Buy a house now or wait?

Question

Heard a guy on Glenn Beck say he thinks housing prices will be on the decline for the next 5 years. I'm currently looking into buying a house in San Diego by summer time but I'm now concerned about negative equity and not being able to sell it back.

Since this will be my first home I'm going for a starter and I really want to be able to sell it within 5 years for a better home. Advice anyone? Thanks!

Answer 1

I don't live in your market, but I think it's hard to predict what the next 5 years will bring. That is one man's opinion.

You are lucky that the market is getting very friendly to you now. There are a lot of homes to choose from now and many sellers will practically beg you to buy their house now.

There are many opinions probably on what you should do, probably a different answer from every person, here is mine. I find a neighborhood I want to buy in first. A quality neighborhood is not judged solely by the price tags of houses. I would find a location you like, and drive it, see if you can find people in the neighborhood to ask for their opinion, don't be shy. Don't buy in a low end neighboorhood, or in a high end neighboorhood. A high end 'hood costs more, not only to buy, but to keep up with the joneses in.

I would not buy right up to your buying limit, if you can qualify for a $300k purchase, don't start there, bring it down a notch and start in the $225 range. Why? It will obviously cost you less and leave more of a cushion allowing you to more easily live within your means, one of the best ways to stay out of financial trouble. If you buy as much as you qualify for, you will potentially be house poor and you will be betting your pay will go up, the housing market will go up, etc, it's gambling and dangerous. Also, a lower price house that is nice is much easier to sell than a high price house if the market does go down.

You may want to consider a "Lease Option" or "Lease Purchase". This is basically a way to rent a house, often for around 3 years or so, with the option to buy it within that 3 years. A lease option gives you time in the house to decide if you really want to live there, has a lower down payment, your lease money usually goes towards your purchase. The downside is that if you opt out, you forfeit your option money (The low down payment), but this is worth looking into.

If you decide to buy, I recommend finding a good "Buyers agent". Have your criteria for your agent and let them know you only are interested in buying homes at a discount. This means your agent has to find someone who is getting desperate to sell, or a bank who has reposessed a house (An REO or bank owned property). This way, your agent will find you a house that when you buy, can immediately have equity!

There is a lot of info in your local bookstore about buying homes since people do it as an investment (Like me). Use the same techniques and get the same education, it pays, and pays a lot to be prepared and educated.

Bottom line is buy now, just buy smart!

Answer 2

You have lots of time to see what will happen with the housing market. With the upswing in the economy and the feds curbing inflation so far, the housing crash could be more like a stumble.

The big problem is with folks that opted for the "funny financing" of mortgages. Their interest rates have gone up on adjustible mortgages and they can't afford their home. A good lesson to you, never get an ARM loan, always a fixed rate.

San Diego's housing went up and up and it's only natural that it levels off or even dips a bit. You should watch what happens in the next few months. I suggest if you can get a deal, go for it. San Diego will always be a place where people want to live. The housing market always goes through these cycles.

Just make sure you buy a home in a good neighborhood, remember the realtor mantra; Location, Location, Location. Keep your home in good repair and upgrade appliances when you can and make improvements when needed.

There is no investment that earns so much so fast as real estate. I have owned homes and condo's for over 30 years, so I do have some experience! What I made on just one condo in the right place, at the right time enabled me to live comfortably.

Answer 3

It depends on your financial situation. If you have a large enough down payment that your payments will be the same as paying rent then you should buy. If you have a very high income you should most likely buy. If you have a middle or low income and a small down payment it may not be the time. Don't listen to people who say that owning is "always" better. Since you want to sell it for a "better" home in 5 years it sounds like you want a status symbol. The best advice I can give you without knowing about your finances is to really question the value of that. How many days out of each month are you willing to get up and go to work for a status symbol?

Answer 4

Buy now. San Diego real estate will always be in demand. The fact that the market has made a correction will work in your favor. Find a house in the very best part of town you can afford and then make a very low offer. Just remember, you can always raise your offer but once a higher offer is accepted, you won't be able to lower it.
Besides, the seller is probably making a killing on the property as it is, especially if it was purchased a while ago.

Answer 5

being in real estate for over 22 years i have seen what is considered to be good markets and bad markets and i am here to tell you there is never a bad time to buy if you are going to live in the house.
firstly, if you wait 5 years calculate how much rent you would have paid. after doing that think if prices would come down that much (if they go down at all) and think about the income taxes you would have paid and the amount of money you would not get back in the form of a mortgage interest deduction.
also, if when you decide to move again because the time is right and you cant sell it because of the price you can always rent it and sell later. you probably still wouldnt be any worse off.
lastly, if prices do come down .. who cares you are living in it. and at the end real estate always goes up, even if it goes down for a while. think about this if you bought a house if the early 1990's when prices were "down" and sold it today chances are it went up over 300% do you think those people made out bad.
if you want to use less of your own cash to buy you may want to check out www.libertygrant.com and see if you can get a FREE grant for your downpayment.

Answer 6

You'll be fine. San Diego has some areas that are in a decline, but within 5 years you'll be better off than if you were renting. If you need financing or help purchasing a home in San Diego, I can do both. Once we get your financing in order and you know an area in which you want to live, I can find a property that's in pre-foreclosure and purchase it for you or find a property way below market value.

Regards

Answer 7

Check with the SD Chamber of Commerce. The SD city/county should also have a "tourist" bureau eager to help those willing to relocated. The housing bubble has burst. BUT it is a selective leak. Some sites remain moving quite well.
Check out what where the home is located. Location is very important.
Check out the condition of the house if you intend to do some "self" equity improvements. Kitchen remodel is big. Landscape is first impression important.
Kudos on the first home.

Answer 8

Now is a good time to buy. Prices are down and in most areas it's a buyer's market. You don't know what the market will be like in 5 years. May be up or down.

Answer 9

Here in Ohio the housing sales are down & people are having to lower their asking price by 20-30 thousand dollars. My sister just started in reality & says it is really hard to sell with the economy down.

Answer 10

Good times or bad - real estate is a good investment.

Things to do :

1. call a real estate agent
2. ask how many short sales are on the market (this are foreclosures in the process)
3. then ask him if he has experience with this
4. if he does, ask him to take you home shopping
5. no xp, call another one (repeat steps)
6. if you like a home, ask him how much to offer - if he says
full price or it's a hot property, get another agent!
7. make sure if it's short sale, offer 30 to 50k below..market value
many times more depending banks

Good Luck

http://www.theforeclosuresinfo.com/bay-area-real-estate-home-search.php