Realtors - when is the time to buy?

[GRIFFIN1]

I need a house, but with the way the economy is going, I'm nervous about putting a large chuck of my savings into something I would lose in 6 months if I lost my job. If I trimmed the fat out of my present budget, I could go for about 3 years on the money I have saved. If I lived with relatives, I wouldn't have to worry about working for 6 years.

 

[Psynaut]

I didn't read the rest of this thread, but I believe that residential prices are still due for about a 15%-20% further correction. I would not buy until after Q4 of this year, or next year if you can wait until then.

I am not a residential agent, I am a commercial broker, but looking at the economic data I think my analysis is probably pretty accurate.

 

[Psynaut]

Link

Here, check out chart #1 in this article. It doesn't say so, but I have seen this chart elsewhere, so I know that the data is adjusted for inflation. This will show how far we have to go, even if the market doesn't overcorrect, before you should buy. And if it does overcorrect, like it did in the great depression, you can follow this data to observe when it does and by how much, and then that would be the time to buy several homes.

If you factor out the great depression, and just determine the baseline (the red dotted line) since 1940, you can see we have about 15%-20% still to fall.

 

[LegendKiller]

Originally posted by: Psynaut
Link

Here, check out chart #1 in this article. It doesn't say so, but I have seen this chart elsewhere, so I know that the data is adjusted for inflation. This will show how far we have to go, even if the market doesn't overcorrect, before you should buy. And if it does overcorrect, like it did in the great depression, you can follow this data to observe when it does and by how much, and then that would be the time to buy several homes.

If you factor out the great depression, and just determine the baseline (the red dotted line) since 1940, you can see we have about 15%-20% still to fall.

The data in that chart (S&P Case/Shiller) I saw first in the CFA Level 2 readings of Irrational Exuberance. I have followed the SPCS Index for the last few years and my post above contains charts from the data of the index. I say that the Composite needs to come down about another 25% to reach the long-term appreciation of housing (black trendline). We will most likely over-correct from that line, thus, we may depreciate another 30-35%.

 

[Psynaut]

I will make a point to go back through and read your posts since it looks like you posted a lot of compelling data. But ya, 25% seems realistic to me. I usually say 15-20% for two reasons: 1) because since we know the great depression was an overcorrection, it makes sense to eliminate that data from the baseline which bumps the baseline up a bit, and 2) because nobody believes it could still fall 25%, and they stop listening.

But i think 25% is in the range, especially with an overcorrection.

But I should really look at the data you presented, so I can discuss it intelligently.

 

[Oceandevi]

Originally posted by: Ocguy31

Originally posted by: Jeff7
$15k to new home buyers?
Dandy, more people who can't afford the home they're looking at are going to spring for it now.

There are no loans out there that let you buy more than you can afford. You have to prove all of your income/debt.

Anyone getting house right now can afford it.

lies. I was approved for way more that I could afford.

 

[Vic]

Totally depends on the particular market you're looking to buy in. Some markets are starting to show signs of hitting bottom, while others are just finally beginning to fall.

ALWAYS remember that, in any market, the best information available has already been acted on by the time you get it.

 

[Vic]

Originally posted by: Oceandevi

Originally posted by: Ocguy31

Originally posted by: Jeff7
$15k to new home buyers?
Dandy, more people who can't afford the home they're looking at are going to spring for it now.

There are no loans out there that let you buy more than you can afford. You have to prove all of your income/debt.

Anyone getting house right now can afford it.

lies. I was approved for way more that I could afford.

Afford is a subjective term. An opinion, really. Your opinion might be different because you might want to spend your money on more than just a house payment.

 

[Slew Foot]

Originally posted by: LegendKiller

Originally posted by: Psynaut
Link

Here, check out chart #1 in this article. It doesn't say so, but I have seen this chart elsewhere, so I know that the data is adjusted for inflation. This will show how far we have to go, even if the market doesn't overcorrect, before you should buy. And if it does overcorrect, like it did in the great depression, you can follow this data to observe when it does and by how much, and then that would be the time to buy several homes.

If you factor out the great depression, and just determine the baseline (the red dotted line) since 1940, you can see we have about 15%-20% still to fall.

The data in that chart (S&P Case/Shiller) I saw first in the CFA Level 2 readings of Irrational Exuberance. I have followed the SPCS Index for the last few years and my post above contains charts from the data of the index. I say that the Composite needs to come down about another 25% to reach the long-term appreciation of housing (black trendline). We will most likely over-correct from that line, thus, we may depreciate another 30-35%.

Yup, buying now is catching falling knife, late in the year at the earliest in low end locations, not for a another year or so in the high end.

 

[looker001]

It's hard to say when it's right time to buy. Every single market is(are) different and as such no single rule exist. Anyone that can tell you that in 3 month will be right time to buy is an idiot and knows nothing. In socal for example a lot of places that are being sold under 500k and are not short sale are being bought pretty quickly. My suggestion is to call local broker and get your self prequalified. Once that is done, start keeping an eye on the market. In some states there is service called http://www.listingbook.com book which makes easy to keep an eye on the market.

 

[StageLeft]

Not a bad time. Prices will continue to fall though as unemployment rises and you can put that one in the bank. Assuming the bank is still there. The only reason not to buy now is if you think rates will drop a bit more (they can't drop all that much more, though, so not a big deal) or you are worried about your job and/or don't have a lot of money set aside to make payments if you're out of work for an extended time.

House prices are still going down and will continue to, however, don't forget it or let anybody tell you different.

I need a house, but with the way the economy is going, I'm nervous about putting a large chuck of my savings into something I would lose in 6 months if I lost my job. If I trimmed the fat out of my present budget, I could go for about 3 years on the money I have saved. If I lived with relatives, I wouldn't have to worry about working for 6 years.

If you cannot tolerate 6 months of unemployment you are not even in the ballpark of prudency or buying a house at the moment.