I think so. I am not trying to time the market bottom for real estate. I don’t think any one can time the market top or market bottom. Based on what we are going thru today, it appears that buying a house is not a bad idea.
However, it’s not for every one. First of all, you should have steady income and stable job or business. Second, do not try to buy houses or apartments in areas like San Francisco bay area where the prices haven’t gone down much.
If you have a good feeling about your job or business, it’s better to buy a house rather than renting it. In the wild-wild-2006, you can get the loan with 0% down. Not any more. You should be able to make at least 20% down payment. If you put down less than 20%, it’s harder to get good mortgage rates. You will also need to pay for private mortgage insurance (PMI) in that case. PMI is bad, very bad.
Mortgage rates are hovering around 5.42% for 30 year fixed mortgage and 5.15% for 15 year fixed mortgage. If you can afford it, it’s better to go for 15 year fixed mortgage. The rates are higher for jumbo loans. Do not get adjustable rate mortgage (ARM) at this point of zero percent economy. (When the interest rates go up, you will need to pay more interest in ARM).
Home buyer tax credit of $15,000 approved by Senate also would also help the home buyers now. Buyers would get 10 percent of the purchase price of any home, up to $15,000, applied to their tax bill. Consumers would be allowed to spread out the credit over two years, making it possible for those who pay less than $15,000 in taxes to benefit. Anyone who buys a home within a year of the bill’s signature would qualify. Please note that buyers must occupy the house as their main residence for at least two years. This provision is in place to discourage the speculators and house-flippers.
Way to stoke a new round of bag holders. It’s evident things will only get worse and real estate has only just started it’s decline (especially in california).
You argue my point on your own: “Second, do not try to buy houses or apartments in areas like San Francisco bay area where the prices haven’t gone down much.”
You’re right – prices haven’t gone down much and will continue to go down. Your ‘article’ offers no analysis of the market forces currently in play. Next time do some analytical research instead of offering up your opinion – because your opinion is wrong.
Well, I am not trying to stoke a round of bag holders. I clearly mentioned that it’s not for everyone. If you have a stable job/business and live in a market where the prices have gone down much, it’s not a bad idea to invest in a property.
I am not talking about speculation to profit from house-flipping. I am talking about buying the primary residence.
Now, coming to the “analytical research”: Many analysts, that make more than $250,000 a year, were totally wrong in the last 2 years. Even the great minds like Raphael Bostic and the super smart scientists in Renaissance hedge fund couldn’t understand the severity of sub-prime crisis. Raphael Bostic is the director of the University of Southern California’s Casden Real Estate Economics Forecast and is a former senior economist with the Federal Reserve Board of Governors. He didn’t believe in the housing bubble in 2006. See http://www.businessweek.com/the_thread/hotproperty/archives/2006/04/more_on_media_h.html
Smart analysts at Renaissance hedge fund couldn’t predict the impact of the housing bubble. All the analysts and economists in Fed Reserve Bank were wrong. Great Greenspan now admits that he made a mistake. Chief economists in major banks such as Wells Fargo couldn’t get it.
On top of these people, we had people like David Lereah. He was the chief economist of National Association of Realtors. He hyped up the housing market everyday using his analysis of the market. Now, he confesses that he lied to please his bosses. See http://money.cnn.com/2009/01/05/real_estate/Lereah.moneymag/
My point is that whether it’s the analytical research or the gut feeling, it all boils down to individual situation. If someone has a good job and can find a decent property for the reasonable price, this is the good time to buy it. The prices may still go down, but no one can predict the exact bottom of real estate market or the stock market. Exact bottom is not needed for the guys that are looking to buy their primary residence. Something close to the bottom is ok.
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Historically, recoveries in the housing market are slow, and most experts expect the prices to stay low for some time. So, people can take their time shopping for the right property.
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