Why did I post a heading with today’s mortgage rate? My mind is all over the place thinking about phone calls I’ve gotten this week, on my cell and while on floor duty at the office. Maybe I’m a little slow, but I am finally understanding why so many people are asking me ‘do you think the market has hit bottom?’ Yeah some of us are just curious, but many are possible buyers who want to wait until the moment when the bottom is hit and prices are as low as they can get. I literally just realized this today; okay yes I AM slow.
What has me in a bit of a tizzy about this is that trying to buy a home at the bottom of a market cycle is like trying to figure out when it’s the best time to buy a stock; it’s a crap shoot! Plus, it serves no purpose! What kind of square footage do you need? How many bedrooms? Do you need a one or two car garage, or do you care less about a garage but want to be near RTA? Do you want a short commute to work? These are the quality of life issues that matter, not whether or not you have a cart full of clearance sale items!
Back to that mortgage rate. It hasn’t varied much since 2005. But now it’s tied into the stock market which is volatile, and while you are wondering if you can get that 65k home for 50k if you wait another six months, do you really trust the market enough to think that interest rates will still be steady at that time? They could be or they could not be! Then you will have waited for the clearance sale for nothing.
And that is not even the point.
Clearly, home prices are way down from where they were in 2005. Do you want to buy a house to live in? Good. This is my mantra (yeah you’ve heard it before): figure out what you can afford by talking to a mortgage lender. Then look at the figure and determine what it means as far as a monthly payment is concerned. Then decide on your comfort level, not what a mortgage person tells you but what you can reasonably spend a month on a mortgage. Do you travel a lot? Do you buy tech toys? Do you need money for kids sports and social events? In other words, figure out a budget for a mortgage payment.
Then we can find a house that is a good value in that price range. It’s not about having to get the cheapest possible home. Really! Cleveland is not a city for flipping homes, so why is it ever important that you have waited until some poor seller has listed his/her home for tons of money lower than typical market value (although market value is arguable but that’s another topic)?
What IS important is that you not overpay for a home. That’s where someone like me can help you. I spend an inordinate amount of time in the neighborhoods, in and out of homes, analyzing the market on line, etc. Cleveland IS a good place to buy an investment home, but only if you are doing it with the idea that you will keep it for a while..just like your primary residence. I cannot emphasize this enough.
So while you may read all the pundits trying to predict how low it can all go (now I want to find the limbo song on you tube), how low it goes is not the issue. The issue is what can you afford and are you financially able to buy a home? That’s it. I am not usually on a rant but apparently today was the day for one. Peace Out – 3C
0 responses so far ↓
1 Ann Cummings // Apr 3, 2008 at 8:09 pm
Carole – good rant! The problem for those who are waiting for that bottom to hit won’t know it’s come, and then begun the upward climb, until it’s already passed. That’s one thing that we never see until we look in the rear-view mirror. Just as we didn’t know when the peak market was until we looked backwards, we won’t know when the bottom is, or was, until we look backward at some point as well.
And then those who were waiting will have waited too long. You’re right – if buyers find the right property for their needs now, and can afford the mortgage payments AND are comfortable with them, now is the time. If they wait, someone else who’s also in the market may just decide to make that perfect home their own home and buy it right out from under those buyers who chose to wait just a little bit longer.
Great rant!
2 Carole Cohen // Apr 3, 2008 at 8:11 pm
Ann, I didn’t even think about your most wonderful point (and there were many!) We don’t know it is the bottom until it starts climbing back up! Thank you!
3 Bob Carney // Apr 3, 2008 at 8:15 pm
BINGO!!! I think buyers really really like when sellers are making money on their property.
But to your point what if we didn’t hit bottom great, you still got a good deal and I bet when you sell it 3-7 years from now you will have made some money on it if not at least broke even.
National ave for appreciation last year was around 5.9% but don’t quote me on that. I can’t find the official number.
Bob Carney’s last blog post..Down Payment Assistance – How do I get it?
4 Carole Cohen // Apr 3, 2008 at 8:18 pm
Hi Bob, your point about getting the home you want and getting it at a good value strikes me as being crucial. I’m not sure we will see 5.9% appreciation here for a while. But still, your other point about it being good for sellers to make money also matters…because once the buyer becomes an owner, they want to have the home appreciate. It is hard to have it both ways! lol
5 moni // Apr 3, 2008 at 8:27 pm
I really think we’ve hit bottom. Buyers are looking and buying, our prices are very desirable. I’m thinking 2002-2003 levels for sure and with the activity we’re seeing …that tells an important story for those smart enough to hear it.
moni’s last blog post..17 Marilyn Park Drive Hampstead NH
6 Bob Carney // Apr 3, 2008 at 8:29 pm
What it really comes down to, is the market is either fair or bad for someone.
Bob Carney’s last blog post..Down Payment Assistance – How do I get it?
7 Elaine Reese // Apr 3, 2008 at 8:33 pm
Excellent post – tells it like it is! Sellers here have pretty much stopped dropping the price. I’m seeing far fewer price decreases in the MLS system. Some builders are actually increasing their spec prices.
New listings are being priced better – meaning right at the market. Of course, agents are less willing to take an overpriced listing, so that is forcing the sellers to be realistic.
Unless something drastic happens in the national market, I think we’ve already hit bottom, and may actually tick up a little once the weather turns.
8 Carole Cohen // Apr 3, 2008 at 8:42 pm
Bob,
amen to that!
Moni, we have some homes for sale at $10k, $4k and $1k; yes that was one thousand; how much lower could they go?
Elaine, we still have a need for price decreases here on homes that were just listed too high, but I do see that homes are rarely way over priced (like some of them were in 2004-ish).
9 Carole Cohen // Apr 3, 2008 at 8:43 pm
and why are some of you not using comment luv; seriously, you write great blog posts, use it next time!
10 ines // Apr 3, 2008 at 9:57 pm
This is what I find fascinating – how come buyers were not concerned with buying at the “top” of the market when the market was HOT?? Wouldn’t that be a bit more risky? Instead they were willing to pay above appraisal and put in ridiculous bids for homes that were not worth it.
I agree with Bob – real estate will always be bad for someone and the media will always focus on that “negative”.
you do floor?
ines’s last blog post..Real Estate Market Reports for Miami Shores, Bay Harbor Islands, Surfside, Fisher Island, Aventura, Biscayne Park and El Portal
11 Carole Cohen // Apr 3, 2008 at 10:06 pm
Hiya Ines. The hair went up on the back of my neck as you reminded me of the high appraisal issue. It really points out that in our experience I think people get caught up; if the market is high OR if the market is low. We need to keep perspective!
12 Ann Cummings // Apr 3, 2008 at 10:07 pm
I don’t know how to use that, Carole. I just checked the link below, and I don’t know…..
13 Carole Cohen // Apr 3, 2008 at 10:10 pm
when you look under the ’submit’ button, there should be a box checked that says enable comment luv; maybe it’s having trouble finding yours? I hope not!
14 Laurie Manny // Apr 4, 2008 at 1:50 am
Well prices here have finally leveled out. What a surprise for all of those buyers who waited. They cant get their offers accepted.
Every good property has multiple offers on it and the investors are walking away with most of them with all cash purchases.
Sellers are already giving little or no concessions. I don’t anticipate an upturn in the market, although, this is going to get really interesting when interest rates inevitably start climbing.
Good rant……………anybody listening out there?
15 Carole Cohen // Apr 4, 2008 at 2:00 am
Laurie, I have two clients affected by exactly what you said regarding losing out to cash purchase investors. For both of them, they didn’t wait hoping the market would get lower, this is just when they got to the point they could buy a home. Nevertheless it proves your point that the good ppties are seeing multiple offers. I am showing a house tomorrow (er, later today) that has been on the market only two days and am praying that if we like it, we won’t have competition. Thanks for commenting.
16 derek // Apr 4, 2008 at 8:30 am
You are so right Carole. It’s about your values and the value of the home. What good is a cheap house if it’s not what you want?
It’s nice to hear a professional say these kinds of things
.
derek’s last blog post..Who says?
17 Carole Cohen // Apr 4, 2008 at 10:16 am
Derek, thank you and right back at you! It’s good to hear ‘what good is a cheap house if it’s not what you want?’ from a lay person! :0)
18 Market Update for Frederick area and Condos : Focus On Frederick.com // Apr 7, 2008 at 1:45 pm
[...] Houses are starting to get people back through them again, and the phones are ringing again. The interest rates are still very low for potential home buyers. Buyers that are on the fence need to do the math on the savings of [...]
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