Is this the right time to buy a home, or should I wait?

Question

I know this is a tough question. I'm about to buy a condo in a couple months in Los Angeles county in CA (first time buyer!). I'm going to apply for a loan next week because the interest rate is low now, probably due to the November election

It seems there are 2 different opinions though. One says I have to wait until the housing prices go down, probably within a year, while another says housing prices will not drop, so I have to buy a home now.

Recently I've seen some listed homes don't sell for months. Would this situation cause the prices drop in a few months? Or, as some experts say, the drop in housing prices would not occur? I want to hear some advice from someone who knows the market.

Answer 1

IMO you need to continue to research your real estate market carefully and for some months longer. There are strong signs of weakening of RE markets throughout the country, and prices are already dropping in some locations. In other locations, marketers are postponing the inevitable by offering incentives (discounted fees and interest, upgrades and other freebies) instead of actually lowering the sales price of a home, but these gimmicks are the same thing as lowering the price--it just doesn't look like it on the sales contract. Traditionally, condos lose the most value in a price slump, so there is a good chance you could be upside-down in your mortgage in a year or two if you buy now.

Do not expect any real estate agent, or anybody who works in banking or real estate, to tell you that the market is weakening--it is against their financial interests to do so. The more money they can get you to pay for a home, the more money they make in commissions, fees and interest payments. You need to do your homework on your own, using resources that have no financial ties to the real-estate world. Try the economics blog I've linked below, and go from there.

You can also look at zillow.com and get a sense of home values. But again, since zillow.com gets advertising revenue from real estate agents, the info there can't be trusted 100%. But it does show that even my home has lost value (about 15%) this year.

Answer 2

I do not know about your area. However in my area we are in the worst slum in the Real Estate market in 20 years. What this means is that houses sit on the market for 6 months or more. It is what is called a buyers market. You can get a good deal. Here the sellers are paying the closing cost or part of the down payment for the buyers. Some high end homes they are giving a new car with the a full price offer on the home.

People here are selling their home for far less than the appraised value. Personally if you are in an area where the property is not moving fast , you are probably in a good place to buy now. Make an offer on a house, you do not have to pay full price. In a Seller's market you would not be able to negotiate, but in a Buyers market, they love and want you!!

Answer 3

Hi,
I am a Realtor in the San Fernando Valley. It seems that the real estate market is cooling in our area. If you don't buy, you are not going to lose much. There is, however, a possibility that the rates (interest) may go up. Lately, the Feds have been good with holding the rate steady. Overall, if you can afford a payment, then buy. You can get tax advantages from owning a home plus some intangible benefits (homeownership pride). What areas are you considering?