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December 26, 2007


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It's always important to remember just because we are conditioned to buy homes soon as we sell the previous home does not always mean it is the right pratice.

Like you say, bigger downpayment, time is on your side, and you can even do more research on where you want to live. Who knows, you might find a different neighborhood, etc...

Good for you.

I have said this many times, but the real estate prices will experience the greatest downward pressure when we enter a recession. Then people might be forced to sell, rather than being able to hold out at unreasonable sales prices.

It is still much cheaper to rent than own where I live so it makes sense to rent.

I'm timing the stock market just like you're timing the housing market. 2008 will be a bad year for stocks so I've pulled all my money out and will buy when it hits bottom.

Good luck.

The main trick is being well prepared to buy when you are ready -- at your own timing --so you are not a pawn in any market. This means having a saved serious down payment money in advance so that you are not subject to predatory lenders for the rest of the financing. Over the life of the loan the difference in pricing of the house you buy will likely matter less (in monthly payments) than what percentage you can put into standard down payment. A good standard down payment (10 to 20 %) equals a good standard fixed prime (not sub-prime) mortgage. Very old fashioned. But that advice is what was ignored when people sought "no money down" loans or other quick fix lending schemes. It takes two parties to have done the sub-prime-tango.

While housing prices may well go down -- and we probably will see a recession -- the government is printing money right and left to try and help banks recover. That flood of money usually means inflation. Inflation will be a contrary pressure on housing prices. My prediction is house prices may well stay the same or even increase slightly -- while we see raging inflation. And the main control for raging inflation is increasing interest rates. While you want to wait for your best price house, you may also cut yourself out of a great interest rate in the wait. Interest rates over time are the biggest crunch to your pocket book.

Much to consider. The tried and true is best -- have a good down payment saved, shop till you find good value and buy it at the best terms you can get -- regardless of the market. I don't day trade on the stock market, I don't play commodities and I doubt the equivalent game in real estate is worth the effort. Only real experts make any money (or claim they do) timing markets.

Here is a tip. Don't worry about buying on an upswing. In fact, it is really important in all financial transactions, like stock picking, not to try and pick a bottom.

When you are thinking about buying an asset like a stock, it is best to let it hit bottom, and then recover. You may have to buy 4 or 5% above the low, but it's important to be sure that the asset won't go further down in price.

Just keep looking for motivated sellers. Sellers will be getting more motivated with each mortgage payment on the houses that they're trying to sell.

We're looking to move closer to town and I'm doing much the same thing (to my wife's frustration). ;)

We're "timing the market" by waiting until we are sure we have the downpayment + equity we need to purchase the next house that we will stay in for life. We are pretty sure we'll make a good return (10% or so) on our current house based on transforming it from a eyesore to an updated, attractive home regardless of the market conditions.

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