My Wife and I have been pre-qualified for a conforming loan for the last two months. I don't believe the market has bottomed out and won't until later next year.
Why should we consider buying now after 2 long years of
waiting for the market to change from a sellers to a buyers market? Clearly there are more adjustments to come. I will be patient and wait until all the subprime
pain is felt by the big hedge funds and the investors
all start running for the doors with the few sheckles
they can salvage. Then I'll get excited about buying!!

Consider the source. Of course agents want you to buy now -- the longer you wait, the greater the chances you won't buy at all. Agents make their livings off commissions.

I think Devona is right. Potential buyers are waiting for a so-called low point. The market is inflated, even now, and nobody wants to pay more than they should. It will correct itself, and buyers are wise to wait.

Look at all the inventory. Look at the drop-off in sales activity. Look at the fact most people have about 50 percent of the income needed to buy the average home.

Be patient ... or be sorry.

To buy or wait? AHHHH What a topic. So many answers I have for this question. It is true the National Association of Realtors, ever since I can remember, has stated its a Great time to buy. In addition, with the NAR stating over the next couple years we will see price declines in property values(less the 5%) it is very perplexing when they come out and say NOW is a great time to buy. Especially when they forecast price drops. It has NOT gone unnoticed by Wall Street. Herb Greenberg and Jim Kramer have publicly denounced the NAR stating they are just concerned with taking care of their own. The NAR demanded a retraction by Kramer on Today. He refused and again pounded the table stating "How can you tell people to buy when you also tell them prices are coming Down?"

Timing the mkt is tough but we may look back at this sub prime collapse at being just far too oversold. The following companies I also have been tracking as a great entry point: CFC Hi 45.26 Now 10.00, NFI 125.64 Now 2.08, BZH 48.60 Now 7.86, LEN 56.84 Now 15.82, KBH 56.08 Now 20.41, IMH 9.77 Now .59..the list goes on and on with builders and lenders.

Should I wait or should I buy. My past experience reminds me of when McDonalds collapsed to 9.00 per share because of people eating better and ecoli scare. Not to mention that movie came out Supersize me. I thought to myself WOW I think they are going under. NOT SO!

About 5 years later 60.05 pps.

Moral just when you think its the worst it turns out to have been the best time to buy. Prices are down down down. No more bidding wars. Pacific NW with jobs galore. And an interest rate that I personally guarantee you will be happy with for decades. My advice, find the home you want, make a fair offer based on current market conditions, and enjoy your decision. You will be very happy you did !

Ray Pepper
Broker
500 Realty

I agree with Pepper.

The time to buy is NOW...between now and February 1 at which time we always notice a mood change in the market when the sun comes out on those bright spring days.

...Strong employment data and another shot at historically low interest rates.....

by the way...Have you noticed all of the new commercial construction?

People getting paychecks are going to fill those new buildings.

The message to buy now is not just self serving advice from Realtors. It is a position based on facts in Pierce County that can easily be verified by any interested purchaser that is willing to take a Sunday drive.

The problem with the real estate market in Pierce County is supply and demand. Pretty simple. Too many homes for sale. Not enough buyers making offers. At the center of the supply side problem is new construction. Builders/developers did not anticipate the slowdown that started in 2006. They gambled that the frenzy of 2004-5, which saw prices increase weekly, would continue for a couple more years. They made building commitments based on that assumption. This mistake has repeated itself over the years so it's not new. Builders are always behind the curves in the market. They can't get inventory up quick enough in a fast market and they can't shut it off fast enough when the market slows down. It's the nature of the building industry. Now we have way more new homes available than the demand warrants. Builders are forced to sell homes at prices below what the same plans sold for in 2005. If anyone had asked an agent to find them a new, 4 bdrm home with 2000 sq ft, fully landscaped, for under $270,000 2 years ago no one would have wasted their time. Now there are choices among homes like this. Sellers of resale homes have to compete with this so their prices have fallen also.

Buyers who don't understand the market are thinking, "Why not wait? Prices will go lower. I need to time my purchase to catch the true bottom of the market or I’ll lose money." This seems to be a wise position but it will cost lost opportunities and greater home expense, and here's why.

Builder's paid 20-30% more for the lots they're building on today than the lots they utilized for their 2005 homes. With the flat prices they didn't count on, they're losing money or making tiny profits. They aren't stupid, nor are the lenders who provide their construction financing. They are shutting down their new starts and any buyer can verify this for themselves by driving around the new home subdivisions. Gone are the signs "Framers wanted," "Sheet rock crews needed" that were often crudely painted on scrap plywood entry signs. You won't see dozens of workers swinging hammers. You won't have to dodge the concrete trucks and work vans of the plumbers, carpet layers and landscapers. It will be quiet. Just a lot of standing inventory and signs advertising buyer bonuses and free upgrades. Take the time to check it out. There are a few exceptions, but very few. So where is this taking us, and you, as a buyer who's waiting?

New home standing inventory is shrinking. It will not be replaced by more bargain basement homes. The builder has no incentive to do that. When the standing inventory is gone you'll be making an offer for a home that isn't built yet. The builder will not be motivated to give you huge incentives. After all, he's only carrying the lot cost, not payments on a full construction loan. The builder will be in a much better bargaining position. To make matters worse for the buyer, the construction process takes 4-5 months. The longest interest rate guarantee (lock) you can get from your lender is 60 days. Buyers will be at the mercy of financial markets. Where do you honestly think rates will be going in the future?

Once the builders eliminate their standing inventories the heat will be off the resale owners too. They won't have the same tough new home competition they have now. Buyers aren't going to be able to say "I'll just go around the corner and buy a new home for less." That option will be off the table.

Believe me, these aren't rantings of a salesman looking for a deal. This is real and you can verify it. Call your favorite Realtor. Have he/she give you a new home tour. See for yourself. Then make a wise purchase. You'll be thanking them soon.

Not everyone is looking for new construction. There are older well built houses for sale.

pepperrealty1-

So using your McDonald's stock analogy, you think real estate has hit bottom and is selling for $9 a share?

Pierce County had a second month of price declines, a 1.4 percent drop from the same month (Nov)in 2006.

You seriously think this 1.4 percent drop is a bottom?

'Come on...

I believe we are seeing a near bottom in LEN, CFC, TOL, NFI, IMH, and FMT. All forming triple bottoms. As I posted the NAR has stated we will see less then 5% price declines 2008. However, when I emphasize (make a fair offer based on mkt conditions) it is far higher then 1.4%. Just the home I have closing tomorrow was asking 239k - SOLD to my buyer for 195k.

1.4% No way!!

Combine the home sale prices with the 5.65% interest rates you will receive now at par and you will be very happy you bought in the same McDonalds time frame of 5 years.

Going home to Reno where I'm from and get homes that sold 2.2 years ago for 579k for a whopping 413k Today!!!! No industry in Reno and it may even get worse with the foreclosures and "walkaway properties" piling up.

Every transaction is its own entity. Timing is ripe now to find that home and it may be better in 6 months as well. But, if a seller must sell NOW the Buyer will benefit far more then 1.4%. We may not be at the bottom but its in sight here in Pierce County. In a strong economic state I say PIERCE COUNTY is on SALE across the board. Waiting may be wise, but the house that may be sitting now may not be available in 6 months. The FED is drivings us back for 1 more visit to 5%. Buyers WILL BUY! But, will that house still be there with sellers becoming so much more aggressive. I think NOT!

BTW on Dec 11 the MKT has priced in a 100% chance of a .25 int rate reduction and a 60% chance of a .50 pt. Further futures are indicating that in the next 6 months we will see another .50 pt. Many are calling for the FED to just do it all now 1 pt.(and get it over with) Bernanke is too smart to shock the mkts and unfortunately we must wait. 2008 in Washington State will be very exciting and bring on many new home Buyers across the board with the FED fueling the run (again).

Ray Pepper
Broker
500 Realty

Now I'm just an average Joe with a little bit of gray
matter. I don't claim to be a guru on real estate. The
big issue in the current market is PRICE. Traditionally
re has been a long term investment with about a 4 - 6%
return per year. Most borrower were required to have
a down payment and they needed to pay their bills
on time and live a somewhat responsable life.

The advent of the sub-prime mortgage artifically bouyed
the market with non traditional borrowers that allowed
for very questionable lending practices. This caused the
market to hyper inflate setting in motion our current
situation.

I'm a believer that every market has equilibrium and when
it gets to high or to low it will always find it's mean.
My observation of the current expectations of re
returns far exceeds the markets sustainability. This
will be a hard learned lesson for most investor that
have had it so good for so long.

Buyer's who are waiting till the bottom drops out arent' necessarily looking at the big picture. If you are currently renting, you are throwing that money away when you could instead be spending it on an investment that WILL appreciate over the long term.

If you want to try and flip a home, that's one thing, but if you are thinking of living in the home for several years, then you will weather whatever dips may come in the next 12-18 months. Almost everyone agrees that three years from now, when you want to sell or refi, it will be a very different market, and you WILL have equity. And in the meantime, your payments will be tax-deductible--as opposed to those rent checks that you are sending in every month.

Now, of course, don't be reckless and buy a home that you can't afford... If you need to refi in a year, you won't see the appreciation that owners saw in 2004 and 2005. But if you're smart and get payments that are reasonable and you're thinking long term, buying now or in 6 months when the market *might* be a bit lower won't make much difference--except that every month you wait is another month you won't be able to take advantage of the tax deduction.

As the new figures for November show, we're starting to see a steeper decline. It's going to be an interesting year ahead, one we'll all be watching closely.

At the risk of offending some browsers here, agents who say "now's the time to buy" in the face of mounting evidence of a strong market downturn (and lower rates to come) seem disingenuous at best, deceptive at worst. I know there are some good eggs out there, but I fear the rotten ones will stink up the whole joint.

Buyers who listened to such agents three months ago are kicking themselves today. They're the same agents, in many cases, who are advising to act now.

It's important to remember, too, that the price figures we're seeing represent only homes sold. What we're not seeing is that unsold homes are being listed at even greater discounts, year over year. Bottom line? It's even worse than it appears.

Buyer agents, especially, would be well served to interpret what's happening from an objective standpoint. Those are the agents who will be recommended time and time again. Buyers aren't stupid, and telling them "now's the time to buy" amid cold, hard facts to the contrary, I believe, assumes that they are.

Ray, I'm guessing that home that was listed for $239k and sold for $195k was never worth the original listing price to begin with (was it the 4338 N Pearl home, MLS#: 27186196 ?)

With Tacoma having an average of 76% home appreciation over the last 5-years, there is definitely A LOT more room for declines given all the negative head-winds (tighter lending practices, ARM's re-adjusting, flooding of inventory, being in the top 50 for foreclosures in this area, etc)

A 76% appreciation in 5-years is NOT normal. You can spin it anyway you please but it was an ARTIFICIAL appreciation due to all the sub-primes being available to otherwise non-qualified home buyers.

We still haven't seen the worst yet, IMO.

Boomer you maybe right. The worst may yet be on the horizon. The property you mentioned is still active with no offers.
But, let me reiterate if a seller has to sell and your a buyer ready to buy the timing may not be better then the present. Not to mention the interest rate to boot!. Let me just give you a personal story.
I own many properties in Washington. Oregon, and Nevada. Both residential and commercial. Anyway, I went home for Thanksgiving and went to my parents home in Dayton Nevada(35 miles from Reno). In 2002 I purchased an investment property 4 homes away from my parents for 158k(they bought theirs at the same time for 165k). Before it was done being built I sold it for 188k. That same home hit a high not a 1.5 years later of 299k. My mothers hit about 310k.
3 weeks ago when I went home for Thanksgiving in Dayton I noticed the home next door to my parents(the same model I sold for 188k) is in foreclosure along with a few others up and down the community. Price 239k. I placed my offer in at 188k. Guess what..I got it 4 days ago! Good deal? Well it was 158k when I bought it New. Hit a high of 299k. I bought it back for what I sold it for. Am I too early? I dont think so. This home is better then new with all the landscaping done and many more upgrades then I had. Will it have come down further? Maybe. Did I need to buy it? No way, I have too many things going on at 500 Realty. But, I do know this. In less then 3 years it will be back over 220k and it rents for 1000 a month.

Moral. You can wait and wait for the best time but you will rarely hit the bottom. I encourage everyone to be out there looking all the time because many sellers MUST sell and in this Puget Sound Economy and these interest rates the great deals will get bought up. BOOK IT!. The time to buy is now, next week, next month, and next year. Its always time to buy if you are ready and did your research. Let the FED lead us into 2008 with 5% rates for one more time around!

Ray Pepper
Broker
500 Realty

I'm surprised nobody has mentioned that there are different reasons to buy, which would necessitate different times to buy. If I have a client moving here from out of state, and they need a home now, and they don't want to rent because moving twice is a hassle, I'd say buy now.
If I have a client who has been flipping houses for years, and wants to flip again, buy now may not be the best advice
If I have a client, or fit this category personally, who is looking to increase their property portfolio and buy some rentals, I'd say now is a great time.
I think one good barometer is to see what Realtors are actually doing. If I scream BUY NOW, and sit and do nothing, I hope my clients get nervous. If I say BUY NOW (which I do) and I'm out looking for rentals, and I just moved to a new personal residence within the past 3 months, then as a client maybe I take notice and say this is a good time to buy.
I certainly see the point many are making about prices still on the decline, so why buy now? My answer is because you buy low, sell high, and we're low right now, with great interest rates.
I'm curious what people will say when the interest rates rise (which they will), prices begin to go back up (which they will), and they still didn't buy because their agent told them not yet, or they weren't listening to agents and listening to the media instead and decided to wait. When will prices go back up? When will interest rates rise? I don't know, and I doubt anyone else does either. If you have a high risk factor and are willing to try and time the market, then don't buy now, wait. You may save a few thousand dollars. If you're like me and your risk factor is low, and you just know it's smart to buy when things are down, you're welcome to join me in my search for more good investment properties.

I find it amazing that the re cheerleaders don't get
it!! This Market is about "Price" not Rates. It's
about affordability!! The days of the Idiot buyer
is long gone. The buyer that would waive the home
inspection, or would stay in the bid and ride out
a deal based on emotion throwing all sound business
judgement out the window. Where are they now? Licking
their mortgage payment wounds and trying to put gas
in their SUV'S that they are a payment behind on. Who
is left in the market place? The buyer that knows the
real fair market value after you discount the madness
of the last two years. The buyer that has all the tools
at there disposal ( zillow,Redfin,county records.)to
make a sound business decision. The prudent buyer that
hears the same old tired stories about missing out
and tax deductions and whats going on in another market.
We just smile and shake our heads because where not
getting hurt by a declining market. Patience is my motto.

I couldn't AGREE with you more againstthetide.

Ray Pepper
Broker
www.500Realty.net

The real estate agents that are screaming "BUY NOW" remind me of the financial analysts that were saying the same thing back in late 2001 after the stock bubble popped. It was all "NOW IS THE TIME TO BUY", "We Have Hit Bottom", "Best time to buy is when there is blood on the streets", etc.

Well, we all know how that turned out. The bottom wasn't made until 2-yrs later in Feb 2003.

It was a buying opportunity alright... for almost 3-yrs!

At some point I think we need to acknowledge that some people look at a house as a home, and not simply an investment. I think those are the people NAR is targeting with their ads.
I don't want to retype my thoughts here, but you can click on my site above to hear my full thought if you're interested.

I think EVERYONE should be looking at buying a house as a home AND an investment. For the majority of people it will be the largest purchase ever made. You really need to do your own homework and NOT depend on the biased advice of an agent. Obviously some are better than others but when it comes down to it, the commission is what puts food on their table. They need to sell you a house in order to eat. They are there to make a sale and could care less what your house is worth 5 years down the road.

One year ago the agents mantra basically was "buy now before you get priced out forever".

It's funny how in their eyes there is never a "bad time" to buy a home, isn't it?

I try not to argue in online forums, but at this point I think boomer is being a bit offensive. A doctor puts food on their table by making people healthy, but to say they don't care about their patient's health in 5 years is absurd. A teacher puts food on their table by teaching a kid for a year, but to say they don't care about that kid's future is ridiculous.
To imply that I don't care about my clients is ridiculous. My average commission is about $8000. If I didn't care about my clients or their home's value in 5 years, I'd never get any repeat or referral business. Do you have any idea how hard it'd be to make a living finding new clients every single time?
I'm sorry you've obviously had bad experiences with agents, but making a sale is not our goal, helping guide our clients to make wise decisions is more important...it's the ONLY way you can get repeat business which is by far the best way to make a living.
Your comments also imply that you feel housing prices will be lower 5 years down the road than they are now. Purely ridiculous. Is now a better time to buy than 8 months from now? Who knows. You don't know what the market will be like in 8 months. Just like me, you can only speculate based on trends. Is losing out on a home that you dream about worth saving $10k-$15k? You'd spend more than that in rent during those 8 months. If you plan on being in your home for more than 2 years, your home will appreciate in value and you've made a good investment.
No, it's not funny how there is never a bad time to buy. Try finding an investment strategy that has performed as well as real estate over a 5 yr, 10 yr, or 20 year period. Real estate, in our area, has appreciated more than any other investment that I know of (I don't pretend to be an expert in all areas of investments, so feel free to research and correct me here).
Again, for some people buying a home is more than yearly appreciation. There is emotion involved in a home. I think NAR's ads are not trying to say buy now because it's urgent and you'll never find better prices. I believe they're saying don't be afraid to buy if you find the HOME you want to live in. 5, 7, 10 years down the road it WILL have increased in value and in the meantime you can enjoy living in your home, be proud that you own a home, make memories in a home, and not spend $12k-$20k a year in rent.
Again, arguing online is a no win situation, but I don't appreciate being insulted based on a profession I chose. Your numbers may be right, home prices may continue to drop, but real estate is a proven long term investment and good agents, which most are, truly care about their clients long term well being.

Matt, please don't take my previous comments personal. I'm in no way implying you don't care about your clients. But, the reality of this business is that it is a commission based position. No sale, no paycheck. Agents can "care" all they want about their client but the bottom line is they need them to buy in order to get paid.

If a buyer offers full price on a home that the agent thinks is overpriced, how many agents are really going to stop them from purchasing it?

As far as home prices being lower in 5-yrs from now being "purely ridiculous" -- How so?

Southern California home market has been declining for over 2 1/2 years and is STILL going lower! I wonder how many agents told their buyers back then that it would be "ridiculous" to see depreciation in the next 2.5 yrs?

Your statement, "If you plan on being in your home for more than 2 years, your home will appreciate in value and you've made a good investment" is a bold statement given all the negatives.

Historically, yes, real estate has always appreciated over time... BUT, the previous boom/bust cycles, while home prices were high, they weren't so far out of whack with median incomes as they were in the boom of the last 5 years. Because prices are so far removed from incomes and affordability, the % decline will likely be much further than in the previous cycles.

The average Tacoma home appreciated over 76% in the last 5-yrs alone... that is NOT normal appreciation.

Matt, I have to agree with boomer,there is no personal attacks leveled at you but your industry as a whole.There are some very good re agents out there and my feeling is that based on the information you have on your website I would say you are one of the better agents in the south sound.

When you look at the run up in real Estate madness over the last 3 years, Real Estate agents and broker had a part to play in that madness. As did the lenders and the mortgage brokers,as did the buyers. Now lets look at the numbers. If I save $50K on a home of my liking,I can save 300 a month on my Mtg payment thats 3,600 a year 18K over 5 yrs. there is a 68k gain by waiting. If I had a new baby and I wanted to start a college fund for that child in a 513b or put into a Roth Ira, I see this as a much better bet than buying now. when even the most conservative estimates are suggesting a national retraction of 10% in values over the next 3 years.

I'm saving 12K a year by renting in what appears to be a retracting market. I don't plan to rent forever, In fact I'm in a very good position to buy Now, however I think this is a better bet than going to the E.Queen. It's all about current market Price and timing. Yes I'm betting it will go down and the numbers of home sales and pricing M.O.M. suggest that my planning in the current economic environment has a better possability of paying off over buying now.

Boomer, against the tide, gig harbor undressed, wazzeus, marzano, great points. I hope nobody EVER takes anything personally on blogs. If I did I would already be out of business and back to nursing. You are all personally invited to our office anytime to discuss these matters. We do it everyday with investors, Mtg reps, financial planners, advertisers, and home buyers . I forsee this debate well into 2008 and 2009 as well.
Take your time. I assure you there is no rush. But, if you stumble upon the home you want there will be a very strong chance that the deal you can make NOW will far outweigh the same deal in 3-5 years. Remember all this negative press on housing always has a positive side. Rental rates go up for landlords and Sellers become more and more willing to drop their prices. I encourage everyone to be looking all the time (especially now) because if you find it then its your time to become a saavy investor as well.
Oh against the tide you wanted an exp of a better investment then real estate in the Harbor the last 5 years or so. I could give you hundreds with higher returns and financial planners could give you 1000's but the most simple ones off the top of my head are GOOG, MCD, BIDU, FFIV, Q, Boeing, and of course Chipolte Mexican Grill ..ummmmmm

Well stated, thank you.

good advise ray, however the stock market is a tough one due to volitility. You have to have a strong stomach for risk. I'm into sleeping at night and I can sleep well knowing that my mutual funds are currently in treasury's. I know I'm missing out and every time I open up the WSJ in the morning I shake my head and wonder why I didn't do something else, however I have a friend that had a much higher value in wamu that until recently was trading in the low 40's and now is trying to break 20.

I'm constantly on the hunt for a good value when it comes to re. I'm open to multi and single family situations but the numbers have to work. This market is still over priced in my view. I have noticed that there are a few novice investors that have weak positions and are in pre-forclosure with their properties. Some are desirable, some are not. Lender owned properties are not being discounted enough to my taste. Once again I see time a my ally.

"Buyer's who are waiting till the bottom drops out arent' necessarily looking at the big picture. If you are currently renting, you are throwing that money away when you could instead be spending it on an investment that WILL appreciate over the long term."

Oh man, the old 'throwing away money when you rent' argument.

Question to the RE agents on this thread as it seems as if there actually are a few who haven't drank the kool-aid - is there ever a time when it's NOT a good time to buy a house?

One of my friends is contemplating this very question. What would YOU do?

Some basics: He's predicting a 3.5% cut in price on a $300,000 home over the next 12 months. (That could be conservative, of course.) He expects to put $60,000 down. He currently has $130,000 saved, drawing about 5% interest. His annual share of rent (he has a roommate) is $6,000. Because he's splitting rent, he currently saves about $30,000 annually in income. He estimates that figure will drop to about $11,000 once he assumes full home payments, utilities, home insurance, etc.

Let's assume his predicted 3.5% cut in price over the next year is accurate. (That's $10,500 on a $300,000 home.) Here's how his finances would look 12 months if he were to buy now versus wait until then:

BUY NOW

$130,000 savings - $60,000 downpayment + $11,000 annual income savings + about $3,400 in savings interest = $84,400 in savings a year from now

BUY THEN

$130,000 - $60,000 downpayment + $10,500 in house price savings + $30,000 annual income savings + about $7,000 in savings interest - $6,000 rent = $111,500 in savings a year from now

He's probably going to wait, and it's hard to blame him, isn't it?

Wazzeus I would love to go over these numbers with you and show you why waiting will most likely cost him far more. Great original post Devona. How about an Open House forum sponsored by the News Tribune? It would be very successful! Are there any planned? Just like the high tech boom this housing "crisis" we have Nationally is on everyones mind. Everywhere I travel its the topic of conversation. Just turn on CNBC. Not an hour goes by without mentioning Housing. Let me know if I can personally assist in organizing!

Ray Pepper
Broker
www.500Realty.net

Regarding your friends' economic
calculations....

I'll grant the math works out in favor of renting vs. buying on a cash accumulation basis.

It did during times of hyper apreciation too.

What you fail to calculate for is the lifestyle cost/ standard of living in non-economic matters.

In your friends' case, he is still living with a roommate....could be living at home with parents..the economic savings are balanced or not by the Image of a person who doesn't have it together yet.

I know a couple single young men who are well employed who bought houses this year locally.

They shopped, found good deals, bought, moved in and furnished...(one of them is shopping now for another investment house).

and now they are Hot prospects for the hot girls...

I think they value the Image they have acquired over the dollars "saved" enumerated in your example above.

To answer nitsuj's question, "Yes," there are bad times to buy. Here are some real-world examples of when I've encouraged potential clients not to buy:
1. Job unrest
2. Not certain where they wanted to settle
3. Only reason for buying was fear they'd be priced out in a few years.
4. Their current house hadn't sold yet
5. Just moved to area and didn't know Gig Harbor from Oak Harbor, Puyallup from Olympia

Is there a bad market to buy in? I don't think so. Are some times better than others, absolutely. Wazzeus' example is a great time of one time being better than another. If his friend has found a house that he wants to live in, is tired of living with a roommate, knows he is going to settle here, then maybe it's worth $27k to him to buy now. I don't know. Is it always better to buy than rent? Nope. Look at my reason #5 above. I'll go back to my house vs. home argument and say that while a home is most definately a huge investment, there is some human element involved too...some reality (hence REAL estate). A home is tangible and practical and so many things that a stock, bond, note, etc is not.

If it takes owning a house to become a hot prospect for a hot girl than you've got bigger issues, or no game.


Gigharbor - appreciate your response. Interesting that you encouraged people NOT to buy for fear of being priced out as that was one of the battle crys of the last RE boom. It's good to know that there are people in RE out there not just regurgitating the company line, and respect that (I do find it odd that you don't like coffee though...)

I would suggest that Wazzeus friend has it well together with that portfolio. ( considering the avg. american has negitive savings and assuming he is under 35 y/o) You can sell lifestyle all you want, however this is not the time to buy for the sauvy manager. As the market continues too decline, this is a win, win, for this guy to wait. I think you have seen the last of positive numbers in sales activity and price increases for some time to come. This market is all about the buyer, we hold the Aces and Kings and where not showing until all bets are in.

Wow, home ownership = "Hot prospects for the hot girls" ... LOL

That is an angle I'd NEVER thought I'd hear from a RE agent to sell a house. I can just see the billboards now, "Buy a home today and get $5k bonus + hot girl".

So basically, that new hot girl is going to cost him around $30k a year. Of course, that doesn't include any dinners or presents... sounds like an excellent financial plan.

Mr Ray Pepper, I and I'm sure the many readers of this board would love to see an outline of why waiting will cost him more.

Can you post them here or on your website?

I'm sure any potential home buyer would rather see hard numbers than be told you'll have "perceived success" by purchasing that home.

First, I'm not a Real estate agent.

I do employ and consult regularly with a Realtor whose opinion and experience I value for my realestate investment decisions. In addition I keep my eye on other sources of insight such as this blog.

If this blog's purpose was to discuss how to get girls I would go on to relate to you how being a well employed, single person and a homeowner worked for me back in the day. You are right, I did and do have issues, which I had to overcome. (Apparently you don't, good for you)

Today I listen to my young adult daughters discuss their various dating prospects and their attitudes about the mens' various achievements and potential. I'm pleased that they have some high standards.

Back to topic-

Recently I asked my Realtor to perform a market analysis for a large house near the UPS campus which I have used as student housing for years.

I have ten comparable size, location, and age printouts on my desk in front of me. All SOLD with-in the past 6 months....some as recently as mid NOV.

Here is the interesting thing I see...

The time on the market is only about 60 days. One sold in 7 days. One in 30 days. Several in 90 days. One in 9 months.

The sale prices range from $380K -$550K.

Several reduced their list prices substantially. Most sold w/in 5% of list.

They sold for on avg 30% more than the tax assessed value...some at more than 40% over.

This just doesn't look like a Realestate crash to me....

(if one of you guys is looking for this kind of property I'd be happy to talk to you.)

Well I was so close to buying before the market exploded and home values nearly doubled. Unfortunately my salary did not increase proportionately. The rates are looking great, I have great credit, have a gifted down payment, but nothing on the market I can afford without extensive remodeling or relocation to the boonies. I am not willing to spend nearly half my income on housing and therefore will wait until there is a change. I am glad I wasn't one of those people suckered into a predatory loan and have nothing now. My rent hasn't changed in 3 years and it was a deal to begin with. So no, now is not a good time to buy, and likely won't be for some time. Unless prices decrease by 50%, and I don't see how that would be possible. Has anyone noticed the median salary isn't enough to afford the median home price?

Bottom line...If you NEED to buy a house buy one, If you NEED to sell a house sell one.

If you do not need to sell or buy do not worry about the current market.

This is not the stock market where you wait for high and lows, this is purchasing a home for your family. I heard someone say once, that you are buying a home not an investment.

I'd be interested to know what the percentage is of homes in the past five years that were bought by investors (as opposed to the previous five years). Because even moderately comfortable homes in decent locations are affordable only to those in the higher income brackets, one can only conclude that the ridiculous prices today are what they are because investors with deep pockets kept coming back for more.

It seems all I see anymore are remodels by investors who just won't take anything less than a 30% hike over what they paid in an already inflated market. The sad thing is, if their pockets were deep enough to buy in the first place, they're probably deep enough to absorb the downturn we'll see in the next few years. Homes will sit empty. And average families with average incomes will STILL be priced out.

A few comments on the savings scenario Wazzeus posted on the 10th:

First of all, I'm confused about how having a roommate is a savings that can't continue when his friend buys a home. There's no reason why his friend can't have a roommate in a house he owns and continue saving $$ that way. That line item is more of a lifestyle choice, which assumes that he will live alone when he buys a house. That isn't required tho, and shouldn't be counted against the "buying now" scenario.

His friend also fails to take into account the tax savings that he will receive on his mortgage interest. Depending on his income, it could even put him into a lower tax bracket.

That aside, most "buy vs. rent" comparison calculators show that it IS better to rent if you are only projecting out 1 or 2 years. Real estate usually shows its best returns over the long run, I'd say at least 4-5 years, typically.

GigHarborUndressed:

You said:
"No, it's not funny how there is never a bad time to buy. Try finding an investment strategy that has performed as well as real estate over a 5 yr, 10 yr, or 20 year period. Real estate, in our area, has appreciated more than any other investment that I know of (I don't pretend to be an expert in all areas of investments, so feel free to research and correct me here). "

How can you make such a proclamation and then say you don't know anything about what you are saying? I think it's usually better to state a real fact, than state something you believe as a fact and ask for someone who knows more than you to correct you.

There have been plenty of studies that show that over the long term, houses are an average investment. Stocks have appreciated more than houses. That's published information that is easy to find on any investment site or personal finance magazine.

The biggest advantage for home buying, in my opinion, is that it is basically an investment that trumps human nature. You have to make your house payment, but you don't have to put money into stocks every month. Most people are not good savers, so they essentially are forcing themselves to save through a mortgage on a leveraged investment. At the end of the whole thing, you can tap your "savings" inherent in your house in a number of ways (provided you didn't already tap it through re-fis and equity loans), and you only need to pay property tax, but as a pure investment, you only did average.

Didn't say I don't know anything, I said I'm not an expert. Here are 3 real facts. I bought a home in Feb 2000 in Tacoma for $113k. Sold it in April of '03 for $154k. Bought in Gig Harbor in April of '03 for $189k. Sold in June of '07 for $327k. Put $25k in a 403b in '97, have $36k in it now.
I'll take the real estate numbers. My homes have provided something tangible as well as successful investment.
I believe an average long term mutual fund is supposed to earn an average of 11% annually. Pierce County Real Estate has averaged I believe 18% since '97 when I moved here.
Depends on which sites you visit I suppose. Visit any Robert Kiyosaki or Donald Trump site and you'll get nothing but real estate in terms of wise investments. Numbers are just numbers. Anybody can make them say whatever they want.

This is from Home guide 123

There has never been much of a gap between incomes and home prices. When one gained, so did the other. This formula changed in 1997 Home prices began to climb at an unprecedented pace. Within a few years, the gap between home prices and incomes had become so large that affordability was suddenly an issue for many potential homebuyers.

This should have been enough to keep prices in check, but it was not. Lenders and borrowers alike found a way to dodge the issue: mortgage fraud.

Applications were falsified, appraisals were inflated and lenders loaned reckless amounts of money to unqualified borrowers. Everyone took a financial gamble on the housing market, assuming that the bad loans could be refinanced or that the houses could be sold for profit later on. These assumptions were built on the theory that home prices would continue to climb.

Of course, it didn't work that way. Home prices are falling, leaving banks and borrowers scrambling to find a way out of their self-created financial sinkhole. Foreclosures are at levels not seen since the Great Depression and are expected to get worse in the near future.

The Topic of to buy or not to buy? Why would any "well educated" person buy in this environment?