To Wait Or Not To Wait
(As the housing market continues to slow, and prices drop, many potential buyers are still stuck wondering if the right time to buy is now.)
The answer to this question is very tough, since it is impossible to time the market because no one knows what is going to happen until it actually does.
Regardless of the status of the market, buyers should only make this life changing purchase when the time is right for them and they find a house they truly love and more importantly can afford.
In a November 6, 2006 article by Dian Hymer of Inman News and posted on Signonsandiego.com, “Home seekers’ big dilemma: buy now or wait,” discusses how the risk of continuously declining prices keeps many from buying homes.
“During the last couple of years, new listings sold in a matter of weeks in many areas. Home prices escalated at a record pace. Financing a home purchase was rarely a problem -- money was easy and interest rates were low. Few buyers wanted to miss the opportunity to make fast money in a market that seemed to defy gravity.”
“What a difference a year makes. Now, the appreciation rate is running at a snail's pace, and declining in some areas. According to the National Association of Realtors, the median home price nationally declined a little over 1 percent in August from a year ago. This trend is expected to continue through the end of 2006. Consequently, many buyers who were anxious to buy last year are standing on the sidelines, waiting to see what happens next.”
Despite home prices declining nationally, there are still a few select areas that are fairing quite well, one being a little section of Northern California where buyers are having no trouble deciding whether to wait or make their purchase now.
“Remarkably, there are still areas where the demand for new listings still exceeds the supply. In the desirable Claremont area of Berkeley, Calif., for example, there were recently nine offers on a listing competitively priced at $1.25 million. Another listing in neighboring Rockridge listed for $1.45 million sold with multiple offers for $1.5 million.”
A good way to decide whether you are ready to buy without concern for the market’s momentum is to think about if you are ready to leave the rental market – both financially and emotionally.
“As a homeowner, you don't need the landlord's permission to make modifications to the property to suit your needs. You aren't at the mercy of a landlord who might raise the rent or ask you to move. Now there's no guarantee that you'll find a place to rent in a neighborhood where you'd like to put down roots. Also, rents are rising after years of lackluster performance.”
Obviously, with the surplus of homes on the market to choose from and prices decreasing, there are many good reasons why now could be a great time for many people to take the step towards home ownership. Low interest rates also make it a good time to buy for many people. And one cannot overlook the tax benefits associated with owning a home.
But for those not thinking about the future, it may be better to wait it out for right now. “Buying for the short term is risky in the current market. But, this could be a good time to buy for buyers who plan to stay put for the long term, particularly if what they're looking for is not readily available.”
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