When Can I Buy and Have it be considered a "good"
It seems pretty obvious that Tim and Bubble predictors have seen their forecasts come to be. A simple housing search on Zip Realty, showed me that many, many folks are dropping the prices on thier homes in the Lynnwood, Bothel area. woohoo!!!!
I would like to buy a home someday. I've been waiting, and waiting, and waiting for the bubble to come. Now, homes that I feel I'd be happy with are coming into my price range.
But, these drops have just begun..right? When do we expect it to turn around again? 3-5 years as the post below suggests? Or sooner?
When could I buy a house, announce it on this blog, and not get laughed out of town? If I were to buy now, what conditions should be met, for it to be "a good decision". Any?
I would like to buy a home someday. I've been waiting, and waiting, and waiting for the bubble to come. Now, homes that I feel I'd be happy with are coming into my price range.
But, these drops have just begun..right? When do we expect it to turn around again? 3-5 years as the post below suggests? Or sooner?
When could I buy a house, announce it on this blog, and not get laughed out of town? If I were to buy now, what conditions should be met, for it to be "a good decision". Any?
Comments
I can't speak for other people, but some key factors that I think should be applied for getting a good value are:
- the monthly payments (including taxes and maintenance as well as mortgage) must not be more than equivalent rent in the area
- you should never owe more than 3 times your annual income
Provided you could meet these two conditions, I think you made a "good" purchase. That said, I firmly believe that home prices are going to drop MASSIVELY in the next 5 to 8 years. We haven't even begun to see the full effects of the credit crunch. When a full-blown global recession hits things will really start to get ugly as mortgage problems are exacerbated by lay-offs at all the major Seattle area employers (and I mean ALL of them).
I will go out on a limb and say that average Puget Sound prices will drop by at least 40% (and likely far more) over the next 8 years. If this proves to be correct, then it won't make sense to buy anything for at least a couple years.
I disagree with this. The difference between renting and owning should not be huge, but a small difference is okay. When purchasing costs twice as much as renting, then renting is obviously a better deal.
During a period of low prices, you may still see rents lower than buying, but it will not be such a large percentage. When rents and prices correct upwards the rent will be more than the purchase cost. This effect creates a confirmation bias in people who purchase a rental and wait for the market to catch up for it to cash flow. That strategy does not work when the market is in a period of high prices.
However, even a loss from inflation is better than an ABSOLUTE loss from negative price appreciation of a home you buy today. Further, I should point out that not everyone is convinced of the inflationary scenario. A few of us think that the dollar is actually going to rally significantly and that ALL assets (including commodities) are going to be trounced when the global recession kicks in.
In my view, asset prices (e.g. commodities, homes, etc) have been goosed due to a credit bubble. Once credit begins contracting in earnest (a process which has barely started) we will see prices fall on all these assets. I don't see any distinction between gold, oil, and real-estate. All their prices rose precipitously due to the credit bubble and they will all collapse together as well (although there might be short lags as deflation targets some asset classes earlier than others).
Good Bloomberg article. Are you buying foreign currency?
Got it. As time passes my financial position should only improve and the less money I pay for a house the better. However, I have to balance this with the desire to settle down, raise a family and not be faced with moving. Plus, some of the other benefits of owning.
I rent a condo. It was converted and we just received the 90 day notice to vacate. I was hoping that I could time our move with the purchase of a new home. Looks like it will be another rental.
thank you!