When should I buy a house?

[scriabinop23]

Quote from Port1385:

Now that makes sense.

My understanding of REO properties is the following. They are properties in which there were no "bids" during the foreclosure auction...meaning that there were experienced buyers that took a look at the property and did not want it so it now goes on the block at a substantial discount.

From this:

Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property.


http://www.realestateabc.com/homeguide/reo.htm

So basically the asking price is too high on the auctions on these subprimes, considering most of these houses are 80% on the first lien at peak prices, plus 20% for second lien, plus past due interest, etc... Thats why REOs fail, not condition.

 

[crgarcia]

Quote from Port1385:

I have studied the charts and prices of houses in my area. Houses are now selling at a discount to 2006 prices, but still I feel there is a ways to go downward. The discount off of 2006 prices is about 15-20%. This is not a huge discount compared to the doubling and tripling that had occurred over the years.

Unemployment is on the rise and layoffs continue to mount.

I have been renting since 2006 and would like to get back into a house. I ask the ET community of experts. When should I buy a house?

Somehow I have this feeling that prices will eventually get back to 2000 pricing and it will take a while. If you forced me to answer when I feel housing will be a buy, I say minimum it will take another 3-5 years to see a bottom. Homeowners are too stubborn and wont sell easily.

It depends a lot on the area you live.
Some areas, like Las Vegas, may see plunging prices for a decade to come; meanwhile in areas like New York, specially Manhattan prices haven't plunged at all.

Make sure your home is relatively near your workplace. I prefer a smaller house near work, than a larger one requiring a lengthy commute.
High gas prices are here to stay for years IMO.
There is still enormous demand and minimum production increases.

 

[KINGOFSHORTS]

Only buy a home if you can put 10% down and pay it off in 15 years or less.

 

[krazykarl]

Quote from Thermactor:

Don't rush into it. A lot of women have value that trend exactly like FNM common shares.

+1.

 

[lindq]

Quote from Port1385:


The REO properties I have looked at all had something very obviously wrong with them. I would have probably lived in the trailer in NJ before living in any of these REOs.

My wife is a Realtor and I invest in real estate, so maybe I can offer some advice, for what it is worth.

Regarding REOs, there are better deals to be had with listed sellers who are in serious distress. You need to locate a good Realtor and clearly explain what you want, and that you are going to be making low but serious offers. Interview a few Realtors and find one who willl work with you. Most aren't selling anything, and if you are a qualified buyer you should have no problems finding someone who will be aggressive for you.

If you aren't qualified and ready to move, then don't bother them.

Regarding market timing. At present there are thousands of very distressed sellers who are open to offers. It is no different than holding a stock that is crashing. Everyone wants to get out in a panic. But once word gets out that the market is starting to change...then sellers in mass will be less receptive to the kinds of offers they may take now.

Right now in my area (Scottsdale), smart money is starting to buy the right properties. And I hear it is starting to happen in other areas as well. WSJ just reported this morning that mortgage apps have risen sharply in the past two weeks.

So if you are ready to buy and can swing the expenses, I would not wait. It costs you nothing to make offers. You might be surprised at what you can get, without putting up with the hassles and risks of an REO or a property that needs a lot of work.