Comments on: Good News if You’re in the Market for Buying a House

By: Finally Frugal

Finally Frugal — Sun, 06 Apr 2008 17:59:16 +0000

Whew! I’m in Portland, and am glad to see that our sales declined by on -0.5!!! I knew we were doing better than the rest of the country, but seeing the comparison really illustrated it. I’m not planning on selling (and then, of course buying) until the market is in much better shape — so it’s good to see these numbers. Glad I sold my house in California when I did, though!

By: mellen

mellen — Thu, 03 Apr 2008 14:36:26 +0000

About the housing prices in California going down the most in the country, does that surprise anyone? Hearing what people were paying for houses in CA shocked me. They don’t make more money than we do in Boston but they were paying double for a home?! It isn’t possible to sustain that level of ‘growth’ especially in a down market. Boston is expensive but CA makes it look downright cheap to live here by comparison. I think it true that people living in moderate neighborhoods will feel the market correction going on right now less than those who bought McMansions in overpriced trendy neighborhoods but also, people who bought what they could afford and not something to impress their friends will be better off too.

By: unimax

unimax — Fri, 28 Mar 2008 16:55:59 +0000

My city (Houston) does not appear in the list. I don’t know if I should happy or not if am planning to buy a house?

By: Da

Da — Thu, 27 Mar 2008 16:04:57 +0000

Uh, Saving Freak, did you even look at the table? Prices in cities from New York to LA are most certainly going down, many in a big way. There’s a small swath of the country (mostly the Plains and Mountain West, and South Carolina as you see in the table) that has not yet been hit, but the price drops listed above (up to 19%! And still going!) are affecting the vast majority of the U.S. population.

The last 10 years is one of the few times in recent memory when nearly every place in the U.S. experienced unsustainable home price gains. This isn’t an isolated fizz, this is a crate of Henry Weinhard all going up at once. It’s getting messy.

You’re right that the market will correct and then eventually rise, but I’m afraid you underestimate the magnitude of the correction. California Association of Realtors just reported statewide prices down 26% from the peak and still going. Your house is losing you $3000 a week now if you own in CA! That’s not a small correction, that’s pretty much a crash.

By: Flexo

Flexo — Thu, 27 Mar 2008 15:31:26 +0000

Steve: You’re right. I only took into account the possibility of selling a house and buying a house of roughly equal value. Most of the time people are moving “up” in the same area or moving “out” to another area where the market forces may be different.

By: Steve

Steve — Thu, 27 Mar 2008 15:18:53 +0000

I have to disagree with your statement “Most people moving from one house to another are buying and selling at practically the same time. This negates the basic effects of the market…”

If I own a $200k home and want to buy a $500k home I need to stroke a check for $300k. If both homes go down 20% (to 160k and 400k), the check I write for the new home is now $240k.

If I bought the bigger house before the drop I have a new home.
If I bought after the drop I have a new home + $60k cash, which I think would qualify as a positive effect of the down market.

By: Saving Freak

Saving Freak — Thu, 27 Mar 2008 14:53:55 +0000

The prices in most areas are not going down. This is a myth. Think of the housing market like a glass of root beer. In some areas the foam fizzed up really high but the majority of areas stayed pretty stable and, though it rose some, did not go through the huge boom. Right now all the high fizz areas are settling back down to normalcy. Soon the market will correct and houses will go up 2%-3% a year like normal.

By: Eli

Eli — Thu, 27 Mar 2008 03:54:06 +0000

I agree now is a great time to buy. I think markets will take some time to recover, and we’ll see some stabilization after another 12-18 months. But there is no reason to wait. Smart buyers can find deals now, , but there is no need to hurry. We can use the saturated sales market to our advantage…I wrote a little about this here: http://www.twincommas.com/ready-to-buy-a-home-use-competition-to-your-advantage

By: El Cheapo

El Cheapo — Thu, 27 Mar 2008 01:49:52 +0000

Considering that the same index shows an 80% runup in home prices from 2001 to the peak in Q2 of 2006, I’d say that we have a few more years to go before the market stabilizes.

By: shoyu

shoyu — Wed, 26 Mar 2008 23:32:19 +0000

Everyone should buy a house now. Buy two. Especially in Florida. The sooner you buy a house, the sooner I can sell mine, lol.

By: Roman

Roman — Wed, 26 Mar 2008 18:51:53 +0000

I would not wait for anything. When a person needs a house they will have to get one. I also think that the number are off for NYC. I have been watching several(20) properties and they have not reduced in price. In my opinion the market here has just gone flat. Homes are not being sold as fast yes, but prices in falling as fast as they are saying.

By: Adfecto

Adfecto — Wed, 26 Mar 2008 18:36:21 +0000

Real estate is inherently local, but even more specific it is “location, location, location.” As Kyle said, I think there is frequently neighborhood to neighborhood or even street to street variation in many markets. Places with good job growth and a diverse economy (such as Atlanta) will have very little slowdown despite double digit national drops.

Real estate prices will always hinge on incomes more than any other factor. If your market is affordable for the average person there is no reason to expect declines. If however your house is out of reach of most local workers then you should expect to face declines until prices are in line with affordability.

By: NickV

NickV — Wed, 26 Mar 2008 16:18:22 +0000

“Would you wait for more positive market signs before buying a houseâ€”particularly if youâ€™re buying your first house?”

The sign I’m waiting for is that, after buying, there won’t be another 10% off sale the next month.

If I suspect that some retailer is going to have a sale next week on something I want, I’m going to try holding off my purchase so I can take advantage of the sale (assuming I’m not ‘forced’ to purchase early (say, for someone’s birthday gift)).

As long as I suspect that houses will be a few percent cheaper next month, I’m going to hold off buying as long as I can. This is especially true since it’s currently much cheaper to rent than to buy where I live (after factoring in other, longer-term, factors than simply rent vs. mortgage payment).

By: Kyle

Kyle — Wed, 26 Mar 2008 15:07:01 +0000

I wonder how much of this is skewed towards the lower-income areas. For instance, in Atlanta where I live, the 4.8% decline is probably correct, but there are 2 relatively small niches of the market accounting for practically all of that decline: upscale, overbuilt condos in Buckhead and low-income housing in the southwest part of the city. For everybody else (90% of the population), the housing market is holding up fairly well, if not exactly rosily. I have a feeling a lot of the other markets are skewed along similar lines. In other words, I don’t trust these numbers.

By: Beyond Paycheck to Paycheck

Beyond Paycheck to Paycheck — Wed, 26 Mar 2008 13:55:14 +0000

Flexo-
This a great post. The overall state of the housing market is certainly more important to those entering or exiting the real estate market entirely as a result of their planned transaction. This obviously includes first-time home buyers.

A fair amount of sanity has returned to the lending community–a good thing. Prices will eventually return to a level commensurate with people’s ability to pay via conventional financing methods. This means the 28% and the 36% rules are back. (For financially savvy buyers, the rules never actually left but they sure disappeared for those who simply followed their lenders advice of “Sure you can afford it.”)

If you’re planning on staying put for several years, have good or better credit, and would buy something that you can now legitimately afford, it’s a good time to be buying.

Is it the best time? No one will know the answer to that until it is too late to do anything about it.

Good luck!