Now is the time to buy a house ... The Rebuttal ! !
http://www.freemoneyfinance.com/2009/07/nows-the-time-to-buy-a-house.html
By David John Marotta
So my buddy Chris sent me the article from above, and you would think that as a Realtor I would love it! Well, check out what I really thought...See the link above for the original article, it helps to read that first.
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In his article, it does seem that David was pretty accurate about the rise and fall of the housing bubble. This economy has been volatile and from his information he has predicted things very well. As an aside though, making money in real estate doesn't always have to be timed exactly right with the market to be effective, but when you do hit the mark, it can be extremely lucrative. People buy and sell homes everyday, every year and in all markets to make money, you just have to know what you are doing! (If you would like to know how, ask me about, "Flip!")
David says, "The bottom is forming, although it may continue to do so through early 2011." Ok, so let's just all be clear on what he means by the, "bottom." If bottom to you means that home prices on average for the area have stopped declining... then most of Richmond is there. Aside from personal experience and just feeling out the market, consider this report from the second quarter analysis of the CVRMLS, "There is typically a bump in sales in the second quarter of the year, since market activity increases in the spring. Sales increased 63% between the first and second quarters of 2009." This was a bigger jump for the second quarter than last year, and with so much hinging on consumer confidence in this slump, this is a promising number!
Now if you think of the bottom as prices have stopped lowering and are now RISING back up, then I don't consider that a "bottom," I consider that kind of an uptick, which may not last, and if it does, then it is most definitely a RISE. Basically what I am saying here is that bottom to me means, no more fluctuation in prices towards a negative direction. This means that there can be a plateau effect at "the bottom," until there is an uptick, or rise in home values.
Now why was that clarification important? Well basically if you wait until you see some upticks or the start of a rise in home values to buy a home...you'll be too late. Someone will have already purchased all the homes you wanted to buy to gain equity on, fixed them up, and started marketing them to You! I realize David is not a Realtor (or at least not actively selling homes) and throughout his article makes plenty of references to how his decisions are purely money driven, but I believe Richmond has hit it's bottom, and now is definitely the time to start making your move. At least we can agree on that part!
Now about his four pieces of advice:
1. "First, don't be afraid to make a radically low offer." RUBBISH!! Just look at the very first comment in the comments section of his article. This is a horrible idea! Now, maybe I am coming on a little strong here, because he did say one thing to kind of save him, and that was ... "if you think it's worth it." In any real estate investment, always and only do what you can afford. I will be the first to admit that some folks out there are intent on pricing houses poorly. Whether it is the owners doing, or the Realtor's, both can been at fault in my experience. It has always been my approach to double check all home values before advising my client's to submit an offer, but only as a check, and not as a means of figuring out how much money we can dupe some poor seller out of. Drastically reducing your offers in my experience, is not only ineffective, but has been tarnishing to reputations of agents, and also to a buyer's second offer, even if it is now legitimate, it will no longer be considered trustworthy, serious, or worthwhile. Be careful with your offers, Real estate has always been, and will always be relational in it's negotiations, especially for personal home purchases.
2. "Second, be patient. Some remarkable deals will be available over the next two years but only for those who are patient, amenable to making a ridiculous offer and willing to walk away. With 3,600 active listings, you can afford to wait for a deal."
Again, I have already spoken about this... waiting is not a good idea. It depends on what you want though! If you want a "DEAL," then by all means wait a round for one, act fast when it comes, and don't take no for an answer. But, in my experience, the best way to achieve your goal, is to set one! Don't just say, "I am waiting for a deal." You can do so much better than that! Say, I am looking for a deal, my lease is up in three months so I would like a home by then, I need X amount in closing costs, and I need to qualify for an FHA loan because of their great rates and lower downpayent requirements so a Foreclosure or Shortsale is probably not the best pick for me. Those are some goals! And if you really want a HOME to live in, you will be searching for just that... a HOME, not a DEAL. (if you are looking for investment purposes only, you know this does not include you)
By the way, I have worked with clients waiting for a deal in the Richmond area.... and in the Richmond area, there are consistently over 8,000 Single Family homes on the market! So do the math here... will there always be an influx of homes, and consistent price reductions on active homes? Yes! If you decide to wait for a deal will you be waiting for eternity? More than likely. Think of it this way though...this is a great problem to have! It means that Richmond is a great place to own a home because of the constant ebb and flow of the real estate inventory, and your home value will be protected in the long run because of it! Don't be scared, Richmond is a great place, and real estate advice is most definitely a local thing.
3. Completely agree. $8,000 is unheard of as a tax credit just for buying a home. Hopefully with a new bill in the works for a $15,000 credit, next year will raise that bar ... but considering the fact that they are underfunded, relatively unacknowledged by other lawmakers, and completely unapproved thus far, it seems slim that we will see any improvements in that area. (I have heard of lenders saying things like: With housing prices starting to bottom out, lawmakers may overlook the issue altogether and place investments elsewhere to help boost the overall economy.) Ever heard, A Bird in hand is worth two in the bush?..... Oh yeah, and any questions, call a Tax professional, not me.
4. "Finally, be sure not to miss out on the low mortgage interest rates." Great!!! Go out an get'em! I bought last year. This year though, the rate is lower by a whole point! I bought when people were saying, "you bought at a great time!" Now, it is even better. Basically, WHO KNOWS!?!?! The economy is a crazy thing. All I know is, we are nowhere near paying 15 or 18 percent on our mortgages, so anytime now seems good to me. Maybe David can shed some more light on this subject in a future article.
So, as a last thought, don't act on real estate because there is "blood in the streets," act because you are ready to take the most wonderful step towards the greatest investment you will ever make! You will be making the biggest financial commitment of your life more than likely, and that requires some thought and preparation. So think about your wants and needs. Remember, the best way to make sure you own the home of your dreams, is to own your first home!
Thanks for reading!
- Nick
www.CardinalVa.com
