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Why Now Is a Good Time to Buy a House


By mili   Follow   Thu, 12 Apr 2012, 12:53am PDT   15,697 views   123 comments
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Although the economic recovery remains sluggish and some fear rising interest rates, there are growing signs that this a good time to buy a house, according to a new study.

http://www.thefiscaltimes.com/Articles/2012/04/11/Why-Now-is-a-Good-Time-to-Buy-a-House.aspx

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Hysteresis   Thu, 12 Apr 2012, 1:31am PDT   Share   Quote   Permalink   Like   Dislike     Comment 4

E-man says

The best time to buy is when interest rate is at 12%. It's even a better buy when interest rate is at 18%. :)

2014 might be a better to buy. Well, 2018 might offer even better opportunity. Nah, I take that back. I think 2022 might be a good year to sell. Oh, I don't own sh1t to sell. You know what? I'll wait for this bubble to deflate before I enter the housing market. I believe the market would hit bottom by 2026 or 2030.

Cheers.

Learn from your victory. Prosper from your failure.

u mad

dublin hillz   Thu, 12 Apr 2012, 2:17am PDT   Share   Quote   Permalink   Like   Dislike     Comment 5

Housing is not an investment per se when it comes to primary residences. It is a form of cost control when it comes to buy vs rent and value is subjective based on desired quality and features. With that being said, I think that right now is a good time to buy when it comes to buy vs rent. I used to rent in fremont in a "luxury apartment complex" until about 1 year ago and then bought in dublin in a new development. The place sold for less than 15 annual rents of today for that fremont place. And I like Dubin better that Fremont (again subjective). The Dublin condo is way more "luxurious" than that fremont "luxury apartment." We intend to pay off the principal in the 10-15 year range and are on track after that first year. I have complete and utter confidence that by the time it's all said and done, we will spend less on housing costs than if we were renting a comparable property.

bmwman91   Thu, 12 Apr 2012, 3:44am PDT   Share   Quote   Permalink   Like   Dislike     Comment 6

It is a good time to buy in some places. It is still a bad time to buy in others. And still others, such as many parts of the Bay Area, you sort of get boned if you rent or buy there.

1sfrenter   Thu, 12 Apr 2012, 3:47am PDT   Share   Quote   Permalink   Like   Dislike     Comment 7

E-man says

The best time to buy is when interest rate is at 12%. It's even a better buy when interest rate is at 18%. :)

IF you have cash, that is.If you don't have a ton of cash saved, then now is a good time to buy.

bubblesitter   Thu, 12 Apr 2012, 3:56am PDT   Share   Quote   Permalink   Like   Dislike     Comment 8

1sfrenter says

IF you have cash, that is.If you don't have a ton of cash saved, then now is a good time to buy.

+1. However it is hard to convince some one who wants to breath debt in and breath out debt and the assumption there was that with 12% and 18% rates price will be the same as today, good luck with assuming that price will remain same with rate hikes.

1sfrenter   Thu, 12 Apr 2012, 4:27am PDT   Share   Quote   Permalink   Like   Dislike     Comment 9

bubblesitter says

+1. However it is hard to convince some one who wants to breath debt in and breath out debt and the assumption there was that with 12% and 18% rates price will be the same as today, good luck with assuming that price will remain same with rate hikes.

Assuming you are buying for shelter, not as an investment:

Let's say you have 50K down payment.

A 600K house with 50K down at 4% interest=
$3250 month PITI and $1,170,000 after 30 years

A 400K house with 50K down at 12% interest=
$4016 month and $1,446,000 after 30 years.

Now if you have 200K saved, that's a whole 'nother story. But if you have 200K saved you are probably in the top 5-10% of the population, as the bottom 90% are living paycheck-to-paycheck.

freak80   Thu, 12 Apr 2012, 4:33am PDT   Share   Quote   Permalink   Like   Dislike     Comment 10

E-man says

The best time to buy is when interest rate is at 12%. It's even a better buy when interest rate is at 18%. :)

True, but when have REAL interest rates ever been that high?

real interest rate = nominal interest rate minus inflation rate

Sure, nominal interest rates were high in 1980 but so was the inflation rate.

bmwman91   Thu, 12 Apr 2012, 4:54am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 11

I'd say that it is a good time to buy any time that you have 100% of the cash needed to make your desired purchase, and an additional 3-4x of that in retirement savings & investments. As one of my favorite posters in here says, "It's CASH or fuck you, America!"

dublin hillz   Thu, 12 Apr 2012, 4:56am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 12

bmwman91 says

I'd say that it is a good time to buy any time that you have 100% of the cash needed to make your desired purchase, and an additional 3-4x of that in retirement savings & investments. As one of my favorite posters in here says, "It's CASH or fuck you, America!"

Yeah, like landlords will keep rent low enough to allow you to get to this level lo.

1sfrenter   Thu, 12 Apr 2012, 5:01am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 13

dublin hillz says

Yeah, like landlords will keep rent low enough to allow you to get to this level lo.

That's what I'm saying. For the average person, by the time you pay rent, food, gas, etc. how are you gonna be able to save 200K?

freak80   Thu, 12 Apr 2012, 5:04am PDT   Share   Quote   Permalink   Like   Dislike     Comment 14

dublin hillz says

Yeah, like landlords will keep rent low enough to allow you to get to this level lo.

They will if you live in an area with a reasonable cost of living. ;)

clambo   Thu, 12 Apr 2012, 5:09am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 15

You save the $200K this way.
You 1. co habitate with roommates save $300/month, $3600/year
2. brown bag your lunch, save $70/month, $850/year
3. buy balanced mutual fund and invest $800/month for several years.
4. Work saturdays and/or sundays at something not too difficult and save up an additional $5,000 per year.
How do you NOT save up money? Try to keep up with your other hipster/trustafarian/dilettantes/other guys who like showing off.
The payoff is nice after you have been a broke appearing guy for a few years. Later on you know you can do more and be more flexible and relax more knowing you have some dough to back you up.
Oh, and it still not a "good time to buy a house" at least where I live. It is a good time to buy stocks however. Why? Low interest rates.
House prices will fall some more as soon as interest rates go up. They are going to go up.

freak80   Thu, 12 Apr 2012, 5:17am PDT   Share   Quote   Permalink   Like   Dislike     Comment 16

Or just move to Houston or Dallas. There are plenty of decent jobs along with low housing costs.

BoomAndBustCycle   Thu, 12 Apr 2012, 5:51am PDT   Share   Quote   Permalink   Like   Dislike     Comment 17

wthrfrk80 says

The time to buy is when there's blood in the streets.

You realize "blood in the streets" is a metaphor... If you are actually waiting to buy when the streets are running with rivers of blood, i think you may be a waiting a long while.

freak80   Thu, 12 Apr 2012, 5:59am PDT   Share   Quote   Permalink   Like   Dislike     Comment 18

BoomAndBustCycle says

You realize "blood in the streets" is a metaphor...

Yes. Hmmm...where's Apocalypsefuck?

bmwman91   Thu, 12 Apr 2012, 6:01am PDT   Share   Quote   Permalink   Like   Dislike     Comment 19

1sfrenter says

For the average person, by the time you pay rent, food, gas, etc. how are you gonna be able to save 200K?

It isn't THAT hard. It'll take 10 years of diligent saving and resisting the urge to indulge in your various "wants," but it is perfectly doable. Very few people can resist the urge to splurge on things like expensive cars, expensive electronic gadgets and expensive dining on a regular basis. Even fewer think that they can "survive" if they have to rent & save for 10 years, despite the fact that they would probably reap long-term rewards. Drive an older car that you paid cash for, have roommates until you are 30 or married, and develop creative hobbies. Spending money isn't a hobby, but it's all a lot of people have to do to kill time until they die. That, and TV.

This is all with respect to the Bay Area, BTW. There are places in the US where buying actually is cheaper than renting. No so, around here. The gap is narrowing thanks to rent hikes, but it is still a gap in all but the trendiest areas.

1sfrenter   Thu, 12 Apr 2012, 6:13am PDT   Share   Quote   Permalink   Like   Dislike     Comment 20

clambo says

You save the $200K this way

You forgot: "don't have kids".

Now that our kids are school-aged (and in public school) we have been able to save quite a bit. But childcare and preschool costs alone are exhorbitant - easily $1200 month until the kids go to kindergarten.

freak80   Thu, 12 Apr 2012, 6:33am PDT   Share   Quote   Permalink   Like   Dislike     Comment 21

bmwman91 says

Spending money isn't a hobby, but it's all a lot of people have to do to kill time until they die. That, and TV.

Agree. Lots of time and money wasted that way.

bmwman91 says

There are places in the US where buying actually is cheaper than renting.

Like where I live. Houses are cheap but the influx of natural gas workers has driven up rents.

bubblesitter   Thu, 12 Apr 2012, 6:38am PDT   Share   Quote   Permalink   Like   Dislike     Comment 22

1sfrenter says

Now if you have 200K saved, that's a whole 'nother story. But if you have 200K saved you are probably in the top 5-10% of the population, as the bottom 90% are living paycheck-to-paycheck.

Hell,I am hoping to be top 5% to 10% cuz after all I am frequenting pat.net. Oh,and I'll pay 400K cash rather than getting a mortgage. :)

bubblesitter   Thu, 12 Apr 2012, 6:39am PDT   Share   Quote   Permalink   Like   Dislike     Comment 23

bmwman91 says

"It's CASH or fuck you, America!"

Haha. AF Tony Manero. Let's march.

David9   Thu, 12 Apr 2012, 6:43am PDT   Share   Quote   Permalink   Like   Dislike     Comment 24

It can't be a good time to buy in the 101 corridor of the San Fernado Valley. It's Thursday, and the banks have listed at most 6 new properties > 300K in Woodland Hills, Tarzana, Encino, and Sherman Oaks. (People don't list anymore unless it's a Realtor trying to flip)

I just looked it up, there are 1.77 million people in the Valley.

Does this seem awry? Or am I a crazy cat?

bmwman91   Thu, 12 Apr 2012, 6:48am PDT   Share   Quote   Permalink   Like   Dislike     Comment 25

David9 says

San Fernando Valley

Hey, I'm ummm here with your pizza. Nice shoes......unnn tsss unnnn tsss chicka-wow-wow!

David9   Thu, 12 Apr 2012, 7:00am PDT   Share   Quote   Permalink   Like   Dislike     Comment 26

bmwman91 says

Nice shoes

Dallas has the great shoes. Made a relatively sound RE decision there by reading Patrick.net :-)

Goran_K   Thu, 12 Apr 2012, 7:08am PDT   Share   Quote   Permalink   Like   Dislike     Comment 27

David9 says

It can't be a good time to buy in the 101 corridor of the San Fernado Valley. It's Thursday, and the banks have listed at most 6 new properties > 300K in Woodland Hills, Tarzana, Encino, and Sherman Oaks. (People don't list anymore unless it's a Realtor trying to flip)

I just looked it up, there are 1.77 million people in the Valley.

Does this seem awry? Or am I a crazy cat?

It's insane. I don't know why inventory is so low, but it's putting the market at a standstill. In Orange County sales are down to 1995 levels because there simply aren't enough homes on the market.

bayarearenter   Thu, 12 Apr 2012, 7:13am PDT   Share   Quote   Permalink   Like   Dislike     Comment 28

1sfrenter says

clambo says



You save the $200K this way


You forgot: "don't have kids".


Now that our kids are school-aged (and in public school) we have been able to save quite a bit. But childcare and preschool costs alone are exhorbitant - easily $1200 month until the kids go to kindergarten.

You forgot: don't take out loans for school
If you financed college or any kind of graduate school in the last ten years you are likely burdened with significant debt

David9   Thu, 12 Apr 2012, 7:16am PDT   Share   Quote   Permalink   Like   Dislike     Comment 29

Goran_K says

It's insane.

Aberration, absurd, crazy, demented, irrational, lunacy, madness, and unbalanced.

Yep. Sure is a good time to buy a house in these areas!

1sfrenter   Thu, 12 Apr 2012, 7:30am PDT   Share   Quote   Permalink   Like   Dislike     Comment 30

Goran_K says

I don't know why inventory is so low, but it's putting the market at a standstill

San Francisco is the same. Nothing on the market. Either crap that's way overpriced and sits unbought or any decent place is underpriced and then everyone hawks about all the multiple bids.

Goran_K   Thu, 12 Apr 2012, 7:39am PDT   Share   Quote   Permalink   Like   Dislike     Comment 31

Sometimes I think, "Wow, the banks really won." The inventory is artificially low, anything decently priced is gone in days with multiple bids.

I have 50% down (or more) in the range I'm looking at, but get beaten out by people who offer 10% to 15% over list on the decently priced stuff. One of them was a freaking FHA loaner.

I may go into house hunting hibernation over the Summer and wake up in the Winter (ironic, I know).

bmwman91   Thu, 12 Apr 2012, 8:07am PDT   Share   Quote   Permalink   Like   Dislike     Comment 32

Goran_K says

I may go into house hunting hibernation over the Summer and wake up in the Winter (ironic, I know).

Yeah, same. I have no intentions of trying to compete with the idiot masses.

BayArea   Thu, 12 Apr 2012, 8:09am PDT   Share   Quote   Permalink   Like   Dislike     Comment 33

bmwman91 says

Goran_K says
I may go into house hunting hibernation over the Summer and wake up in the Winter (ironic, I know).

Yeah, same. I have no intentions of trying to compete with the idiot masses.

I have a multiple offer pending right now (10 offers I'm told). If this is unsuccessful (it would be the 4th time now this year), I will join you guys.

"Investing" by overbidding 10+ people is no way to invest.

clambo   Thu, 12 Apr 2012, 8:36am PDT   Share   Quote   Permalink   Like   Dislike     Comment 34

1sfrenter has my sympathies. The idea might have been to follow my program before marriage. But, it's hard meeting chicks on my "extreme cheapskate wealth program". I know it's been a challenge but you CAN get them. I find a particularly rich vein of single girls in San Francisco, seems like straight males who are not Harvey Milquetoast are in demand.

bmwman91   Thu, 12 Apr 2012, 8:49am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 35

clambo says

seems like straight males who are not Harvey Milquetoast are in demand.

Chicks wanted more sensitive guys that "listened & had emotions" for a long time. Well, they got them, and I don't think that they quite like it. They are finding that they actually just wanted someone that respected them, not someone that completely depends on them & has matching mood swings!

I am not single, but the impression that I get from walking around SF and hitting bars there is that I wouldn't have any interest in the females there even if I WAS single. By the time you hit 28-30, most of the "normal" single people, that are reasonable enough to enter & maintain a stable relationship, already have. Thus, you are left with the princesses, career-first power-ladies & party animals.

Robber Baron Elite Scum   Thu, 12 Apr 2012, 9:05am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 36

"Why Now Is a Good Time to Buy a House"

...I'm not even going to bother with this one...

Robber Baron Elite Scum   Thu, 12 Apr 2012, 9:10am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 37

wthrfrk80 says

The time to buy is when there's blood in the streets.

Quoted by my Grandfather, John D. Rockefeller

freak80   Thu, 12 Apr 2012, 9:14am PDT   Share   Quote   Permalink   Like   Dislike     Comment 38

I thought it was Rothschild...

Robber Baron Elite Scum   Thu, 12 Apr 2012, 10:19am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 39

wthrfrk80 says

I thought it was Rothschild...

They both made a similar quote.

To be precise.

"The way to make money is to buy when blood is running in the streets."
-John D. Rockefeller

Source: http://www.brainyquote.com/quotes/quotes/j/johndrock102029.html

APOCALYPSEFUCKisShostikovitch   Thu, 12 Apr 2012, 10:26am PDT   Share   Quote   Permalink   Like (3)   Dislike     Comment 40

The time to buy is when the newspapers don't even bother to report Reatlor® suicides any more and people stop turning up at Reatlor® jumper events to cheer at them to leap to their deaths.

Robber Baron Elite Scum   Thu, 12 Apr 2012, 10:27am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 41

APOCALYPSEFUCK is Tony Manero says

The time to buy is when the newspapers don't even bother to report Reatlor® suicides any more and people stop turning up at Reatlor® jumper events to cheer at them to leap to their deaths.

hahahahaha +1

rootvg   Thu, 12 Apr 2012, 12:29pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 42

bubblesitter says

1sfrenter says

IF you have cash, that is.If you don't have a ton of cash saved, then now is a good time to buy.

+1. However it is hard to convince some one who wants to breath debt in and breath out debt and the assumption there was that with 12% and 18% rates price will be the same as today, good luck with assuming that price will remain same with rate hikes.

Rates have to go up, and when they finally do it'll come with a vengeance.

We can't, as a nation, continue to have old folks getting 1-2 percent on CDs at the bank while being raped at the grocery store and gas pump. Old people and the military are the Federal government's two primary constituencies. The situation we're in is politically untenable. It can't continue and it won't.

CrazyMan   Thu, 12 Apr 2012, 1:01pm PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 43

You realize if they raised rates every bank in the US would almost instantly fail right?

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