I fear the housing market may continue to drop?  Should I wait or buy now?

How many times have you heard that question in the past few weeks?  I’m sure your answer is “a lot!”  So do I have an answer for you?  Well, before I give you my opinion, let’s consider a quote from Warren Buffett – a man considered by many to be the single most successful investor in our modern history.

Warren often says,” You can’t always sell at the top, but it’s important to sell on the way up.  And you can’t always buy at the bottom, but it’s important to buy on the way down.”  This is the cornerstone of the philosophy that helped Warren amass a fortune worth over $35 billion at it’s peak.

So what can we take away from Warren’s advice?  Well, if you’re a home buyer, we have been experiencing a downward trend in prices over the past 2 year.  Have we hit “rock bottom” yet?  No one knows for sure.  Are there some great deals out there, at prices well below 2006 & 2007 levels?  Absolutely.

All right then, do I buy now or risk waiting longer to see if prices drop further?  Well, that may depend on your motivation and reason for buying.  If you’re an investor and want to pick up some good rental properties, you will probably want to focus on properties that can create positive cashflow – or a worst, a slight negative flow with the probability for increased rents in future years.  And of course, increased home values once selling prices rebound in time.  Plus, as the investor, you can lock into a good 30 year fixed rate loan today before the rates go up – and have the satisfaction of knowing you locked in a good portion of your costs at a very low level.  A bank owned foreclosure may be the perfect opportunity for you.

What if I’m not an investor, but just want to buy a home as my primary residents?  Well, several of the investor opportunities still apply to you, knowing that prices are much more affordable than a few years back and interest rates are still low. In addition, you have a HUGE inventory of homes to choose from – which gives you a high probability of finding exactly what you want.  And since spring/summer is almost upon us, there are even more homes coming onto the market.  Should I wait?  Well, you might ask yourself, “If I wait, will I again see this many homes to choose from?” The answer is no, if the seller’s market strengthens soon as it is predicted to do.  And of course, what if interest rates go up?  If you wait for prices to drop another 5%, but interest rates go up by 1% - did you know your monthly payments would still be significantly higher?

So you can guess that my answer is it’s an excellent time to buy.  Just ask the many investors who made their fortunes by buying up properties in the early 90’s (during our last real estate down-turn) – they’re out there buying up the opportunities as we speak.                                                                          Al

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