Is It A Good Time To Buy Real Estate? Does It Matter?
June 19th, 2008
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Erica Douglass has written a nice post about the current U.S. real estate market, When Should You Buy Real Estate — And When Is It Better to Rent? It should be especially interesting to anyone who’s thinking about buying a house now, or anyone who’s concerned about housing prices.
She looks at two metrics (house prices as a multiple of median income, and house prices as a multiple of monthly rent), and concludes that houses are still overpriced in her city (San Jose). She also predicts that the housing market will reach the bottom in late 2010 to 2013.
I always pay attention when someone analyzes house prices with numbers instead of feelings. But one thing to keep in mind is that every situation is different, so be sure to plug in your own numbers. Whenever I see someone say that now isn’t a good time to buy, renting is better than buying right now, buying is always a bad deal, etc., I plug in my own numbers and confirm that I would have been crazy to rent instead of buying. I realize that for some people in some markets it’s better to rent, but that’s never been true for me.
By the way, why does it matter if it’s a good time to buy? Most likely, you’d be selling one house in order to buy another. If it’s a good time to buy, it’s a bad time to sell, and vice versa. You win one, you lose one.
The main exceptions are if you’re entering or exiting the market. If you’re buying your first house, you definitely want a buying opportunity. If you’re selling your house and renting, you definitely want a selling opportunity. Other exceptions are if you’re trading way up or way down, or if you’re buying and selling in completely different markets. But other than that, do you really care about house prices?
June 19th, 2008 at 2:59 am
Hi Hunter,
Investors think this is a great time to buy (in our area). And for those who can afford the mortgage payments (and have stable jobs), it may be a good time to buy too. But like you say, everyone must choose for themselves.
For both buyers and sellers, I say, “be informed”, do your homework, don’t rely on others to make decisions for you, and (for buyers) don’t let fear stop you from owning your own home.
Barbara Swaffords last blog post..The Biggest Mistake I Made In Blogging
June 19th, 2008 at 10:29 am
Hunter: Come buy real estate in Panama, there’s buildings going up all over the place. There’s even one being built by Donald Trump that looks like a sailboat. Buying a house or property is a big decision, since it’s a huge investment for most people. You need to do your research well and be very informed.
Marelisas last blog post..50 Ways to Celebrate Life Every Day
June 19th, 2008 at 2:13 pm
I agree with everyone here: you should be informed and do what’s best for you, in your unique circumstances, and in your own market.
I live in the Silicon Valley and I tend to agree that houses are still overpriced here.
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June 19th, 2008 at 5:00 pm
Hi Hunter - Unfortunately it’s the investors who think it’s a great time to buy that make house prices unaffordable for the folk who just want somewhere to live.
I heard that people where coming to the North (where I live) and buying a whole heap of houses at a time to rent out. That is all very well but they get much higher wages down there and people up here just can’t afford to go out and buy a house now that they’ve pushed up the prices.
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June 19th, 2008 at 9:10 pm
Hi Hunter, I think it matters if you are buying property for an investment purpose. An investment property is your second home. It makes sense to buy low and to sell high later on if the price appreciates. It also makes sense to buy one in a good location so that it is more rentable.
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June 19th, 2008 at 11:41 pm
Several people mentioned buying a house as an investor, which I forgot to consider (even though I’m renting out a condo). In that case, they would be buying but not selling, so they’d be looking for a buyer’s market. Erica’s post would be a good one for them to read, before making an informed decision.
June 22nd, 2008 at 4:24 pm
Hi Hunter,
Thank you for featuring my post! Enjoying your blog.
-Erica
Erica Douglasss last blog post..When Should You Buy Real Estate — And When Is It Better to Rent?
June 22nd, 2008 at 7:20 pm
@ Erica, thanks for writing it!