It’s been a while since I’ve heard Realtors say that; then again, they haven’t been a very talkative bunch lately. The Wall Street Journal picked up the slack today by offering 10 counterpoints to Time’s recent cover story, “Rethinking Homeownership.” Reason #1?
You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Realtors not talkative? Not the ones I’ve been seeing, including one who called me at 11:45 one night last week and talked until one in the morning..
I have many a recent video outtake of Realtors saying there’s never been a better time to buy. I inform the Realtors that I’m cutting that phrase out of the video because of the negative reaction that too many consumers have to it – without regard to whether it’s accurate.
It seems that many potential home buyers are of the mind that it’s never been a better time to take a bye.
I think it’s a great time to bid.
I hate that phrase, can’t even speak it or writie it. However, I just bought a house! But, I “needed” a house and there was a pretty perfect storm of low interest rates and a decent home being sold by loooonnggg time owners that priced well below the market (in my expert opinion). The home appraised for over $50k from what I bought at and my loan underwriters accepted it.
So yes, given the need for a house and having a couple bucks right now, there was opportunity for a nice primary residence that made sense for our incomes.
I sold my current home for $10K less than I paid in 2007, which is a huge “win”. But, I also refinanced into a much lower loan and rate while owning it. We saved a lot of money with the refinance.
However, I still look at buying new construction at a premium compared to comparable re-sales as a depreciating asset.