Home Buyers: the best time to buy is fast approaching

[Morrigoon]

As you may know from reading the Market Time Reports, which I also post here in the Outpost, Halloween is coming on quickly, and after that time, buyer activity tends to drop like a rock until after the Holidays.

So why is this post about buyers instead of sellers? Simple: sellers know that buyer activity drops off during the holidays. They know there are fewer active buyers out there and that with less competition, buyers are in a position to negotiate harder on the price of buying their house. If a seller is still on the market during the holidays, with all the inconveniences that come with having a house on the market... it's because they NEED TO SELL.

This means that it's a good time to be a buyer. The Fed has held the Federal Funds Rate steady at the last two board meetings, and as a result, mortgage rates are holding and even dropping off a little bit. There is a glut of homes on the market to choose from, many of them with motivated sellers who are ready to make a deal for the right price on their home.

Sure it's inconvenient to buy during the holiday season. That's exactly why it's a great time to do it!

Come January, things will warm back up again. Not as much as it did 2 or 3 years ago, but more than it is right now. Spring, from about the 2nd week in january through April, is the hottest time in the real estate year. Market activity typically will steadily increase from January on, and any fence-sitting at that point could result in seeing your dream home be bought by someone willing to pay more.

So if you're planning on buying a house in the next year, I suggest you consider doing it now, or in the next couple months. Take advantage of the slow market, get your purchase in for this tax year (oh yeah, first-time homebuyers: talk to your accountant about the significant deductions you get to take when you own a home!).

I have the names and numbers of some great mortgage people who can start you on the path to figuring out how much home you can afford, and what payments you're comfortable with. I'll be happy to get you in touch with them.

And, of course, I'll be happy to personally assist you in finding that great new home!

[PrncssZ]

Re: Home Buyers: the best time to buy is fast approaching

Just the person I've been looking for! Where do you do realty? My mom and I are looking for a realtor. We have a very unique situation. I started a thread last week. Here's the addy: http://www.micechat.com/forums/showthread.php?t=39275 . It explains stuff. I've already got the ball rolling working with Wells Fargo for my loan because they have a special teacher program. Thanks in advance!

[Morrigoon]

Re: Home Buyers: the best time to buy is fast approaching

PM me or send me an email with your contact info. There's a contact me form on my website that'll send an email. I'll give you a call and you can tell me exactly what you are looking for and I can start looking right away

Better yet, check your PMs.

[GetBruno]

Re: Home Buyers: the best time to buy is fast approaching

Morrigoon, how bad in your opinion is the coming forclosure wave due to the expiring of the lead-in time on the option ARMs?

[Morrigoon]

Re: Home Buyers: the best time to buy is fast approaching

I think it's going to be interesting, but I hesitate to make more of a prediction than that. A lot depends on inflation (and through it, gas prices), interest rates, etc. The coming foreclosure wave mostly has to do with high prices and previous years' buyers stretching themselves to their financial limits to afford the high prices on low-interest rate loans, whose rates have since changed, drastically.

This 4th quarter should see the first wave of them. We'll have a better idea after that.

But here's the thing: again it's a matter of people trying to time the market, along with everyone else who thinks they can time the market. So let's say the foreclosures hit the market, then what? All those people who've been waiting and watching, do you think they'll recognize opportunity and jump in? Or will they continue to wait and watch until the bottom of the market has passed them by and they suddenly find themselves getting involved next fall? If they do that, next fall could be stronger than this fall, while everyone is still holding their breath.

And in the meantime, what have the sideliners thrown away in rent, and does the difference in house value justify the amount? As residential real estate purchases have slowed, market rents have risen.

Talon and I have been in our place for only 6 months, and we've already figured that between the raise in the rent on our old 1-br apartment and the tax deductions we get for our home loan on the 2-br condo, we're already winning the numbers game. True, we're in a 3-year fixed Option ARM loan, and our payments will eventually go up, but what we're shelling out right now, today, after taxes and tax breaks are accounted for, is comparable to what we would be shelling out on rent, the only difference is, we own something, and the market will be different 2 1/2 years from now when we're ready to refinance. And where will rents be at that point? So we know it would not have made sense to wait any longer to get in the game.

Right now, with the market about to grind to a holiday halt, and with the first foreclosures about to enter the market, buyer activity is at a low point. That low point, in my opinion, will hold through the holidays. People have held their breath on real estate for nearly a year now, and the honest truth is, people need a place to live. So the market will only remain slow for so long. I don't expect next fall to be as slow as this fall, especially if interest rates start to go down and action picks up on news that foreclosures are hitting the market.

True, next year is not exactly going to be a banner year for real estate, but I think that as those foreclosures start hitting the market, buyer activity could very well pick up, as people think they're getting a "deal". But a lot of those homes will be getting foreclosed on because they can't be sold for what's owed on them (else the owners would just sell). So it'll come down to the banks being willing to take less than they're owed in order for people to get the "deals" they're expecting, and given that a lot of the soon-to-be-foreclosed loans are negative amortization or at least low-equity, you aren't going to see as much of a price drop as the media would have you believe.

That's why I think between Halloween and New Years is going to be the best time to buy. You have the least competition, the largest glut of homes available for sale (because not all of the unrealistic sellers have pulled their homes off the market in frustration yet), and the most bargaining power with desperate sellers.

Regardless of other influences, spring is still a warmer market than other times of the year, this just happens cyclically. So real estate activity WILL pick up come spring. We're no longer just coming off a banner year, we've already had a year of slow sales, and this winter will reflect the effects of both the year being down, AND the cyclical effects of being the time of year in which sales are slow. So, by comparison, spring will see the market warm up from its wintry low.

This is still not great news for sellers, but for buyers looking to buy in the next 3 months, it's a call to action.

[Morrigoon]

Re: Home Buyers: the best time to buy is fast approaching

GetBruno: I thought of you today when I came across this article:

http://articles.moneycentral.msn.com/Banking/HomeFinancing/OuchYourHousePaymentJustDoubled.aspx

[GetBruno]

Re: Home Buyers: the best time to buy is fast approaching

Thanks.

We will be watching this trend closely as we continue paying off debt. It looks to me like we will be debt-free just about at the peak of the crisis....

I feel a little bad for looking at the situation that way, but, it is what it is. It has been clear the Cali. market has been superheated for a while now.

The lesson seems to be to never sign a contract without understanding what is in it. A few hundred dollars spent on having one's own real estate lawyer read loan paperwork seems like a bargain compared to losing one's house.

[Morrigoon]

Re: Home Buyers: the best time to buy is fast approaching

Or at the very least, making sure you have a loan person who is conscientious enough to explain it all to you and to watch out for you. Our mortgage broker had to do quite a bit of footwork on the day of our signing when the actual lender tried to change the game on us at the last minute! We learned firsthand the importance of good loan people who will tell you the truth even if it's not something you want to hear!

You don't need to feel bad that you look at it that way. That's how money is made - as Rockerfeller put it when asked how he got so rich, "I buy my straw hats in the winter".