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Well this is good but not a great advice because it doesn't say when one should buy. Of course, it's best to buy (from an investment perspective) when the home prices are at the bottom. But how does an average person know when it hit the bottom?
So let's share ideas on how to tell for an average person (not a realtor) it's at the bottom.
Prices will bottom will inventory is reduced to less than 6 months. We are at 10-11 months in most markets, so I think we are still pretty far from bottom price-wise. I feel we are 12-24 months from bottom price-wise, depending upon which market you are in. In some areas like California and Florida we may be as much as 3 years from bottom price-wise, though this could be reduced if prices are slashed enough to cut into inventory. Watch the inventory levels closely as they will dictate when we bottom out price-wise.
Buyers market yes, but the banks are regulating the prices (and how many are for sale at any given time) turning it into a bidding war like an auction. Our agent says you have to offer around 20k more than the listing price if you really want the home, (You guessed it, going up against other buyers who will then move on to the next home for sale). I may wait til the winter months to start dragging him out in the most absurd weather conditions, that'll be better yet bottom prices for me.
when there is little inventory...right now, there is a TON of inventory and it's going to get much MUCH worse due to all the short sales, foreclosures, etc. We will not hit bottom until the 3rd quarter of 2009 ! HOUSES are simply not affordable yet...thats what got people into this mess in the 1st place.
Saw a small blip regarding housing in CA. Homes are now movin very fast with multiple offers coming in. These are mostly foreclosed homes, but this should help reduce the inventory. I don't think investors are waiting for the bottom and when multiple offers start coming in, then the prices stop dropping. I would love to buy a vacation home in CA and would do so today if we could.
The average person should be buying a home to LIVE in for a long time...not just an investment. While it is an investment, over the long haul, they will see appreciation. They do not need to know when the bottom is coming. They need to find a house that they like, a neighborhoood they like and get it for a price they are willing to pay. It's that simple. Even if the house's value goes down some more, eventually, it will go back up. Appreciation will not be what we saw during the bubble. Prices will eventually stabilize and then go up slowly over time. If one lives in their house for a long time, it won't matter that at the end of 2008 or 2009 or whatever, it went down a little more than what they paid. Eventually, it will be worth more than what they paid if they wait it out.
IMO the time to buy a house is when you find one that serves your purpose and is priced accordingly to fit WELL within your budget, not where you try to buy at the top of what you qualify for. Either you buy a house to make it your home regadless of what the market is, or you buy just thinking it is an immediate 'moneymaker'.
The longer you wait to buy the less time it will take for your house to go up in value. It is better to mistime the market by waiting too long than to mistime the market by buying too soon as price continue to drop but then are forecast to stabilize or remain flat for awhile before going up.
If you don't have to jump in right now, I would wait. I am.
If I had the option to rent for 1-2 years or buy, I would rent. I own and live in one of my rentals but if I did not already own I would rent if I could.
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Price Bottom
