Top 10 reasons to buy a home now

[jepsd]

Our favorite SD-UT today has another smiling Realtor with 10 reasons to buy now (not sure where this in online as I have the paper copy). I won’t go into detail, but please see #10: “There’s no time like the present”.

Let’s get this straight:
-We’ve had 60+ months of appreciation that has never been seen before in history.
-After about 6 months of slowing, it is declared a “buyer’s market” (by people who have a vested interest in selling or transacting for commisions).
-Furthermore, this guy says RE is a medium- to long- term investment. (In my mind that is 100 to 200+ months investment)

So, anyone who is considering buying a 100, 200, 300 month investment, please explain the sense of urgency. Why can’t you wait another 6, 12 or 24 months? I understand that there have been folks wanting to buy that watched the past 60 months go by and they missed out on the near term bubble gains. Oh well. That doesn’t mean that now is a good time to buy.

If RE is indeed a LONG term investment, why is there no time like the present? The market is slowing. Why can’t anxious buyers just wait to see what happens before buying this “medium- to long- term investment”? They figure another 10% appreciation will take place in the next year and they will again miss out on some quick home equity gains. That is the buyer mentality: missing out on something that apparently everyone else is profiting from.

In my opinion, I don’t think we will see 10% appreciation for some time. I can wait to see how long that next 10% appreciation takes. That small amount won’t matter to me in the long run, especially if I get 5% in a savings account annually. If the next 10% takes two years or more, then a 5% savings account doesn’t seem all that bad (hopefully even to those with a buy now at all costs mentality).

[powayseller]

I don’t get why now is a good time to buy. Neither do the other buyers, as many are fence sitters in lieu of buying.

When buyers are buying it is a buyer’s market. But sales are way down, so how can it be a buyer’s market?

I too am sick of hearing the phrase “buyer’s market”. What the heck does that mean? Isn’t it the NAR’s definition of a market where months inventory is above 7 or 8, i.e. buyers are retreating? Buyers are losing interest, not buying, so it definitely is not a buyer’s market.

It is a renter’s market. Ben Jones is right.

[jepsd]

The phrase “buyers market” (as used by NAR) means that sales volume is slowing and sellers are getting desperate. The NAR will repeat as necessary to encourage buying. Get used to hearing it more and more as RE drops 5 to 10% per year. NAR will declare a “great buying opportunity” all the way down.

I heard Ben Jones on the radio with Rich yesterday, and indeed he is right. It is a renter’s market. Unfortunately, mathematics education in the US is so poor that people don’t realize that renting a house for 50% of the cost to own the exact same thing is an awesome deal. They are getting a tax deduction by owning, you know! Ha ha ha. I have a really good deal for anyone who wants to take it: You give me a dollar, and I will give you 30 cents back! Ha ha ha.

[bigmoneysalsa]

A lot of people here and on Ben’s blog have been complaining about the phrase “buyer’s market.” I have to respectfully disagree; in economics-speak “buyer’s market” is really a perfect description of what we are seeing.

From AmosWEB, an online economics encyclopedia:

“A disequilibrium condition in a competitive market that has a surplus or excess supply. Because the quantity supplied is greater than the quantity demanded, buyers have the “upper hand” when negotiating. A market surplus also goes by the more common term of buyers’ market. The alternative to a buyers’ market is a sellers’ market, which has a shortage or excess demand. A buyers’ market exists because the quantity supplied by the sellers exceeds the quantity demanded by the buyers… at a given market price. In this situation, sellers are seeking to sell more of the good than buyers are willing to buy, hence buyers can pick and choose the goods purchased from the sellers. Sellers are lucky to find someone willing and able to purchase their good.”

Sure sounds familiar to me…. Note that buyer’s market DOES NOT mean good time to buy, nor seller’s market mean good time to sell.

[jepsd]

I have to concur that the market is currently defined as a “buyer’s market” because supply outstrips demand, but that is NOT to say that it is a “great buying opportunity” as you have pointed out.

I feel that the NAR uses and will continue to use the phrase “buyer’s market” excessively to encourage buying rather than to state the market conditions of supply versus demand.

Please find me an article by a Realtor claiming there is a surplus of housing in SD, CA, or anywhere in USA. I don’t believe I’ve seen any (although they may exist). It is more likely they will claim “buyer’s market” out of one side of the mouth and “shortage due to lack of buildable land, population, immigration, everyone loves the sun, take your pick…” out of the other side.

[powayseller]

jepsd, I love your explanation of the tax deduction. and I laughed really hard.

The NAR seems like a prime target for lawsuits. Are any lawyers around, who know if they are breaching their fiduciary duty by encouraging people to buy homes when the market is clearly falling?

[Daniel]

I agree. The formal definition of a RE “buyer’s market” is where supply outstrips demand (at current prices, at least), thus leading to lower prices in the future. In the stock market, the equivalent term is a “bear market”.

But calling a RE falling market a “buyer’s market” is a very unfortunate choice of words, because it implies in the mind of the audience that “it is a market good for buyers”. Nothing can be further from the truth.

Ironically, the stock market names have the opposite meaning. If a “bull” is a buyer, and a “bear” is a seller, then a rising market is called a “buyer’s market”, and a falling market is called a “seller’s market” in stocks.

[Chrispy]

The official city flower of San Diego is now a for sale sign.

[lendingbubblecontinues]

Too funny!! Why stop there? Who needs the poppy, anyway? California state flower is now the for sale sign. San Diego’s city flower should be the omnipresent and beautiful “spinning sign” flower.

[Chrispy]

The interactive flower of SD – a spinning sign. How’s that for new media?

I heard some flippers are now flippin’ signs because they couldn’t get hired flippin’ burgers. Isn’t it funny how there’s only a one-letter difference between flip and flop?

[Doofrat]

jepsd,

‘I have a really good deal for anyone who wants to take it: You give me a dollar, and I will give you 30 cents back’

Can I write off the money I lost on that deal?!? If so, my broker will write up some paperwork (He only charges 4%, but I can write that off too)

[PerryChase]

You can deduct for taxes purposes only if you have income to deduct from. I'm sure a lot of people who stretched to get into homes (or used equity from previous homes) don't have the income to fully benefit from the incremental between standard deduction and itemnization.

jepsd, i also love how you put it.   How about this:  give me $1 today, and I may give you 30c back next April, but only if you have a job.  If you're unemployed, i'm keeping the whole amount.    

 

[waiting hawk]

lol @ Chrispy.. I had to put that on my site.

My website tracking Temecula and South Riverside County

[bsrsharma]

Based on:

 Quarter Change Real GDP

 Q4 2007 1.5%

 Q1 2008 0.0%

 Q2 2008 -1.0%

 Q3 2008 -1.0%

 Q4 2008 0.5%

 (From http://calculatedrisk.blogspot.com/2008/01/more-on-goldman-recession-call.html )

 Q4 2008 should be a good time to buy, if you are paying much of the price without a mortgage.

[bsrsharma]

Based on:

 Quarter Change Real GDP

 Q4 2007 1.5%

 Q1 2008 0.0%

 Q2 2008 -1.0%

 Q3 2008 -1.0%

 Q4 2008 0.5%

 (From http://calculatedrisk.blogspot.com/2008/01/more-on-goldman-recession-call.html )

 Q4 2008 should be a good time to buy, if you are paying much of the price without a mortgage.

[Author]

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