Comments on: Buying Tips For 4Q09

By: Things to Consider When Buying Homes | Real Estate Blog

Things to Consider When Buying Homes | Real Estate Blog — Thu, 22 Oct 2009 19:00:24 +0000

[...] bubbleinfo.com » Blog Archive » Buying Tips For 4Q09 [...]

By: Jim the Realtor

Jim the Realtor — Wed, 21 Oct 2009 01:19:12 +0000

Holiday buyers will shy away from short sales, because the intensity is lower. Who wants to deal with them if you don’t have to?

That’s why they could be an opportunity for those who don’t mind the uncertainty, the 2-6 month wait, and enduring the shenanigans employed by the sellers and agent.

By: Arsen

Arsen — Tue, 20 Oct 2009 18:21:01 +0000

JtR, in your last point, why would buyers shy away from short sales?
Thanks!

By: Mike

Mike — Thu, 15 Oct 2009 00:43:34 +0000

Good info, thanks.

By: sdnerd

sdnerd — Wed, 14 Oct 2009 23:06:05 +0000

‘The government is not going to subsidize home sales forever, and when it ends, home prices will reflect the support being pulled.

The game they seem to be playing is, they will keep subsidizing and forcing rates down until unemployment starts going down and/or inflation catches up with home prices.

Sure the government might cut off all the stimulus, not extend the tax credit, and allow rates to jump 2-4% all by next year. Pigs might also fly, but I wouldn’t bet money on it.

If you are waiting for interest rates to lower the price of homes, all signs point to it’s time to take a few years off IMHO.

By: JayC

JayC — Wed, 14 Oct 2009 22:42:45 +0000

Appreciate the uncharacteristic, but honest, tone from a Realtor. Thanks Jim.

Here’s something else to ponder. All of these stimuli have the aggregate effect of keeping home prices higher, and substantially higher, than they would be without the stimuli. Gov’t purchases of mortgages, $8K tax credit, 3% down FHA loans, excessively low interest rates, blah blah blah. While they do bolster home prices, 1) artificially high home prices only serve to indebt you more (if you you have to borrow 97% of the purchase price because home prices are too high for a 20% down payment, you still have to pay the 97% back!), and 2) at some point these stimuli must end. The government is not going to subsidize home sales forever, and when it ends, home prices will reflect the support being pulled.

If you understand points 1 and 2, then you understand that it’s kinda silly to buy a home now. Consider, for example, a home you would buy with a 5% mortgage. Home prices are in large part a reflection of what people can afford to pay on a monthly basis (so people can afford around twice as much purchase price with a 5% loan than with a 10% loan). Sounds like you should buy when interest rates are low, right? Wrong. Prices will predictably fall when interest rates inevitably rise since what people can afford each month doesn’t change. You’re better off buying when interest rates are high, since interest rates can always fall and you can refinance. Buying when interest rates are at all-time lows virtually assures that the home you bought can only go down in value. Not that a home is only an investment, but owing more than a home is worth can create a cage for you.

Ditto for all the other phenomena that are artificially inflating home prices….

By: Not scared into buying

Not scared into buying — Wed, 14 Oct 2009 20:57:13 +0000

Even if interest rates go up it doesn’t necessarily follow that the cost of buying a house will go up. People base their home buying decisions on how much monthly payment they can afford (principle/interest). If the interest rates go up in this market, seems to me the prices will have to go down to compensate. It seems to me a lower price with a higher interest rate is beneficial to buyers. You get a bigger tax write off on the interest and if you pay down any principle early, you will be paying down a larger percentage of the principle than you would with a low interest rate/higher priced house….right??

By: Rich

Rich — Wed, 14 Oct 2009 20:15:03 +0000

If the Fed stops buying mortgage-based securities in March ‘10, as they’ve threatened to do, interest rates could shoot up 2-4 points as fatcat investors look for deals before buying them again. (Money from these transactions are what banks need to create new mortgages). Buyers would desert the market with 7-12% interest rates and prices would have to tumble, offering up new buying opportunities in mid-late 2010. This housing market has a long way to go before bottoming, so be patient if you can’t jump in yet, your time will come.

By: Erin

Erin — Wed, 14 Oct 2009 20:01:21 +0000

Thanks! Gives me hope! I don’t mind looking at houses when it’s dark outside, and we don’t qualify for the new homebuyer’s credit anyway.

By: San Diego I-15 Corridor Housing Trends – The Big Squeeze — The San Diego Home Blog

Wed, 14 Oct 2009 19:03:51 +0000

[...] San Diego I-15 Corridor Housing Trends – The Big SqueezeI couldn’t have said it better. Jim Klinge prognosticates on our 4th quarter housing market, and it sounds a lot like the conversation Steve and I have been [...]