Is now a good time to buy a house?

[queenoftheclick]

Hi Everyone!

We have our 20% down payment and credit scores of 820 and 840 so we have been preapproved for a mortgage.

In Brooklyn, NY one family homes are about $700,000. Is now a good time to buy a house? Or should we wait and let the market knock down the price?

Any predictions or thoughst?

Marlene

[gstrobl]

Now is a great time to buy a house (and a really crappy time to be selling). Take advantage of the soft market while you can! If you try to time the market you will probably miss it. If it is your goal to buy a house and you have the financials in line to do so, do it.

[SouthShoreGirl]

I think this is a good time to buy. I don't know about in NYC, but on Long Island where we recently bought, the prices seems to be going down even more still. We did really, really good on our house purchase. We probably wouldn't have been able to have bought this house 2 years ago or so---it would've been priced too high.

[Philip Brewer]

You're still thinking of a house as an investment. Better, perhaps, to think of it as a place to live.

In the community where I live, it's quite a bit cheaper to rent than to buy. (Rent may be more than a mortgage payment, but once you add in the other costs of ownership--taxes, insurance, maintenance, water, garbage, sewage, and so on--renting is definitely cheaper.) If you rent a cheaper place, and then put the difference into investments--well, those really are investments.

On the other hand, the quality of life might be much better in a house than an apartment--more privacy, more control over your environment. If you're willing to pay extra for those things (and you can afford to), then by all means buy a house. If that's why you're buying, it almost doesn't matter if this is a good time to buy.

Nobody knows if home prices will keep dropping. I think there's a pretty good chance that they will--depending on where you live, home prices may need to fall another 15% to get back to the long-term trend value. And, of course, there's no telling what will happen then. Maybe they'll keep dropping until homes are as under-valued as they were over-valued two years ago. Maybe they'll bounce right back up again. Maybe they'll bump along more-or-less flat for a decade or two.

If you can comfortably afford a house and want to live in it, I'd say, don't worry about whether it's a "good time" to buy. But if you're trying to justify stretching your finances to get into a house you can't really afford, on the theory that it'll go up in value, I don't think it's the right time to take that gamble.

[singleguymoney]

You have excellent credt scores! Now is a great time to buy a home and I wish I was in the market for a new home. There is a home in a neighborhood that I really loved that sold for $198,000 when home prices there are usually around $240k-$260k. It was a foreclosure and whoever purchased it got a great deal; if there weren't too many repairs to be done.

[Xin Lu]

I think depending on your particular situation it could be a great time to buy a house. These are the things I consider:

1. I intend to stay in the house for at least 7 years. The reason for this is that it takes a lot of money and time to dispose of a house if I have to move. If I had to rent the house out from a distance there would be costs, too, and it is just a lot of trouble.

2. The cost to own isn't more than 10% more than renting. Where I live the cost to rent is half or a third of the cost to own. I think there needs to be a bit of a sync on the costs for buying to make sense.

3. I don't tie up every penny of my savings into my house. This is basically so that I don't put all my money in one basket. Also, having liquidity is good especially in a recession.

4. I can afford the payments comfortably. Here in the Bay Area a lot of people are putting more than 50% of their take home pay into their house. I think that's pretty dangerous especially considering the rise of other living expenses and the possibility of losing jobs. When I say "comfortably afford" I mean that I could afford the house with less than 1/5th of my income.

Anyway, I think it is up to you to decide if it's a good time to buy a house. For each person I think the answer is different.

[finvik]

Yes, this is the right time to invest in a property as the markets are down. for anyone who wants to sell at this time could be a bad decision. so as far as you are concerned, invest now and when the market is in boom again you can sell it and re-invest it
Vik

[Mary Webber]

What good advice from Philip Brewer and Xin Lu! Now, while one of you is west coast and one mid-country, I'm east coast, although outside of the expensive DC-Boston corridor.

As a real estate appraiser, I second the idea of buying a home and not buying a house as an investment at this time. If you think you want to buy, it's mostly your market. I say mostly because there are always reduction-resistant pockets in every declining market.

If you find a house you want, do your research. HERE'S HOW! Go to the town office and check the information for your "subject" property, the one you hope to buy. By checking the tax card, you'll find out the subject property's sales history, when it's sold and for how much.

Then check out what else has sold in the subject town in the past six months to a year. We call these "comparable sales", and we look at sold houses that are most similar to the one you want to buy, again checking sales history. This will give you a good idea of how values have moved in the past year, and by how much. This info could be key to making an offer on your subject home.

If the town you're looking in had few home sales in the past year, check the two or three most similar surrounding towns. An even simpler way to get all of this information for many areas, especially New England, is to go online to www.visionappraisal.com where a wealth of local real estate information is available.

[MMarquit]

I cringe every time my husband refers to our home as an "investment." As has been mentioned, it's really more of a purchase, albeit one that we enjoy immensely.

You sound like you are in a position to buy. Which is great. Look for something you like. You are pre-approved, so you can move quickly on something you like (making an offer that is perhaps lower than the asking price). If you don't find something, you probably have a couple of months to keep looking without having to worry overly much about a sudden spike in prices.

You are in a great position to do what is best for you. Don't think about it as an investment, and instead approach it as a purchase that you want to get the most enjoyment out of.

[Dan Auito]

I've written the book and you are free to give it to people whom you feel could use it: http://www.thecitruscountyclassifieds.com/downloads/2/fsbo-ebook.pdf Enjoy!

As a 20 year investor I got tired of explaining the process so I wrote the book and give it away to save time and help others much more than I could by one on one communication.

P.S. There is no better time than NOW to buy! Talk about steals! We just picked up a 3 bed 3 bath with a built in pool for $88,000!