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This spring I will be in the market to buy another home. I am wondering just how deep the bottom is. I am very concerned that if I make an offer of 90-95% of the asking price and then in six months the market value could drop by 70-80%. The market may come back but the current economics is unlike anything in the past and so there are no guarantees or even any positive speculation. I realize that RE agents/brokers will try to uphold the market but I am sure there are many sellers who are willing, or need, to accept a reasonably low offer.
I was looking in an area of PA but there are several foreclosures and declining town populations. In many cases townships have seen fit to increase taxes on the remaining residents to cover their needs and yet the home prices remain high. I see this as a recipe for financial disaster.
I am now looking in other areas.
Comments appreciated.
No one knows what will happen. In 6 months the home we just bought may be worth $425K, $100K less than what we paid. But we needed a home and I am happy with it. It's like when you need a new pair of pants...you can buy a pair of Dockers for $50 at the start of the season and then 3 months later they are half off. Did you need the pants? Did you want the pants? Then you got your utility out of it. If you don't need a home or if you don't want a home, then wait. But, just remember if you wait the prices may rise...you never know. Especially with the government stepping in and bailing people out. Who knows what affect that will have on the real estate market. And, who knows what the new government will do.
You are not sure where you want to buy and yet are considering an offer of 90-95% of the ask.
Reality is one house might be worthy of 100% of the ask and the next 75%.
There are no hard fast rules. It all depends on how a given house relates to closed and active comps for the area.
My parents were both children of the depression era. Both families lost their homes during the great depression. This made such an impact on them, that they never could pull the trigger to buy a home and so we were renters and paid off other people's homes.
If you are going to put down roots, you ride out the tough times and enjoy the lifestyle. We all have to live somewhere.
I am encouraging my worried clients just to rent. If you are going to live in the house for a long time and you find something you like make an offer. Out here, homes typically went for 98-99% of list, and we are hovering at 95% of list (for all home sales).
Like everyone else said, there are no guarantees of what the market is going to do. It also depends on your local market. I live in a very stable neighborhood, and one of my neighbors sold FSBO in 3 months in the Oct-Dec time frame.
Your home should be a relaxing place to hang your hat at the end of the day. If you are so worried about losing your equity, just rent.
I am encouraging my worried clients just to rent. If you are going to live in the house for a long time and you find something you like make an offer. Out here, homes typically went for 98-99% of list, and we are hovering at 95% of list (for all home sales).
Like everyone else said, there are no guarantees of what the market is going to do. It also depends on your local market. I live in a very stable neighborhood, and one of my neighbors sold FSBO in 3 months in the Oct-Dec time frame.
Your home should be a relaxing place to hang your hat at the end of the day. If you are so worried about losing your equity, just rent.
We are looking at 5 acres in a nearby rural area that were purchased for $55,000 in 2002 and they want $110,000 now. No improvements to the land at all. In fact, it has a 2/1 mobile home on it in deplorable condition and some debris which we would get rid of. An expressway opened up during that time to make the drive into the city shorter, so I can see an increase in property value from that. It is also not covered in palmetto bushes which are horrible to clear. It's just brush.
I was thinking it would be about $80,000 and was shocked to see it at $110,000. Is it normal for the prices to double in 6 years in these days? I know the market was berserk in 2005-06, but double at this time? We're very much in the preliminary stages of our research on the property. We've just done a drive by, we're checking into wetland information, etc. to make sure it would be appropriate for horses.
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