Is it Really Time to Buy a Home? I'm Wondering....

By
Real Estate Agent with Harry Norman Realtors

Put down the talking points and agent propaganda, I'm looking for a defensible answer. A rousing discussion with my CPA, my investment guy and a buddy that's a CFP left me scratching my head...is it really time to buy a home? Does that make sense for most folks?

I'm curious, I know we're all too close to be completely objective but some very compelling observations were discussed this afternoon...I'd like to hear what the rank and file have to say. I'd also like to know if you've ever suggested to a buyer that they might be better renting.

One favor - please give me a modicum of support for your point of view - more than the NAR talking points that are drilled into us. I'm looking for that real world opinion...

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  1. Donald Reich 11/15/2011 12:33 AM
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Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Hank... the best answer to this question is... "it depends."  So much depends on the market area you are talking about.  But... assuming the area in questioned has "recovered..." I can honestly say that there has never been a better time to buy a home than right now.

Nov 14, 2011 11:29 PM #1
Ambassador
1,465,403
Praful Thakkar
Keller Williams Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Real world opinion may be differnet than what we as a realtor(r) have - because we know the facts, we believe this is the best time to buy a home!

Nov 14, 2011 11:32 PM #2
Rainer
86,095
Ben Blonder
Broker/Owner, Keller Williams - Fort Collins, CO
Buyers, Sellers, Investors!

For many of my clients it is time to buy, but others, it is definitely time to sell and I still see those who want to wait it out. It really depends on the situation. If I could, I would buy up investment property like crazy!

Nov 14, 2011 11:41 PM #3
Rainer
107,613
Ted J. Macy
Top Agents Atlanta Metro - Milton, GA

To Purchase or not to Purchase, that is the question. For Ben, the lack of money is stopping him, for Praful, he has the facts, for Karen, "it Depends", and so for me, I think it is a difficult questions, as the area I work has not recovered, but then I have read "The Fouth Turning" (by Strauss and Howe) and I choose to wait.

Nov 14, 2011 11:53 PM #4
Rainer
242,688
Donald Reich
Prudential Centennial - New Rochelle, NY

Prices are low inerest rates are low.

Yes, prices can continue to fall, but we are closer to a bottom than a top.

Interest rates have NEVER been this low, and probably never will be again.

So, YES, no is definitely the time to buy!

Nov 15, 2011 12:32 AM #5
Rainer
77,860
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Finally, someone  that has a "pair". No, it is not time to buy unless you are an investor.For goodness sake the math doesn't work. We've have too much inventory in the physical and developed lots to be absorbed by the demographics. In short, we are not creating enough households to absorb what we have. We need to step back and solve some 'problems" that currently exist in the title area, financing, 2nd liens, MBS, secondary mortgage market and TBTF solvency issues. Did I forget anything?

The powers that be are searching for the silver bullet, the be all end all. Well, there ain't one. Hank, 4 years into this mess, can you tell me what our housing policy is? I'm not talking about nar's; it's a great time to buy a house bs. Trouble is we don't have one...maybe the dog ate it or it was lost in the snow storm or the earthquake...I'm still waiting to hear one.

Anyway, thanks for being objective. That seems to be in very short supply around here.

Nov 15, 2011 12:41 AM #6
Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mike in #6... I am so sorry that your local Houston market area sucks.  But... that is NO reason to assume it is the same in all other markets.  My Fort Worth market is just fine.  About a 2% or so market appreciation per year.  And... no monstrous value drops like it sounds you have encountered.

Sure... there are a few scattered neighborhoods where builders went nutz in 2005 and 2006... and out-of-town investors bought them up rather blindly... but other than that... things are decent.

So please do not answer for me, nor for anyone else but yourself, or at least state a disclaimer about how things in other market areas could be different.  You may have "too much inventory"... but in my market, a home that is "reasonably" priced will sell in a matter of days... sometimes multiple offers.  And... by "reasonable"... I do not mean way below market... nor am I talking about short sales... which again, are not all that numerous.

I repeat.  As far as my Fort Worth market area is concerned... this IS a good time to purchase a home.

Nov 15, 2011 12:57 AM #7
Rainmaker
132,712
Hank Miller
Harry Norman Realtors - Alpharetta, GA
Associate Broker & Certified Appraiser

I asked this to test the waters with agents around the country and see if the "buy buy buy" attitude is that widespread. Here's what I see around Atlanta:

  • Rates are historically low. Correct, and they have been artificially held there for years and there's not been a demonstrative improvement in the housing industry. How many years have we been saying...."get them before they're gone"?
  • Very few agents and even fewer folks outside of this industry realize the wall of distressed inventory waiting to drop. I'm talking "REO and sitting vacant" and tee'd up ready to foreclose. I'm an REO appraiser and the amount of work that I'm bombed with doesn't stop...it will take years and years for that to be absorbed....all the while impacting the market
  • As Mike 6 said - there is nothing coming from DC to instill confidence.
  • There is nothing to instill confidence in how FNMA and FREDDIE are doing
  • Banks and lenders won't hire enough quality people to assist in trying to keep folks in their homes, that just adds to the distressed inventory
  • Those REO homes are not being given away. I routinely see homes I've appraised and know intimately priced 15-25% over my appraised value; many not repaired as suggested. The "bargains" everyone thinks they get are reserved for the areas where you shoot your way in and shoot your way out. Those in decent areas are not being given away.
  • A buyer that lacks confidence in their job doesn't buy a home....no matter what the interest rate is.

I know the "you need to live somewhere" argument and in some cases buying trumps renting. But I'm really exhausted with our industry and the relentless buffet of BS it serves up to the public. Obviously there are situations where it's better to buy and every situation and client is unique - why is that so hard for this industry to say? Joe...you should buy and here's why; Ed...you're better renting and here's why.

We're our own worst enemy when we don't call it like it is - there's a reason we're held in such low regard by the public.

Nov 15, 2011 07:30 AM #8
Rainer
77,860
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

@Karen, I was not answering for you, I was answering Hank. HE asked a question,I answered it. So unwad your panties. You might want to look east and actually READ the Latest Dallas Fed. Report. To help you out. the report has a section on real estate, unemployment and manufacturing. After that, you might want to look at the developed lot inventories of the big 5 builders. Also, look at their K-10's for the last 4 years. Then, go to the census monthly housing report. When you've done your homework, then we can talk.

As Sinclair put it : ..."you can ignore reality but you can't ignore the consequences of reality"...

Nov 15, 2011 12:55 PM #9
Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mike:  I know you were answering Hank's question, but if you had spent more time commenting on other folk's blog posts here on Active Rain... you would know that many better posts actually become dialogues, (the writers encourage that)... and feature some good, healthy back-and-forth not only between the reader and the author, but also reader-to-reader.

It appears that either your meds ran out, your therapist is on vacation, your wife (if any) is on strike, or the anger management class was full... but I suggest you get off your horse and go for a walk.  It might do you some good.

Another possibility is that, since you mentioned MY panties... I might be persuaded to lend or give you a pair or two... to help you while away your down-time in the local Houston market that you complain about.

I would love to know who these "big five builders" are ?  Mention them, and I will gladly give you the inside scoop.  The builders I deal with and sell are quite busy, although some of the more active ones are gladly gobbling up the dormant lots of those that are not doing as well.

Over-priced properties do sit, but those builders who do know the LOCAL market are doing well.

So... who are these top 5 builders you speak of ?

Also... I was willing to give you the benefit of further study, so I went to your blog to read some of the posts you have written during your 18 months here at Active Rain.  Unfortunately, you have not yet written post number one.  Well... sorry, I tried.

Nov 15, 2011 03:07 PM #10
Rainer
77,860
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

No problem Karen, Lennar,KB, DR Horton, Trendmaker, Toll Brothers, want me to go on.As I said before look at the K10's for these companies. It may be a surprise to you but, it's public record. Just have to know how to read and apply critical thought. Which I can't help you there. Now, Karen, I didn't personally attack you. But, since you opened that door, you're a Texan I guess,  don't bring a knife to a gunfight. Please engage your brain before you engage your mouth. 

The 2% appreciation in ft.worth you crowed about is a good point. The consumer price index is at 3.2% which excludes food & fuel. So, using your numbers, ft.worth property values are -1.2% not 2% . It's called currency devaluation and inflation. Want me to keep going? You may not have been around during the bust in '70-73 or the late 70's to early '80's. If you were, remember 16-21% interest rates? Want me to add in food & fuel? Then, we'll get down to REAL negative numbers.

Karen, quit kidding yourself. Think about what happens when we have a 1/2-1% rise in interest rates. Think what kind of shape the builders you work with will be in. Think, Think, Think....  

Nov 15, 2011 08:43 PM #11
Rainmaker
132,712
Hank Miller
Harry Norman Realtors - Alpharetta, GA
Associate Broker & Certified Appraiser

And I thought I was the only one looking for the happy juice when it comes to this real estate market....Mike I think we drink from the same spigot. We have small pockets firming up around Metro Atlanta but we're talking maybe 5% of the area....the rest, still swamped and drifting down.

I rely on data like a pilot on instruments; when you begin to drift and start to lose your bearings, refer back to the most reliable thing you have and get on course.

Nov 15, 2011 08:58 PM #12
Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

John... here is the real scoop.  Lennar started to go downhill years ago in DFW when they bought out US Home... which was severely mismanaged.  I knew both the DFW President, and their VP of sales way back when.  I could go on, but I will not.

KB... ummm... (are you serious ???)  In DFW they are nowhere near a "big five."  Bottom five, perhaps.  Never have been considered a "player" in this market since they switched over to building the product they build in San Antonio years ago.  The DFW market just wouldn't swallow it.  Never a player.

Trendmaker... they are not in the DFW market.  Never have been.  They are a Houston builder. 

DR Horton... they are HOT... and cannot build them fast enough.  They try to stay ahead of the market demand, and Realtor demand, and always put specs on the ground... even now... for the relo market.  Hot builder.

Toll Brothers... are only a token in the DFW market.  I know they are a so-called "luxury" builder, but Fort Worth/Dallas has so many genuine luxury builders that Toll Brothers are simply not a player, either. 

If your info is from a "public record" you are playing, perhaps you need either a new copy, or a new needle.

So goes your "top five."  You obviously do not know the Fort Worth/Dallas market.

Interest rates:  I have been licensed since 1973... either as a salesperson or a broker.  The mortgage rates were never at 21%.  Never.  When the prime rate hit 21% in 1983 or so... the FHA/VA rate hit 17.5%.  I personally did close to 7 million in 1983... selling for Gemcraft Homes in DFW... in the 72K to 85K buyer.  They could not build those fast enough, either.  Hot market. 

The 21% you mentioned was the prime rate... often charged for commercial loans to prime commercial customers.  The residential mortgage rate followed the prime as far as the direction it was going in, but never on a par with it... actual rate-wise.  At least back then.

In my use of 2%... that was in the slow areas.  Other areas of this market have grown perhaps 3-5%.  A few of them even more.  But, just a few.

And puhleeze.  I am NOT a Texan.  I am being held against my will in what I call The People's Republic of Texas.  Rick Perry is a joke.  At least you have a good Democrat for mayor of your fine city.  I am from the Buckeye State.  Go Bucks ! 

And... your "don't bring a knife to a gun fight" quote was not from a western.  I believe it was from a film called "The Punisher."  using his knife, Thomas Jane killed the dude who had the gun who was chasing him.

Also... when the rates finally do start to go up... it will be a great "nudge" to get folks off the fence, and out buying.

Nov 16, 2011 03:09 AM #13
Rainer
77,860
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

John,

Truly sorry for the topic hi-jack. I agree with you, data is the key. I like to see & hear the train before it hits me. Not paying attention to the data points is akin to standing in the freeway with your back to the traffic.

Socratic Logic fails again.

Nov 16, 2011 10:43 AM #14
Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mike... my hope is that both you and Socrates have a wonderful day.

And John, I also hope my "back-and-forth" with Mike was not seen as a hi-jack.  If so... it was not meant to be.  Take care...

Nov 16, 2011 10:57 AM #15
Rainmaker
996,908
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

To Mike and your friend Socrates:  Here is a link to a story I just found on MarketWatch.com, which is connected to the Wall Street Journal.

It relates the ten areas where buyers are most likely to purchase homes.  Fort Worth is the ONLY market where home values are predicted to rise.  That rise is projected at 2.7%.

**^^ - The Cities Where People Finally Want to Buy Homes - 24/7 Wall St.

The article also states that the Fort Worth market appears to have been totally skipped over by the effects of the subprime mortgage crisis.  We did not have the same frantic market increases that California, Nevada, Arizona and Florida had... so we have not had a "bubble" to burst.

When in a debate, my friend, it really is a good idea to be speaking from a point of fact... don't you agree ?

Nov 16, 2011 05:30 PM #16
Rainer
77,860
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

OK Karen, Projcted rise 2,7%. CURRENT INFLATION=3.2%. Here comes math; 3.2 - 2.7 = <0.50>. That does not include food & fuel. I guess we just leave inflation out of the equation to make the numbers look better? Don't want to confuse you with facts. Kind of like the White house play book- Spin Manual Lesson #1; After you report data, quickly follow up with "it's better than expected".

Karen, I'm proud of you for taking the time to research something. Good work,keep it up.

Nov 16, 2011 07:01 PM #17
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Hank Miller

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