RE Agents - when would you buy? (sellers, loan, interest rate)

[stevep]

I'm just trying to get a feel for the different markets. RE Agents - I have 2 questions. Let's say you're personally in the market to buy a home. You have the flexibility to purchase it anytime within the next 2 years. When would you buy your home (now, in 3 mos, 6 mos, 1 yr, etc) knowing that there is still weakness in home prices and sales?

Second Question - you want to buy an investment property to hold for 5 years and sell. When would you buy it?

[Gretchen B]

Originally Posted by stevep

I'm just trying to get a feel for the different markets. RE Agents - I have 2 questions. Let's say you're personally in the market to buy a home. You have the flexibility to purchase it anytime within the next 2 years. When would you buy your home (now, in 3 mos, 6 mos, 1 yr, etc) knowing that there is still weakness in home prices and sales?

Second Question - you want to buy an investment property to hold for 5 years and sell. When would you buy it?

Answer to 1st ? - Do I have a house to sell before I buy? Am I staying in the same general area?
If I have a house to sell first and I'm not relocating, then it really doesn't matter when I buy because if I have to take a hit on the sale of my house, then I'll make it up when I buy.

Also, it's not nearly important when I buy a home as when I sell my house and either don't buy another house or relocate to another market. Here's how I look at it.

Ex. A I could buy a house now at $300k w/ 20% down = Loan balance $240k @ 5.75% interest = P&I $1401.60/mo,
Ex. B I could wait a year and buy the same house for $275k w/ 20% down = Loan balance $220k @ 6.50% interest = P&I $1390.40. (Of course no one knows what interest rates might do in a year.)
The difference is only about $11/mo in my mtg pmt, and for a whole year I've been able to enjoy my house, get the tax deductions, and also build some equity.

Now what if I sell my house in Ex A at the peak of the next market swing? Wow! I'm in really good shape if I want to just cash out. OTOH, if I buy another house, it will cost more then, too.

What if I miss selling at the peak in Ex B? Just because I bought it a little cheaper may not result in more equity. I've had a higher interest rate, meaning less is going toward principal, and now I'm not selling at the optimum time. If I'm cashing out, I'm not in any better shape than in Ex A (maybe worse, if we're in another downturn, or if the market hasn't fully recovered). Again, if I'm buying another house, it won't matter because the price of my next home will parallel my current home.

And just to add another variable into the mix, what if I get an awesome deal on the home of my dreams now? Maybe I purchase it for 10% below market value ~ I've just gotten what I want now, instead of waiting for the rest of the market to drop that 10% in another year (which it may or may not do).

As long as I don't pay over market value for a house, it's only going to matter to me when I sell that house or if move to a different market. The timing is really far more critical on the backside than the front.

Answer to 2nd ? ~ I'm going to look for a positive population migration, vibrant local ecomony, and a lack of excess new builds. When those things are present, I'm buying.

[Mike1306]

I have bought 3 times in the last year and will again if the right situation presents itself.

Weak market or strong market there will always be good opportunities you just need to keep your eyes open.

[DavePautsch]

Investment property - Yes, in a heart beat if the right deal came along (actually just closed on one this past November).

Home purchase - This depends on so many factors (and I think GretchenB laid out the logic pretty well). Given the interest rates and the long term outlook, if it was my plan to live in it as a HOME for the foreseeable future, and it was a home that met my needs for my family "just right" I would certainly buy now.

I would NOT buy in this market if I knew I would HAVE to sell again within a year or two. If I had to sell my current home to buy, I would also be hesitant to buy now; mostly due to the loss of negotiating leverage of having a house to sell first. Yes, I'd take a hit on price selling today, but given how long I've owned my home, I would still be well ahead...but it can take longer to sell and time is money on the NEW home purchase.

[austin-steve]

Second Question - you want to buy an investment property to hold for 5 years and sell. When would you buy it?

The following is what we tell investors on our investment page ...

Investment Buyers ask us "is this a good time to buy?" and sellers ask "is this a good time to sell?". The answer is always the same - there is no right or wrong time to buy or sell real estate in Austin TX - it all depends on your personal goals and financial needs.

We've personally bought and sold real estate every year in Austin since 1994 (as recenty as Feb 2007), and we never pause to wonder if it's a good time or not. We only consider whether or not it makes sense for us personally at that particular time to do that particular deal. Your decision to invest or not to invest in Austin TX real estate really does "just depend" on you and your financial goals.

We can ask you questions about your reasons and motivation for buying in Austin, but ultimately, it's your personal decision and nobody can tell you if it's the right one or not. Only time well tell. That's the nature of investing.

Also, making a good real estate purchase decision, or finding a "good deal" in the right location doesn't necessarily mean you will achieve success investing in real estate in Austin. Hiring a good Austin Property Manager, or being a good landlord yourself, will be most critical in determining whether your real estate investment will be a profitable and rewarding long-term endeavor.

We can make you aware of and help you avoid the common mistakes we've seen Austin real estate investors make during our combined 35 years managing, buying, selling and owning investment property in Austin TX, but we can't promise or guaranty your long term success.

[Captain Bill]

I currently have my former residence home on the market in California, from where I moved some four years ago. When that gets sold, I will buy an investment property here in AZ.

I'm actually considering selling the home I live in here in Gilbert. It's a lake front property in a desirable location. I would buy a smaller home to live in, and another investment property.

I would be planning on selling either of the two investment properties when I feel the time is right, or when I see the opportunity to make a good trade.

The short answer is anytime is the right time. It all depends on your personal situation and goals, as Austin Steve said.

[austin-steve]

Also remember that if you are both selling and buying in the same market, the market conditions don't matter. A down market can actually be a great time to move up since the discount you have to give to sell your old home is smaller than the one you receive buying the newer more expensive home.
Steve

[kturbe]

I bought my dream home last year and though appreciation did fall this year I have no concerns. Why, because, first and most important, I love the house! Second, I know I will be in it a long time and the market will rebound and this home stands apart from others so I will always have a good value.

Regarding question 2 - If an investment property can meet your cash flow requirements, I would be buying in a heart beat. I am in SoCal and just previewed a condo priced at $195k. The last time we had pricing like that was years ago. There are great opportunities currently available!

Really the only sad thing I see in this market is the pricing has come down to a point that first time buyers could really take advantage and get in, however the tight underwriting contraints are going to be an issue. So who will be picking up these deals, investors!

[tomocox]

You have just asked the question of the ages. When should one buy shares of stock, etc?

As most people have said, its how you intend to use the house. If it's going to be a long term home, anytime. You are buying your family's shelter, yes there is an investment angle, but primarily shelter. Buying as an investor, shop for deals.

[DMenscha]

I'm rolling my money from land I have for sale into even more as soon as it sells, bargains everywhere and I'll identify the best 3 for my 1031 exchange when I get to that point.