Bad time to buy a home in Knoxville? (for sale, loans)

[hiknapster]

As one of your colleagues recently pointed out, sales are down in the area by 10 percent.

If you come from California, and managed to sell your home, and think that prices here are dirt cheap, it still makes sense to rent and scout out the area while waiting for the economy to shake out, then make your move.

[AdelinaRotar]

I agree that renting short-term is a great idea, especially when you don't know the area you are moving to.

Sales are down by 10%, but average house prices are up 4.4%. Everyone is waiting for the market to "bottom out." No one knows when the market will hit the bottom until after it already has...that's also a point to ponder...

When I read all the negative news stories, I sometimes get worried too. However, the news media hardly ever runs positive stories...no one reads them. I really think there is too much negative media regarding the house market. I sometimes have to shake myself back to reality! As long as people roam the earth, they have to have a place to live!

Real estate is a long term investment, and I personally don't want to pay my landlord's mortgage for the next 10 years. Even if homes had 0% appreciation, I would still want to purchase my OWN home... I want my kids to have animals, I want to have a garden in my backyard, I want to paint my walls whatever color I want. I want to be my own boss; I don't want my landlord telling me what I can and can't do to his/her house. Just my 2 cents...

[mbmouse]

Whoa! Feds just cut rates again! Even before the Feds were due to meet next week. The Fed rate is now at 3.5% and Prime is now at 6.5% the lowest since 1990. This means folks that fit in the conforming bracket can get 30 year fixed mortgages for much less than 6%, even in some cases down in the 4% 's. In a local market where values are not decreaseing.......ok, now I go over to the "yes, now is the time to buy" side where a week ago, I was kind of on the fence either way. If anyone is crazy enough to still have an ARM mortgage that is not already caped out, now is the time to take care of that for sure!
Here is part of an article about the cuts, the why's and the link to the rest.


"The central bank said that the strains in short-term credit markets have eased a bit, but "broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets."

The move caught financial markets by surprise. Many had expected the central bank would wait until its meeting next week to make any move in interest rates. The Fed made the move before markets had opened in the United States.

Before Tuesday's move, the Fed had cut interest rates three times, beginning in September, the month after a severe credit crunch had roiled Wall Street and global financial markets. The Fed cut the funds rate by a half-point in September and then by smaller quarter-point moves in October and December.

"The committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risk," the Fed statement said.

The Fed's action was approved on an 8-1 vote with William Poole, president the Fed's regional bank, dissenting. The statement said that Poole objected because he did not believe current conditions justified a rate move before the Fed's meeting next week."

Fed Cuts Interest Rate: Financial News - Yahoo! Finance (broken link)

[Beretta]

DH just called about this a bit ago. Do you think that they will still meet at the end of the month and cut them again or is it too early to tell?

We are at 5 and something and have been planning to refinance when the rates are right (which may be now). We want to pull some cash out and do some renovations.

[mbmouse]

Originally Posted by SmokyMtnGal

DH just called about this a bit ago. Do you think that they will still meet at the end of the month and cut them again or is it too early to tell?

We are at 5 and something and have been planning to refinance when the rates are right (which may be now). We want to pull some cash out and do some renovations.

In that article it says some believe the feds will drop the Fed rate (which is at what rate the banks/lenders borrow money from the Federal Reserve to lend out to homeowners through mortgage loans) next week too. But not sure about the prime, that may stay the same. But if you are "conforming" prime doesn't apply to you in a mortgage but it will make you adjustable rate credit cards go to lower rates. Unfortunately it also makes the savings interest rate to go down. My savings account dropped 1/4 percent interest over night.
Only time will tell if they will drop the rate again next week. This is the times that we "float" loans and watch the rates and clock, hold the finger over the "lock" button.

[hiknapster]

Even though I missed most of the drama this morning, due to the ice crisis around here, I knew that it was going to be a crazy day on Wall Street.

The world markets had taken record losses for two days and the futures trading signaled that the stock market could be down as much as 500 points at the opening bell.

Bernake, pressured by investors, dropped the rate. Even still, the market was down by 128 points by the closing bell. I still don't consider this a good sign. Dropping the rate might have worked in the past, but I just don't see how it's going to change the problem of supply and demand in the housing market or the recession.

Until we do something economically meaningful - other than have phony dot com booms, sell each other houses or make money on the stock market - our economy is going nowhere. We need to become producers AND consumers.

Call me the gloomy Gus.

[mbmouse]

Originally Posted by hiknapster

Until we do something economically meaningful - other than have phony dot com booms, sell each other houses or make money on the stock market - our economy is going nowhere. We need to become producers AND consumers.

I can not agree with you more here! We need to bring the work back home, produce it and service it here.

[Bones]

Freddie Mac: Mortgage rates hit four-year lows--->Freddie Mac: Mortgage rates hit four-year lows - MarketWatch


Existing-home sales fall 2.2% in December to 4.89 million--->Existing-home sales fall 2.2% in December to 4.89 million - MarketWatch

[hiknapster]

It was a notable year for the housing industry, and not in a good way.

In 2007, the median price of an American single-family home fell for the first time in at least four decades, according to the National Association of Realtors, a trade group.

The median price declined 1.8 percent to $217,800, the first annual decline since reliable records began in 1968. “It’s the first price decline in many, many years and possibly going back to the Great Depression,” said the group’s chief economist, Lawrence Yun.

Over all, sales of previously owned single-family homes fell 13 percent in 2007, the biggest drop in a quarter-century. Last month alone, home sales dipped 2.2 percent from November, to a 4.89 million annual rate. (The group’s survey excludes newly constructed homes.)

http://www.nytimes.com/2008/01/24/bu...4cnd-home.html

Buy a house if you must, be know that it's not going to kill anyone to wait.

[AdelinaRotar]

Good stories on the national market; however, the Knoxville market hasn't seen this decline...

This is an excellent time to buy a home if you are still renting. It is also an excellent time to buy investment properties. Landlords are doing quite well right now!

Although the national average is down, the local average is not down. Less homes sold (10% less) in Knoxville last year, but the average house price went up.

Unless you're brand new to the area, renting is never smart. Homes are not only an investment for the long term, but also shelter. I don't want to sound like a broken record; however, real estate is a long term investment that over the years appreciates.