Is Now a Good Time to Buy?

Scenario breakdown is clear as mud. If this doesn’t get people off the fence, then they probably aren’t motivated enough to begin with.

What is your home supply like in Austin?

If I had a crystal ball like an old gipsy lady could I maybe answer your question? I think “Joe” must take a discussion with him self and asking if he need to buy now or can wait one or two years, can he maybe save more money over two year and get a better deal with the bank, if he don’t take a so big mortgage, its so many thing to think about, personally had I recommended him to buy now, I think the prices going to rise slowly.

Scenario 4 – home prices fall another 10-20% while rates stay the same. That is more likely than the other 3 scenarios you listed. Sales have been down 25% for 3 months in a row. Pendings in Sept were down 27% so rest of the year is going to be similarly bad. Inventories are climbing when they should be falling given the extremely high rate of failed listings that are being withdrawn from the market. There are way too many sellers vs buyers and nothing but lower prices and a better economy is going to fix that.

Woody – prices haven’t fallen 10-20% since the height of the market (some submarkets in Austin have, but Austin in general has held fairly strong.)

Pendings in September are down, but our year to date is right in line with 2009, while median price has increased 4%.

“The sky is falling” is always a fun position to take, though…

Median prices are holding up because low end sales have fallen off so hard. That’s how median statistics work. If prices were steady then the median would be rising right now. The average price per sq foot tends to hold up for awhile too when volumes and prices fall, because only the quality stuff sells. But it falls once the lower quality homes adjust their prices down in order to sell. Real estate cycles are very long and we are in the early innings here in Austin. If volumes fall 25% for six months in a row despite the government subsidizing rates to such a low level, no amount of happy talk will help prices or volumes.

It sounds promising in Arizona, but Colorado prices are still falling. It sucks!

I agree completely. Even if a client misses the absolute bottom of the real estate market, it may be advisable to purchase if the interest rate is believed to be at or near the lowest point.

After this latest drop in the market, I will only buy again when it makes financial sense to do so. In other words, if I can not rent the target property and make a positive cash flow from the purchase including all expenses, then I will pass. And yes, this is the same criterion that I use for my own home that I plan to live in. In the event you have to move, if you can’t rent the property, you are up the proverbial creek. We see this right now all over Florida. If people had used this criterion from the get go, then we would have this housing crisis. I know I learned my lesson.

I think Eric is right on the money here. Even if the worst case scenario
-the prices stay flat or decrease say 5 or 10% – The rates have got to increase in the next year and your going to pay more money in the long run!

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Eric is correct but I think we should see what the next round of bailouts brings – living in the UK I’m especially concerned with the amount we’ll have to contribute to rescue Eire.

Yeah rates are falling since last 2-3 years, so the situation got to improve in few months. It is bad everywhere but especially bad where the real estate bubble had inflated to unbelievable levels.

Jim

Woody is being a bit pessimistic, but I agree about a price increas being a result of low-end homes not moving like they were 6 months ago.

Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”

To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.

Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how homeownership builds wealth over the long term,” Golder added.