When is Right time to Buy?

By
Real Estate Agent with RemaxPV Realty

The question of when is the right time to buy a home is perplexing. The media says prices will drop further next year and they are right, but the timing is critical. When the prices increase again you could see the market quickly change to a sellers market and now the multiple offers begin. Here are a few questions and my response for you to consider:

  1. Aren't we facing a wave of  defaults on option arms and other mortgages made in 2005/2006 with teaser rates?

I believe foreclosures will rise in 2008, but these problems reside mainly with subprime borrowers which comprise only 9% of the market.  Subprime borrowers with mortgages in foreclosure account for only 5% of that. Therefore the problem is confined to less than 1%, of borrowers.

2. Isn't this a challenging market condition time?

 What is challenging isn't the market conditions, but the psychology behind these conditions. There is a huge pent -up demand which, I believe, will grow. In past years we have seen that for every 2 new jobs, one new home buyer is created. Job growth has been pretty strong, that's why the Feds again lowered the rates. Where are those new home buyers? I believe they are sitting on the fence waiting for prices to drop. Once these buyers look past the headlines, they'll see that this is actually a very good time to buy. Inventories are high, so there are lots of homes to choose from, prices are declining (slowly); and interest rates remain low. Once the buyer's psychology catches up to our real market conditions that pent - up demand will be released and, in my opinion, we will move to a sellers market.

Therefore, why not offer a price on the home you want with a reasonable discount included which is based upon expected price reductions and move the pressure to the seller. You may not win the deal and it may take more offers from you, but there are lots of homes to choose from and you can get a good deal!

Comments (4)

The Tanya Busch Team Central Maine Real Estate
The Maine Real Estate Network - Hallowell, ME
I'd rather not try to be a genie or a mystic predicting the future.  We are asked this question so often.  I like the response in your post.  Our buyers are seeing that there are so many homes to choose from, that they can make offers to see which one works out to a price they are comfortable with and one that can be supported by an appraisal.
Nov 05, 2007 06:56 AM
Steve Glose
Keller Williams Classic Group - Orlando, FL
TRC, CIPS, 407-616-7286, Orlando Real Estate, Orla

Well my investors are buying now. While there is still room in the market for adjusting, my clients have been waiting for this market and are out there looking for deals.

Nov 05, 2007 07:06 AM
Susan Trombley
Trombley Real Estate - Wake Forest, NC
Broker/Realtor, Raleigh, Cary, Wake Forest, Youngs
I would want to be purchase at this time. Interest rates are going down and days on market are up the media is saying not a good time. Looks to me like I can put in a bid and I will get a large amount off because they want out. Especially on a vacant house. They want out now and are willing to cut their losses since they more than likely have been making two payments for a period of time.
Nov 05, 2007 07:23 AM
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN
In my area, the prices aren't coming down, because the job market is very strong, and houses keep selling. Not at the pace we had last year, but still good enough to keep the market prices stable. I agree with you that a lot of people are on the sidelines, including the builders, who have mostly stopped building because of the news. When the buyers start getting aggressive, new  homes will be difficult to find. I have 7 buyers who are in no hurry to buy, because they keep expecting the prices to come down,and it's not going to happen. They will be watching the prices go up next spring, and wondering why they news media misled them.
Nov 05, 2007 07:51 AM