Maryland Take On Jim Cramer (CNBC) Who Says Don't Buy Now (Baltimore: for sale, renting)

[starr71]

This week, Jim Cramer, host of Mad Money on CNBC, went on the Today Show and said "Don't you DARE buy a house now, you WILL loose money." He also says that the Feds will continue to cut interest rates and that by June 2008 the market will rebound.

My take on it is that if you are buying a house strictly as an investment, and if you plan on selling that same house within the next few years, it may not be a good time to buy as prices are still falling. But while houses are indeed a huge investment for most people, most of us primarily buy a house because we need somewhere to live and the investment portion is a secondary consideration. Of course you wouldn't want to buy in an area that was obviously declining (bad schools, high crime, run down properties, etc.), to me, that is a bad investment. But I thought this was a buyer's market??

I'm actually in the process of selling my home and buying another, so to me, if you are selling and buying at the same time, you're going to suffer and benefit on either transaction no matter what kind of market it is (seller's market or buyer's market).

Locally, I'm interested in hearing opinions on this subject. I know a lot of realtors are furious about his statements. I saw him today on the Today Show with the President of the National Association of Realtors, and I wasn't convinced either way by either one of them.

In terms of Maryland, do you agree with Jim Cramer's advice?

[Bagira]

I would agree, we moved here in Feb. of this year. Renting and we have seen since then in our neighborhood go from @475-550k to knock basiclly anywhere form 100-125k off... and they still are not moving. We most likely will be buying in 09 most likely, maybe next summer if other things fall into place....

As far as the higher end homes @Rockville haven't followed them since we won't be buying them anyways but they should be falling more...spoke with a lady who purchased @750-800k home a year ago or so and they will be moving in 3 years or so and she says she WILL BE HAPPY TO GET BACK WHAT THEY PAID FOR IT!!!!!!!!

[trickymost]

I disagree with Cramer...his whole take is why buy now when interest rates will fall and when housing prices are falling at the same time.

But, IMHO, those aren't the real sources of problems. The problem is that there's not enough credit to lend to people even if they're qualified, and without credit, who cares whether interest rates are high or low, and who cares whether home prices go up or down.

Further - mortgage rates aren't tied to Fed interest rates, so unless the bond markets calm down and get less anxiety about credit drying up (not likely), rates may continue to rise even if the fed continues to cut their interest rate.

If you're going to pay with all cash or mostly cash, or if you don't currently own a home and will have 20% to put down on a home with a value of $417k or less, I think there's merit to what Cramer is saying.

But, if you need to sell a house before you move, or if you don't have a lot of cash available to put towards your purchase, now seems like a good time to buy as you may not be able to get a mortgage in 1-3 years, or interest rates may balloon upward by then (and that will offset falling prices).

In my experiences in the last month in Baltimore County, you can negotiate hard with homebuilders, and you can find homeowners who don't want to be stuck in their homes who will negotiate too.

[Rmx Christina]

i think people talk to the extreme to get their name out and voice heard. i also am in the middle of buying a home for myself, and planning to sell my current in this market. I think it will be a successful and profitable investment decision despite local market decisions.... some might say, "bad move?" like the guy on CNBC.... you just gotta use your brain when it comes to investing... there isn't a right answer or someone's voice to listen to.

[km703]

I agree. Now is not the time to buy for primary residency purposes.
I constantly monitor the inventory (houses for sale) here and can say with confidence that prices are FALLING because the inventory is not moving. Realtors know this because they have accurate and up to date statistical data. If you are thinking about buying or selling you need to know:

1.In my area, What is the current average number of days a house is on the market before it sells?
2.In my area, What is average percentage ratio of listing price vs. selling price?

I've seen desirable homes on the market for well over 12 months and price reductions at 25-30% LESS than initial listing price.

Example 1:
Very nice, 10 year old, 3 Bed/2bath on 5 acres with waterview initially listed 399,000 one year ago is now listed at 299,000 and is still not getting showings.

Example2:
Similar as above initially 330,000 sold 16 months later for 255,000 with 5K seller contribution.

[lscalder]

This market is the perfect market to purchase a home. If the prediction that the market will rebound in June 08, that is just months away. The rates are lower,house prices are lower why not buy then hold on to your property for the next seller boom which will start june 2008. If you want for the market to rebound interest rates will increase and the minimum credit score will also increase. Right now to purchase a home with any lender the minimum credit score is 640, for other lenders it 680-700. When the market pick back up its thte sellers market and buyers can no longer get their way.

[starr71]

But km, based on what you said, isn't that a GREAT position to be in as a BUYER??

[km703]

starr,
You would think that,,,,, immediately.
But if this housing /mortgage crash does continue throughout '08, better deals are going to be had for buyers through price & finance offers.

For example:
6 months ago in my area I observed a 3/1, .5 acre property sell for an unheard of $200,000. It needed tlc.

Last week a 2/1, .90 acre tlc property sold for $100,000.

[ChosenGSR]

I'm not sure where you guys see prices that are very noticeably falling. I'm constantly reviewing inventory for a garaged townhome in Columbia/EC/Laural area and prices haven't moved much at all. They aren't rising, but they aren't falling by more than 5% all year at best.

[starr71]

Chosen, looks we're looking in the same market. I'm also looking for a garaged townhome in the EC/Columbia area (not considering Laurel--want to stay closer to Baltimore). What I have observed is that houses are staying on the market longer, and that prices are indeed dropping the longer they sit. If I could only sell my split level single family in Gwynn Oak, I'd be ready to jump on one the MANY listings that I see in the EC/Columbia area.

Based on what I'm observing, it's just a bad time to be a SELLER. I think most people buy their homes for the long term, or at least for five years, and in that time the market will certainly correct itself. This would make what you buy today a real bargain compared to its price five years from now. Anyone else agree?

I also think it's a bad time to be a buyer if you have bad (or shaky) credit and not a lot of money to put down. Seems like people just can't get financing.