Free Ebook.

Enter your email address:

Delivered by FeedBurner

« $10k Challenge: Start a Blog | Main | Are You on Track for Retirement? »

August 28, 2007


Feed You can follow this conversation by subscribing to the comment feed for this post.

I think the only way anyone should buy right now is if the buyer is perfectly content to live in (or otherwise hold on to) the purchased house indefinitely. The prices have a long way to go down and then a long way to go back up before things return to the booming market it once was.

I'm in the same boat as you and looking for house prices to decline. I have a smaller house in an ok area with ok schools and am looking to upgrade to a larger house in a better area/schools sometime in the next few years. I'm in no rush though. I might even throw a for sale by owner sign out there for a year just to see what happens. No hurry for me.

Wait until October when a lot of ARMs will reset - might be a fire sale in the fall.

On the other hand, if you can't buy a house, prepare to pay through the nose - rents here are projected to rise 8.5 percent this year and an additional 6 percent next year.

If I had enough cash for a decent down payment, I would seriously consider buying a rental property. The rental market should see a good rise as a corollary to increased foreclosures.

I think it may take two or three years of decline and remain flat for another five, but if a recession hit, rates would drop and prices would firm sooner.

I don't understand the "Great time to buy" argument. If it is a great time to buy, wouldn't that also make it a horrible time to sell (meaning you won't get as much for your current home)? Of course, it's different when you are going from renting to buying.


Not if you are moving to a larger house.

Kevin --

1. What Ryan said.

2. We don't HAVE to sell in order to buy. We have 3-4 options available besides selling that can work for us.

"Great time" will only be known in hindsight. You may be right (very unlikely), but we will have to check back in 12 months.

FMF - Ok, I get that you may not have to sell, but how many people are actually able to have 2 homes?

Ryan or FMF - Please explain how buying a bigger house disproves my argument. Your smaller house is still going to be worth less than what it was 3 years ago, for example.

Kevin --

If all homes are down 20% and I own a $200k home and buy a $300k home, I "lose" $40k on my home ($200k * 20%) but "gain" $60k ($300k * 20%) versus what the $300k home sold for a few months ago. If I both buy and sell, I'm "up" $20k.

I know the numbers have a lot of other factors that influence them, but you can see the general principle at work in this example.

OK, I guess I understand the argument a little better now. Just hope that house prices don't drop another 10% after you're in your $300k home or there goes your "net".

I guess I'm just of the mindset that changing homes is such a big, long-term investment that the main factor should be based on whether or not a family actually needs that much space to justify the hassle. Timing the market isn't something I'll be worried about when I am ready to upgrade.

It seems to me that with mortgage rates a percentage point above where they were a year or two ago, that cheaper price isn't really all the much cheaper. I got a 5.875 30-year fixed with no points in 2004. I think I'm looking at around 6.5% if I were to look today.

I haven't done the exact math and it will vary from person to person, but it might not be quite as great as it appears.

And I don't mind the "I told you so"... everyone knew it was going to happen anyway. This is far from a shocker.

Boy, this sure does sound like someone's timing the housing market. Hmmm... You're not supposed to time the stock market but timing the housing market is perfectly ok.

Very interesting.

Kevin --

We're not going to buy a home we hate just because we can get a good deal on it. We're looking to move closer to work/church, to a better school district, etc. -- all the issues people normally consider when moving.

As far as the price going down more once we buy, that's a possibility. That's why I mentioned it in my post.

Lazy Man --

We won't have much of a mortgage and won't have it for very long, so rates aren't a prime consideration for us.

And, belive it or not, I took a lot of heat a year or so ago from borrowers who defended bad loans and told me why they were really good loans. Haven't heard much from those people lately. :-)

Victor --

Ha! Interesting comment. Maybe I should write a post on it.

I think the stock market and housing market are different. And for me personally, I view buying a house as a purchase, not an investment. For example, I time my car purchases, vacations, etc. to get the best prices I can for what I want, why not do the same with a house?

Lazy man,

Good call on getting the fixed rate mortgage. It makes sense getting an ARM only when fixed rates are high. When fixed rates are low, we are at the bottom of the rate cycle and rates only have one way to go - up.

I agree with Kevin. I'm also not going to buy a house I hate just because it seems like a good deal. It's so exciting to see these prices drop. It's true that one person's misfortune is another's fortune. If we just wait awhile longer nice affordable homes with good interest rates will be handed out.

The comments to this entry are closed.

Start a Blog


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.