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I think what he should be saying, is don't buy a home for a short term investment, for it may not pan out. A home is more like a Blue Chip stock. The idea is to hold on to it for a while. My Grandmother told me her mother bought her home in NY for $5,000 in the late 20's. She had a neighbor a year later who paid twice that, the Depression hit, and they had to sell for less than half. That home is still is my family, and worth well over $500,000.
Now, whether you bought the same home for $5,000 or $10,000, it was still not a bad investment.
Builders overbuild, they have inventory homes. Most builders want to sell those inventory houses before the end of the year. Thus, its a great time to buy those houses. Production builders typically reduce those homes $10,000,$20,000. That doesn't mean EVERY builder is offering those incentives.
Vicki
It seems to me that with all the new construction out there, it is even a BETTER time to buy a resale home, since they don't seem to command the prices that a lot of new homes do. You can find many "almost new" homes , like under 5 years, that are a very good buy. Do you see it that way, from the realtor's perch?
Renting is still an option. The problem is that Cramer implies that, if you don't already own a house, renting is the ONLY sane option right now. That's incorrect.
I think that he is correct in the near term (6 - 12 months).
And for you and your personal situation, that may be true. But the assumption that it is true for everyone is false.
If you don't have to buy a house then renting is the only sane option right now. There looks to be too much volatility in interest rates and housing prices in the near term to justify purchasing a house at this time. House prices will be flat or lower through spring 2008 regardless of the area of the country you live in. Send me a PM and we can bet whatever you'd like on it.
Let me take Cramer side and tell you about true situation:
When I came to Raleigh early this year, I liked a subdivision in Wake Forest. The average home price was about 450K. Custom build with only few inventory homes to choose from. They were selling them like hot cakes. I was thinking seriously to buy there, but I didn't have the down payment ready. I checked the subdivision again 3 month ago, and I found a re-sale home for 425K. It seemed as a good value to me, because builders were still demanding 450K for their homes. I passed on this opportunity as well. I checked the subdivision today, and I found 2 new homes for 399K and about 5 in the low 400K. All the homes are made of the same quality interior and exterior, and all of them are about the same size.
Now tell me how would you feel if you bought a home for 450K to find your neighbor buy the same home for 399K?
That would not feel good, wouldn't it? I don’t know about all of the optimistic people in here, but it takes me many years to save those 50K.
There are no absolutes. There is no single right answer for everyone. That applies to the housing market ... even now. So again I say renting may be the right answer for you and for a number of other people right now, but one shouldn't assume that it is the only right answer for everyone.
Let me take Cramer side and tell you about true situation:
When I came to Raleigh early this year, I liked a subdivision in Wake Forest. The average home price was about 450K. Custom build with only few inventory homes to choose from. They were selling them like hot cakes. I was thinking seriously to buy there, but I didn't have the down payment ready. I checked the subdivision again 3 month ago, and I found a re-sale home for 425K. It seemed as a good value to me, because builders were still demanding 450K for their homes. I passed on this opportunity as well. I checked the subdivision today, and I found 2 new homes for 399K and about 5 in the low 400K. All the homes are made of the same quality interior and exterior, and all of them are about the same size.
Now tell me how would you feel if you bought a home for 450K to find your neighbor buy the same home for 399K?
That would not feel good, wouldn't it? I don’t know about all of the optimistic people in here, but it takes me many years to save those 50K.
Your situation is true for Wake Forest as there are different situations out there for different areas and that is the point of this thread. Cramer is basically stating that every single market out there is a poor market when in fact that is not true. There are markets in the Raleigh/Durham area that are doing better than others based upon the wants of the community (schools, amenities, proximity to RTP, amount of over development) and if the state of the market is that volatile and builders are dropping prices then wouldn't now be a great time to buy since you can get practically anything you want for much much much cheaper than before? When builders are desperate you should buy and not wait for the upswing when they have the leverage as opposed to the buyers.
Cramer is basically stating that every single market out there is a poor market when in fact that is not true.
KEEP HOPE ALIVE!
Quote:
Originally Posted by tluv00
When builders are desperate you should buy and not wait for the upswing when they have the leverage as opposed to the buyers.
As Jim Cramer said in the recorded interview the NASDAQ looked like a great deal when it went from 5,000 to 4,000.....until it went to 2,000!
The deals on homes will still be there 6 months from now, people! There is no need to rush into anything.
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