There was a good article on MSN recently dealing with the housing market.  I was impressed with the thoroughness and thoughful insights expressed by the author, Melinda Fulmer.  Here's the link:

http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=6112643

In the conclusion of her article the author points to 5 good reasons to buy right now, and 5 good reasons to wait.  You should read them, ESPECIALLY IF YOU'RE AN AGENT PAID TO INFORM THE PUBLIC.

In the meantime, here are some good quotes for Lancaster Countians:

"But for many buyers, there's no real need to wait for the market as a whole to officially bottom out, says Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate. "Real estate is local," Conway says, and therefore what constitutes the bottom for the country is meaningless for those looking to buy and sell homes in their own neighborhoods.

"Waiting for the absolute bottom to hit before buying puts you at risk of missing it and getting caught up in aLancaster PA Real Estate market on the upswing. Plus, for some first-time home buyers, owning simply makes better economic sense than renting."

"...even in a down market, the best houses are at least holding their value...For some people, the value of the local public schools will play a large part in their buying decision. A well-designed house in an established area with a good public-school district will hold its value and save you money in the long run. "These places don't get hurt as much as the whole market, and they recover faster"

"Of course, there are some people who are better off waiting in this market: people who bought their current home in the past couple of years. In this short period of time, the value of the home hasn't gone up enough to compensate for the agent's commission and other selling costs."

"...five is the magic number when it comes to buying and selling: If you've been in your house five years and plan to move to a place where you will stay at least another five, you're probably OK."

"If there are a lot of foreclosures continuing to pop up, prices might fall further than you'd like in the short term. That may not be an issue if you plan to stay put for a while, but it could limit your options if you need to sell or refinance your mortgage."

"But ultimately, the market will come back up, he notes, even those markets in California that are taking a beating. "Does anybody really believe that California won't come back again, and with a vengeance?" he says with a chuckle."  (I threw that one in for my California friends...)

Mrs. Fulmer makes one of the best arguments that "now is a good time to buy" of anyone I've heard recently.  She examines the circumstances that would make buying a good choice, but also recognizes the reasons for staying put. Rather then believing or rejecting this happy slogan blindly, we should analyze how our local market is changing and change ourselves to find success.  

So for those whose opinion tends towards "waiting for the bottom" - my challenge would be to look at your circumstances and reasoning, and don't make a foolish mistake just because the media says the sky is falling.

Here are the 5 reasons, reprinted with Melinda's permission:

5 REASONS TO BUY

1. Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don't like apartments, the small penalty you pay for missing the bottom may not mean much.

2. You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.

3. Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can't: the mortgage-interest deduction on your taxes.

4. You've found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.

5. You've built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.

5 REASONS TO HOLD OFF

1. You've lived in your house less than two years. Chances are you haven't had enough time to accumulate equity in your home. Indeed, you may have negative equity, if you live in many areas such as California, Florida, Arizona or Nevada.

2. Your job security is uncertain. If your company or business is in distress, it's probably better to stay put until the smoke clears.

3. You don't plan to stay in your next house at least five years. While it's not important to buy at the exact bottom of the market, it is important to stay long enough to ride it out completely.

4. You don't have good credit or a decent down payment. Do you have a job and income you can document? As a result of  the subprime lending crisis, lenders are much more careful about whom they're giving their money to.

5. You have an existing home to sell in a neighborhood where prices are dropping precipitously or where the number of foreclosures is spiking. In this climate, you're probably better off waiting out the storm.

(Courtesy Melinda Fulmer and MSN Real Estate)

 

 

 
This post has been included in Pennsylvania Information
Post is included in group: Dedicated Bloggers

23 Comments on Why "Waiting For The Bottom" May Be Foolish

FEB
13
2008
529,189 Points 96 Featured Posts Localism Sponsor Outside Blog Hit Router
Jeff- Finally a reporter who thinks! Send her down here to write for the Palm Beach Post! 
1:29pm • #1
566,277 Points 69 Featured Posts Localism Sponsor Outside Blog
Jeff, the only problem with finding the bottom is that you don't know it's happened until your market is, once again, on the way up - and that can happen pretty quickly!
1:45pm • #2
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes

I agree, Katerina - this is a very well-written piece that takes most of the perspectives on the market into account.

 

1:49pm • #3
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Patricia Kennedy

You are right, Patricia - the author mentions that possibility as well. 

1:50pm • #4
535,871 Points 236 Featured Posts Localism Sponsor Outside Blog
Jeff, This article sure beats "It's a great time to buy or sell real estate" I agree with everything she has stated. It all depends on why you are being and what your expectations are.
3:43pm • #5
205,851 Points 1 Featured Post Outside Blog
Jeff, people will only buy if they feel comfortable doing so financially.  Right now, I don't think any of us feels THAT comfortable!
7:32pm • #7
Thanks for the info on the selling and buying.  It is good to know and I should pass this along to other individuals. 
8:24pm • #8
FEB
14
2008
269,500 Points 40 Featured Posts Outside Blog
JEFF - I think that one of the most important factors that the media leaves out is that each situation, and each locality has its own positives and negatives.  This was really good information.
5:46am • #9
Jeff, this article was a great find.  Not only is Real Estate local, Real Estate is personal. . .what is right for one is not right for others.  I am bookmarking this. . .
1:18pm • #10
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Adam Waldman - Long Island Real Estate

That was one of the unique parts of this article, Adam - the acknowledgement by the media that the market is indeed local!  Thanks for your comment, always appreciated...

2:06pm • #13
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Lori Gilmore - Will County Illinois Realtor

Thanks Lori - RE is definitely a personal decision, and one that has advantages and disadvantages for each of us.

2:08pm • #14
734,709 Points 205 Featured Posts Localism Sponsor Outside Blog Hit Router

Excellent Jeff.  You covered all the bases.  Sure it's O.K. to buy now.  We're selling homes, albeit slowly.  New homes are still the best buy around here, but I've seen some other good pricing opportunities too.  We're negotiating home down. 

In fact, one of our agents got a contract yesterday with a higher than the other bid contract because their financing is in good place and the lender knows what he's doing.  In fact, the lender put it over the top when the listing agent contacted the lenders.  In today's market financing better be strong. 

 

4:06pm • #15

I suppose it is foolish to wait for the bottom. After all, in the middle of a banking meltdown, a commercial real estate slowdown, and with the declining dollar and consumers retrenching, when prices turn they will surely skyrocket so fast that there will be no reasonably priced homes. Additionally, many Americans are experiencing massive wage growth and have practically no debt to work off. Expect at least 10-20% annual appreciation.

Please: Listen to yourselves. No one is buying that advice except a few gullible buyers and other RE agents.

You may think that now is a great time to buy a home, but I assure you that it is an even better time to preserve you professional credibility.

Buy a house because you want one. No other reason will do for the near term.

 

Weary Consumer
5:23pm • #16
244,589 Points 3 Featured Posts Localism Sponsor Outside Blog
Jeff, regarding the previous comment, I note that you also provided 5 reasons NOT to buy a home at this time.  I think that's providing fairly even-handed advice.
6:18pm • #17
FEB
15
2008
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Homefinders, Real Estate in MD & VA, Lenn Harley, Broker, New & Resale Homes

Lenn, I agree about the financing issue - a buyer needs to be much more aware of their financial situation and eligibility to secure the mortgage they need. 

12:31pm • #18
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Brian Schulman - Your Lancaster County, PA Real Estate Professional

Brian, I'm excited to get people talking - not just "gladhanding" like we tend to do on AR.  Of course, I am bummed that this reader didn't read the whole post or my prior posts this week about prices being too high, etc. If anyone can be accused of being blindly positive, it wouldn't be me.  Sometimes I think I'm too pessimistic, actually, given Lancaster's insulated situation vs. the national trend.   That's why I liked this MSN article (note that this perspective came from the media, not the NAR).

Oh well, I'm still glad to have diverse comments - bring them on! 

12:36pm • #19
FEB
16
2008
2 Featured Posts
Jeff - it is nice to hear the mainstream media finally putting this market in perspective! There are so many good values available today and those that get off the fence and purchase will give our economy the stimulus it so badly needs! Great post!
10:19am • #20
FEB
17
2008
Localism Sponsor
Love it!! Very accurate and clever. Those who survive the storm  will acumulate some $$$ somehow...
6:30pm • #21
FEB
19
2008
241,727 Points 6 Featured Posts Localism Sponsor Outside Blog Hit Router

Mary Bigelow, Renewing Your Life!  

Good values are out there every day, but they don't last long!  If you're buying you need a hawk watching the MLS daily - that would be me... 

10:16am • #22

Leave a response…



(optional)
What does the graphic say?
 
Rainmaker_large

Jeff Geoghan MBA - Lancaster PA Real Estate Expert

Lancaster, PA

More about me…

The Jeff Geoghan Realty Group, Coldwell Banker Lancaster PA

Address: 1000 North Prince Street, Lancaster, PA, 17603

Office Phone: (717) 735-8400

Cell Phone: (717) 799-0851

Email Me

A news & discussion forum for all things Lancaster County PA focusing on real estate, historic homes, "green" building, energy-efficiency and articles on life in Lancaster County.

Enter your email address:

Delivered by FeedBurner

Green Home Building

Subscribe

Get great free widgets at Widgetbox!  Add to Technorati Favorites
free html hit counter
Feedjit Live Blog Stats


Links

Archives

RSS 2.0 Feed for this blog

Find PA real estate agents and Lancaster real estate on ActiveRain.