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I think people should think long term when buying real estate. Given that this is a buyers market with houses being discounted due to foreclosures and how low interest rates are, sitting on your hands could turn out to be a huge mistake especially if you have steady income. What if the economy/real estate picks up gradually over 3-5 years up to the point that it was a couple of years ago and that same house doubles in value and its now worth 450K? Then what buy at that time? No one can predict what will happen and its all speculation and sure trends in declining real estate are continuing. My point is that real estate should be thought out as long term. A bird in the hand is worth more than two in the bush.
So, let me get this straight. We should buy real estate now because in 3-5 years it could double its value? You know because...anything is possible. I mean perhaps space aliens start to buy up real estate.
You should buy real estate long term, but that doesn't change the fact that the guy that buys today is going to be much worse if prices decline than the guy that buys in a couple of years. Both will hold it long term but in the example above one will end up paying almost $100k more (after you consider interest) than the other.
Real estate isn't going to go from $225k to $450 in one month...or even one year. It didn't even do that during the housing bubble..... The worse case situation for the person that waits and rents is that they pay an extra few thousand for the property. The worse case for someone that buys now is very very bad.... This really has nothing to do with speculation. You think about what happens in either case and the downside risks are dramatically higher if you buy than rent and wait. I don't know about you, but I'm going to pick the option that involves less risk.
So, let me get this straight. We should buy real estate now because in 3-5 years it could double its value? You know because...anything is possible. I mean perhaps space aliens start to buy up real estate.
You should buy real estate long term, but that doesn't change the fact that the guy that buys today is going to be much worse if prices decline than the guy that buys in a couple of years. Both will hold it long term but in the example above one will end up paying almost $100k more (after you consider interest) than the other.
Real estate isn't going to go from $225k to $450 in one month...or even one year. It didn't even do that during the housing bubble..... The worse case situation for the person that waits and rents is that they pay an extra few thousand for the property. The worse case for someone that buys now is very very bad.... This really has nothing to do with speculation. You think about what happens in either case and the downside risks are dramatically higher if you buy than rent and wait. I don't know about you, but I'm going to pick the option that involves less risk.
This is California and I would never rule out that prices will reach the level they were at the peak. California has alot of well paying jobs as it attracts alot of talent from all over. These incomes will always drive real estate prices up. Sure we're in a bad economy now but historically real estate has always been high. You wait it out two years and you'll more than likely would have to compete with more offers, the selection may not be a good as it is now (you could end up in a shack by the railroad tracks for a cool 200k) as things could change overnight. My point is that if you can afford to buy now do it with the premise of long term. Think 10-15 years at the minimum.
This is California and I would never rule out that prices will reach the level they were at the peak. California has alot of well paying jobs as it attracts alot of talent from all over.
California has the 3rd highest unemployment rate in the Country. California's job market is currently not one of its assets. And with a ridiculous tax rate, which company exactly is going to rush in the state to create new jobs?
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Originally Posted by RCLL
These incomes will always drive real estate prices up. Sure we're in a bad economy now but historically real estate has always been high.
Real estate prices over the last 8 years didn't go up because of incomes, wanna know why? Because the incomes hardly went up. California home prices are still well beyond what incomes in California would justify.
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Originally Posted by RCLL
as things could change overnight.
Real estate doesn't change overnight. A renter has plenty of time to act if they notice the market changing.
Quote:
Originally Posted by RCLL
My point is that if you can afford to buy now do it with the premise of long term. Think 10-15 years at the minimum.
And my point is this move involves the highest degree of risk. If you like high stakes gambling then I suppose this could be for you, but for those of us that don't like dealing with such risk renting is far superior. This is especially the case when renting in terms of monthly costs is cheaper than owning a comparable property as is the case in California.
here we go again.
if ya see a house you like, just throw a damn INFORMED offer out. Yes or no will be your answer, how freaking simple is that?
I used to agree wholeheartedly with this sentiment, but after looking at 30+ homes over the weekend, I'm realizing that it's not as simple as it sounds. We are looking at the high end of the market in a new locale, and there are virtually ZERO properties in our price range that have sold over the past 3-4 months. Comps older than that and prior to the worsened economy and credit crunch are probably meaningless. But despite 24 months of inventory on the market, sellers have not lowered asking prices AT ALL. Our realtor states that this is because "they are anticipating low-ball offers and want to start high so they have room to come down."
And so what exactly is an "informed offer" and what is "low-ball"? Is it 10% off asking? 20 percent? 40 percent!? What is a "fair offer" on a "luxury" home that has been sitting on the market for >12 months, is unoccupied, and shows like an abandoned crack house, but is still listed for 1.1 million?
Our buyer's agent provides minimal assistance and seems almost apoplectic when we suggest making offers of 25% off list price. In such an environment, I find it very difficult to get a handle on what is going on with the market.
I used to agree wholeheartedly with this sentiment, but after looking at 30+ homes over the weekend, I'm realizing that it's not as simple as it sounds. We are looking at the high end of the market in a new locale, and there are virtually ZERO properties in our price range that have sold over the past 3-4 months. Comps older than that and prior to the worsened economy and credit crunch are probably meaningless. But despite 24 months of inventory on the market, sellers have not lowered asking prices AT ALL. Our realtor states that this is because "they are anticipating low-ball offers and want to start high so they have room to come down."
And so what exactly is an "informed offer" and what is "low-ball"? Is it 10% off asking? 20 percent? 40 percent!? What is a "fair offer" on a "luxury" home that has been sitting on the market for >12 months, is unoccupied, and shows like an abandoned crack house, but is still listed for 1.1 million?
Our buyer's agent provides minimal assistance and seems almost apoplectic when we suggest making offers of 25% off list price. In such an environment, I find it very difficult to get a handle on what is going on with the market.
You should require that your agent write the offer.
If the Seller has maintained the price to have "negotiating room," you need to find out how much negotiating room there is.
The offer doesn't really matter.
Yes, it is easier when list price is realistic, and the Buyer offers list price, but "easy" isn't in the job description.
The final negotiated price and conditions are where the rubber meets the road. You will never get to a negotiated price without an original offer.
Force the issue or find someone who will work with you.
I used to agree wholeheartedly with this sentiment, but after looking at 30+ homes over the weekend, I'm realizing that it's not as simple as it sounds.
We are looking on the other end of the price spectrum, but our experience has not been all that different. It makes for a very uncertain and frustrating experience. Those who think buyers are trying to buy "a house they couldn't afford before for almost nothing" just don't get it. I just want a functioning market. Realistically, if I saw a 20% decline in my area, I would make the jump even though I believe prices could potentially decline much further over the next few years. The rationalizations and reluctance on the part of sellers to actually participate in a market, where goods are priced at what people are willing to pay and gains are never guaranteed, aren't helping matters.
Ditto out here. The stagnant listings with indignant sellers behind them are enormously frustrating-- and tragic. When they finally do start the price drops, they're usually 6 months behind where they need to be.
I've given up keeping track of the homes we would've bought if they'd just been listed at this week's price from the get go. Instead, they dropped the price just as the stock market fell off a cliff and all the negative economic indicators broke records. So now they're just chasing the market down.
I used to agree wholeheartedly with this sentiment, but after looking at 30+ homes over the weekend, I'm realizing that it's not as simple as it sounds. We are looking at the high end of the market in a new locale, and there are virtually ZERO properties in our price range that have sold over the past 3-4 months. Comps older than that and prior to the worsened economy and credit crunch are probably meaningless. But despite 24 months of inventory on the market, sellers have not lowered asking prices AT ALL. Our realtor states that this is because "they are anticipating low-ball offers and want to start high so they have room to come down."
And so what exactly is an "informed offer" and what is "low-ball"? Is it 10% off asking? 20 percent? 40 percent!? What is a "fair offer" on a "luxury" home that has been sitting on the market for >12 months, is unoccupied, and shows like an abandoned crack house, but is still listed for 1.1 million?
Our buyer's agent provides minimal assistance and seems almost apoplectic when we suggest making offers of 25% off list price. In such an environment, I find it very difficult to get a handle on what is going on with the market.
Great post. I think the old rule of thumb about comps is not the only thing you should be considering in todays housing market. Just like the quick rise in prices (where comps only provided a starting point and were usually sold for much more) I think this quick drop will play the same way.
I know when I am looking as a buyer in this fast down market I am requiring that any house I make an offer in has some built in market protection. If I think in 6 months that I will surely be owning a house worth $20k less then I am not going to pay $20k more today. I want that buffer built into the house price today. If not I walk. And if the sellers don't get that then they will be holding house for 6 months and be at my 20k less number in 6 months anyway and that is when I will be demanding an extra 10k off. And I am pretty sure I am not the only buyer thinking like this.
I know when I am looking as a buyer in this fast down market I am requiring that any house I make an offer in has some built in market protection. If I think in 6 months that I will surely be owning a house worth $20k less then I am not going to pay $20k more today. I want that buffer built into the house price today. If not I walk. And if the sellers don't get that then they will be holding house for 6 months and be at my 20k less number in 6 months anyway and that is when I will be demanding an extra 10k off. And I am pretty sure I am not the only buyer thinking like this.
Collectively MANY potential buyers are doing EXACTLY as you describe!
And on the other side of the table MANY sellers are aware of this, and have no ABILITY to do otherwise.
If the houses are vacant that means either: a) the people that USED to live their are now living someplace else b) the place was never lived in
In the case of either "a" or "b" that must mean that SOMEHOW the sellers are paying for an empty unused house and must have sufficient funds to do so. Until those funds run out and the place goes into foreclosure all you can do is HOPE that sellers will "cave".
Things are a little different in an occupied property, but even then the classic "Mexican Standoff" is the driving force -- odds are HIGH that both buyers & seller will suffer near term financial downsides. Mexican standoff - Wikipedia, the free encyclopedia
Until such a time as there are "Win- Win" conditions the markets will be deadlocked...
You should require that your agent write the offer.
If the Seller has maintained the price to have "negotiating room," you need to find out how much negotiating room there is.
And keep in mind that what a buyer is willing and/or able to afford to sell for has nothing to do with the value of the property.
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Weird market
