A. The housing market is near bottom now, with some great deals on certain properties. With the $8K housing bribe, historically low interest rates, and deals to be had, now is THE time to buy - especially if you can get a property at 35% to 45% off peak prices.
B. The housing tumble has barely started. Foreclosures in May will be at an all time high (fact), the Alt-A crisis is as big as the sub-prime crisis, and we now have a looming 'prime crisis' when people with good credit and some assets lose their job or walk away from their mortgage because they are under water. With interests rates sure to rise significantly over the next few years and the effects of the recession yet to really hit the housing market (the housing collapse CAUSED the recession, but there will be a feedback loop), prices have much further to go. With a very FLAT bottom still a couple of years away, you would be INSANE to buy right now.
Please give precise and convincing evidence for your answer. And do it quickly, because we're having an awful time trying to figure out if we should put in an offer...
5 comments:
If your time horizon is long (e.g. you aren't going to leave Baltimore a year from now, or five, or even ten) and you find a house you love where you can pay at least 20% down, then the answer is a). The basis for making this decision has never changed. The housing market was whack enough for long enough where it seemed like there should be a different decision matrix, but there isn't.
Fair enough, and I pretty much agree. But the craziness of the market over the past 8 years or so makes things a bit less simple. If a person followed your logic in 2006, they would have found themselves in a house that would take over a decade to return to the value it was when they bought it.
The time horizon IS the big thing, but it's possible that if you buy now it will take 5 years before your house is worth what you paid for it. So you have to ask yourself whether it wouldn't make more sense to rent. And this is particularly true in our case since we can rent for probably $500 - $750 a month less than we can buy. So over 5 years, that's $30K savings, etc. etc.
Or, put differently, I don't know what it would mean to 'find a house I love' since houses just look like financial decisions to me these days. I know, my fault.
Also: I'm more and more convinced that the house I love exists somewhere not-Baltimore. Lovely housing stock in B'more, but it's lots of Victorian (Bolton Hill) city-living (Mount Vernon) and row houses (everywhere) of various vintages. My "dream home" --and I know there is no match for these things in real life, even if (especially if?) you build them yourself-- is a craftsman bungalow with lovely oak built-ins, a large, heavy, wide front door with small little window-panes in it, wood floors, 2 big or 3 bedrooms, and 1.5 baths. These are a dime a dozen in the midwest, mountain, west coast areas. They just don't happen here. So instead my eye turns to livability and money--practicality, not love. a sad truth. but you can't fight architectural, economic, and regional social history. At least not all at once.
There are craftsman bungalows in the DC area, including AU Park and some parts of Arlington. Sure there aren't areas in Bmore where they have spread?
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