Is it Time to Buy a Home?

Marc Rasmussen
January 8, 2011

By Marc Rasmussen: – Sarasota Florida real estate

The number of homes for sale is dropping, sales are increasing, interest rates are still low, the economy is starting to show signs of improvement and the recent unemployment rates improved. U.S. companies are going to report the best 4th quarter results in 19 years and are sitting on a record amount of 2 trillion dollars of cash.  So is it finally time to buy? Has the bottom hit?

Yes….well maybe.

No one knows for sure if the bottom is here. Time will only tell. The foreclosure mess will continue to put downward pressure on home prices. The price of anything is determined by supply and demand. If there are too many homes out there for sale and the buyer demand is not brisk enough prices will fall. However, they may not fall that much. My personal opinion is that we are scraping along the bottom. Some segments of the Sarasota real estate market have hit bottom while others need to come down a little more. I imagine most other real estate markets are similar.

If you are looking to buy a home would you rather buy one today that you absolutely love for $250,000 or buy a home you kind of like a few months down the road because you can get it for $240,000?

Home prices might fall a little bit more but so will your options. As the market bottoms out you will have fewer homes to choose from. If you are one of those really picky buyers you better start looking now. You don’t have to buy now but it is a good time to learn the market and manage your expectations.

Someone asked me the other day if home prices started to rise and if they needed to jump in the market. I told her it was a fine time to buy if your time horizon was long enough.

If you buy a house make sure you plan on spending a few years there – probably at least 4 or more years. The market is volatile. It could drop a little for the next 12 months, sit flat for 2 years and then start to rise. It could be oversold and we might see rapid appreciation once the inventory is depleted. There are many different possible scenarios.

If you buy today and then want to sell in a year or two then you will probably lose money because of the transactions costs. If you are ok with that then feel free to jump into the market

The bottom line is that you need a place to live. Sleeping outside under a tree probably isn’t much fun. You can be a renter. There is nothing wrong with that. You can also be a home owner. If you are the type of person who likes to move every couple of years you might be better off renting. If the thought of packing all of your belongings and moving turns your stomach and you envision yourself spending several years in one location then this might be the perfect time for you to buy a home.

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Warner Robins Homes
January 9, 2011

All indications are it’s time to buy. Consumers who gave up on the market (why?) should be itching to jump back in and purchase a home.

Todd Hower
January 13, 2011

Hi Marc,

Is it time to buy a home? When you ask a Realtor this question, the answer always seems to be, YES! Was it a good time to buy a home in Austin in 2006? The answer must have been, YES! It was a record year for home sales. Everybody was buying homes. It doesn’t matter what the market is doing, it’s always a good time to sell and a good time to buy a home…according to Realtors. (Let me disclose…I’m a Realtor).

Is the answer ever, NO? The name of the game is to buy low and sell high. Baron Rothschild, the quintessential banking opportunist, is said to have advised that the best time to buy is when there is “blood in the streets.” Was there blood in the streets in Austin in 2006. Heck no! But everybody and their grandma was buying homes. Is there blood in the streets now? I’m not really seeing actual blood in the streets where I live, but I know it’s a much better time to buy a house now than it was in 2006.

So where are all the buyers? I think most of them are waiting for more buyers. People are afraid to get out of their comfort zone during these times of uncertainty. It feels risky to buy a home right now because no one else is doing it. We’ll start to see a lot more buyers when the streets are nice and clean and it’s safe to go outside. And you pay more money to buy homes when the streets are nice and clean.

Is it time to buy a home? The answer is NO for most people. It’s known as the Pareto principle ,or the 80-20 rule. The 20% of people that are buying homes right now won’t be buying when the other 80% are buying homes. 80% of home buyers will be waiting until it’s like 2006 again, and then we’ll start the cycle over.

robert mack
February 10, 2011

90% of consumers are price driven, and what I’ve learned over the years is that price is NOW and terms(interest rates) are long term. As a rule of thumb if a home price falls 10% but the interest rate goes up 1% then the payment for that home is the same or in some cases even more! The focus of today’s buyers should be on the interest rates rather than waiting for the bottom of the market in terms of price! Interest rates are still historically low today and they have been slowly moving up over the last month! I’d rather pay more for a home with a low interest rate rather than pay more per month for a home that I got for less….In real estate it is key to look at the big picutre..not just Price! And yes, for the last 4 years I’ve been saying it is a great time to buy, the only issue is that it does keep getting just a bit better each month! Interest rates aren’t going down soon, so long term, now is the right time while inventory is still in a buyers favor! thx for sharing

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