based on that alone, your argument loses air from the beginning. If you sell the home in 5 years you have to determine if you will make back that $20,000 price decrease.

There are other economic factors at work with our national economy but that wasn't the authors point. He clearly states that you don't have to buy, he just makes a great argument why you might get off the fence.

My father taught me that there's no such thing as a free lunch and a nickel beer. Smart man. As agents, we should be reinforcing our client's awareness of the costs and risks associated with buying and owning property.

It's a great time to buy. If you are fit the right model of a homebuyer for the region you are in and make a wise buy that will work for you.

 

Posted by Jason Graves (Linda Craft & Team) about 8 years ago

I absolutely love the blunt approach... then again, that's just my style ;)

 

Nice post!

 

Be well,

Brendan Winans

Posted by Brendan Winans, Professional Real Estate Services (Winans & Associates) about 8 years ago

As usual we will hear: " I wish I would of" "If only I" etc. Now is a great time to buy.

Ty

Posted by Ty Lacroix (Envelope Real Estate Brokerage Inc) about 8 years ago

Michelle, good post and what's even better it's not NAR saying it!  Congrats on the feature in the newsletter.

Posted by Lyn Sims, Schaumburg IL Area Real Estate (RE/MAX Suburban) about 8 years ago

Excellent post, I missed this article and am very happy you posted it.

 

Posted by Ryan Servatius, Waterfront Communities (Century 21 Affilaited) about 8 years ago

Michele,

Thanks for doing the math!  You make excellent points!

 

Posted by Kathy Opatka, Serving Ocean City, MD, & The Delaware Beaches (RE/MAX CROSSROADS) about 8 years ago

If you've been saving up for awhile and have a "steady" job (what does that mean these days) then it's a great time to buy. There are a lot of homes priced very well. But it's a case by case basis. I like all of the discussion here. Very thought-provoking. Keep it up.

Posted by Beverly of Bev & Bob Meaux, Where Buying & Selling Works (Keller Williams Suburban Realty) about 8 years ago

Michele...I WISH our average decline of appreciation was only 4%!!  Like I mentioned, many areas have not been hit that hard...and I hope you don't experience it at the levels we are dealing with in Florida.  In SWFL, people from up north are buying like hotcakes. Many investors already walked away the first time, adding to the decline in prices. Now, they are back and paying cash in this major fire sale. Our values have dropped 50-80% in the past 2.5 years.  It makes 4% decline look like a fairy tale. 

Real estate is being bought in Florida...and these deals are deals of the century for sure.  I just wish I didn't live in the middle of it myself!!

Posted by Kathleen Garvey, Denver's Neighborhood Expert - Listings & Sales (Cherry Creek Properties - Denver) about 8 years ago

BHi Michele,  Sometimes it takes a 2x4 between the eyes to get people to listen.  Great post.

Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) about 8 years ago

Now, more than ever before is the time to buy.  But if people are still on the fence, there has to be a reason.  There is great uncertainty about jobs, financial stability, etc.  For those who are still on the fence, I don't think that there are any new "tricks" that a realtor can pull out of his hat.  Remember, market price is determined between a willing buyer and seller.  Right now, if willing buyers aren't out there, the market still needs to correct itself.

Posted by Martin Kalisker, Professional Standards & Legal Assistant (Greater Boston Association of REALTORS) about 8 years ago

Of course we want buyers to buy.  I don't think it's the right time for many people, though....or they would be buying.  I'm glad consumers are apparently becoming more thoughtful and conservative about their expenditures (including home purchases)....and I use the word "conservative" conservatively.  I'm politically and socially a liberal!

Posted by Kirsten Lindquist, Realtor - Sonoma Wine Country (Pacific Union International) about 8 years ago

I LOVE the title! Sometimes a slap like that is exactly what people need to see what is really there!

Posted by Todd & Devona Garrigus, Broker / REALTORS® (Garrigus Real Estate) about 8 years ago

"If there is a 10% decrease in price and the $250,000 falls to $225,000 in one year, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422.  You spend more money per month plus at the higher interest rate, you pay more interest over the life of the loan.  Real estate appreciation is always a cycle and as the economy stabilizes, values will level out."

Preaching to the choir, I keep saying this, over and over. Some people just don't believe...

Posted by Vanessa Stalets, REALTOR, Brentwood TN Homes, Real Estate (RE/MAX Elite) about 8 years ago

Not  only will rates go back up...inflation is getting ready to hit us all hard.  The govt keeps printing money...making our dollar worth less each day.  It has to end up worthless if they continue.  Then no matter if you do have money, you still won't be able to afford anything.  So, if you have money...you'd better buy something now.

Posted by Monica Hess, Kentucky's Feng Shui Master (Feng Shui This Kentucky) about 8 years ago

These type of articles are unprofessional.

While financing is an fundamental component of the homebuying process, it is only one component.

My first-time homebuyers have made educated, wise choices.  Here in the Louisville metro market, our values as a whole have been relatively stable through this "Great Recession."  And the combination of low FIXED 30 year interest rates, affordable housing, long-term plans to stay in the community, and long-term job security make it a great time to buy for them.  Add in the $8000 tax credit as a bonus, and for people I've helped over the past year, the consensus was it was a great time to buy.  

Interest rates alone should not make or break the deal.  Other factors need to be in alignment.  Now if they are, then interest rates being so low are a strong incentive to purchase, provided buyers are getting great long-term, fixed rate, amortized financing.  

We are professional consultants.  Interest rates are only one piece of the puzzle.  A short-sighted article such as this is not the image we should be portraying to our clients and our communities.  

 

Posted by John Holtzinger (Cardinal Home Realty) about 8 years ago

Michele,

The numbers don't lie.  And, the opportunity won't last for long.  Nevertheless, there will be those who will be saying, "If I'd only...".

Posted by Eugene Adan, Carlsbad Real Estate (Adan Properties, Carlsbad, CA (760) 720-9710) about 8 years ago

YOU WROTE

"We offer a free consultation to buyers to see if it's a good Idea for their Family"

I am Speechless:)

As to the main theme Broke or Ignorant fits closer to the truth.

Many renters/families young and old don't know that they can and are qualified to buy property.

 The great 'LIE' is you can get more house for your money;;[first time or moving up]

As someone else said;

You can buy the same house for either 100k during high interest times or 150k inflated during low interest times same cost same house.

You will always live were your income and resources deem you can if you try to manipulate that fact well.......

you get what many are getting now.

Phil

Posted by PHIL MCGREEVY about 8 years ago

I asked a 55-year-old man who attended one of my first time homebuyer seminars why he had not purchased a home yet.  He said, I'm waiting for a good deal.  I then asked him, how long have you been waiting? He responded: 30 years.  

Posted by Nelson Carrillo, South San Diego, CA Homes For Sale (McMillin Realty - Phone: (619) 940-6560) about 8 years ago

You're right. The title was a little too strong. And I know you didn't write that. People buy homes for all sorts of reason. I wonder if the author of that article bought a home himself in this time?

Posted by Loreena and Michael Yeo, Real Estate Agents (3:16 team REALTY ~ Locally-owned Frisco TX Real Estate Co.) about 8 years ago

Interest rate are really at the bottom now.

There are many reason beside rates that are reasons to buy.  Many have already been stated.

I one thing I really like to see at the bottom of a cycle is when it's cheaper to buy than pay rent.  Not everyone will be able to qualify but those who can will be motivated to make the move to owning.

Posted by Mark Watterson, Utah Real Estate about 8 years ago

Thanks for the great article

Posted by Thomas Reid (EXIT Realty Homeward Bound) about 8 years ago

Thanks for the heads up on the article... great read!

Posted by Ryan Hukill - Edmond, Realtor, Team Lead (ShowMeOKC Real Estate Pros of KW Elite) about 8 years ago

Michelle,

Thanks for the great article.  I am in the Upstate (South Carolina) market and we are finally getting people to understand that it is the time to buy.  I am continually surprised how much people don't know what they don't know.  Our job, more now than ever, is to keep the public informed.  An addition to the example you used ($250,000 purchase, 5% down, 5% vs. 7% interest rate), another fact that people don't realize is that if they take a mortgage out at the 5% vs the 7%, after 5 years, for example, they will have reduced their outstanding balance ($218,093 @ 5% interest rate vs $223,563 @ 7% interest rate) by approximately $5470.  That is cash they wouldn't have at the higher rate!!!!!  

Keep up the good work. 

Posted by Anush Showghi -Greenville, SC RE Broker (Prudential C. Dan Joyner) about 8 years ago

As a few have pointed out - it's a good exercise for fence-sitters.  Have the stable job, have the downpayment, like the house, plan (for good reasons) to be there many years, will use 28% debt-income on housing, few other debts?

and...

Can one reasonably expect or predict that prices will NOT go down by 10% or more?

The fact that interest rates are so low and either a)increase your "purchasing power" or b) reduce your debt-income ratio - you should qjuit wiating and go ahead and buy.

Posted by Bo Bromhal, Triangle Native, 2 decades of experience (Fonville Morisey) about 8 years ago

Very well written and I had planned to re-blog it until I read your solicitation for business.

Although you are certainly justified to promote yourself, it was a little much for me to re-post to my page.

You still deserve the congratulations for a job well done with your thoughts.  Joy

Posted by Joy Carter & Jeff Booker Brother and Sister Team, Trust Your Family's Move To Our Expertise! (Keller Williams Parkland/Coral Springs Realty-GreatFloridaHomes Team) about 8 years ago

Great post, Michele.

I printed it out and I'm planning to show it to everyone I know.

Thanks a lot and Happy Holidays!

Tommy

Posted by "Tommy" Decebal, Adamescu Long Island NY MASTER Home Inspector (HomeSpector Inc. 516-851-5833) about 8 years ago

Right on point. Now is the best time to take the plunge. Many people understand graphs, so maybe I'll make a graph to show them the comparison of rates over a period of time.

Posted by Dennis Puckett (Adams,Cameron & Co.) about 8 years ago

I know I shouldn't but I can't help myself...

STUPID IS AS STUPID DOES!

Hehe!

OK, give it to me, I have it coming...

Posted by Bob Krus, What About Bob? For All Your Real Estate Needs! (Keller Williams Foothills Realty) about 8 years ago

When was the last time a real estate agent or a mortgage professional ever claimed it was a bad time to buy a home? NEVER...

In my short tenure of 10yrs in this industry, the standard pitch has always been "it’s a great time to buy a home!”. This rhetoric has never changed. The only thing that has changed is that previously we could say “it’s a great time to sell!”.

So if now you’re "stupid" not to buy a home, you must be a real "moron" to sell your home in this market.  So why is it a great time to buy now?  Because last time around the idiots believed our mantra and were fooled into thinking it was a great time to buy despite them not having the means to carry a mortgage.

This herd mentality is damaging to our professional integrity and reputation. The bottom line is that it’s the circumstances of the individual that should dictate their decision. As someone previously said, it's a good time to buy when its cheaper to own than to rent after considering appreciation or in this market depreciation along with tax write-offs despite what the interest rates are today, yesterday, or in another 10 years.

Posted by Patrick Fleming (WorldSelect® Real Estate) about 8 years ago

WorldSelect (Patrick):  I think it is rarely wise to generalize and globalize when making statements like you have.  Within the last month I wrote a post... it was on November 11, 2009.  The title was "When Was the Last Time you Counseled a Buyer... and Suggested They Continue Renting ?  You might want to go to my blog and read it.

It brought sixty-three comments... and was given the coveted "Gold Star", and deemed to be a "Featured Post" by the folks at Active Rain.  I am suggesting that perhaps you see what you want to see... and that you have a less-than-positive attitude.  There have been many times when I have suggested against a buyer making a purchase... when, after considering their circumstances, I shared with them that I felt it would not be in their best interests to purchase at that time.  You see... not all Realtors are commission-whores.

By the way... I do NOT like the title of this post myself.  Calling someone a moron or stupid for not buying a home... as I commented above... I thought the title, and the whole concept was distasteful.

By the way, Patrick... you have been on Active Rain since April of 2009, and have made two comments and not written any posts.  I think if you would participate more... you'd find there is much to learn, and much to share.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) about 8 years ago

These are opportune times to buy a home, and many I talk to wish they could buy, but the job market is holding people back.

Posted by Wayne B. Pruner, Tigard Oregon Homes for Sale, Realtor, GRI (Oregon First) about 8 years ago

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