Alright. I've been listening to you guys yammer back and forth on the idea of the Housing Bubble for several months now, keeping silence while debating my present situation and decisions I need to make in the quickly approaching future. I thought I might ask for some advice. My situation: Currently, I am an American expat living in Russia and in the next few months or so, I'll be heading back to the US as my assignment ends. I am debating whether or not this is the right time to buy a house, or whether I should wait for a determined period - and rent - until I see what happens to housing for the next year or so. I would be looking to live in the northern NJ area, as that is where my company is positioned. I'll be happy to answer more specifc questions if you think you need the data to answer, but essentially my question is just "buy" or "wait". If it is "wait", how long do you believe I should wait? Cheers, and thanks for all worthy commentary. -Ivan
It really depends on the area where you want to buy. Real estate usually has 11 years cycle. In California RE has dropped 25% in 4 years in 1991-1995. People ignore to remember that.
I would suggest WAIT Time Frame? Get a ONE Year Rental By then, things should be a lot clearer than they are right now.. Good Luck!
http://biz.yahoo.com/special/arm05_article1.html "Enticed by juicy commissions from all those deals, others are jumping into the mortgage biz. Among them are John Switzer, an 18-year-old high school grad from New Bern, N.C., who put off college so he could start work as a mortgage rep for Houston-based Franklin Bank Corp. (NasdaqNM:FBTX - News). "Right now, mortgages are a little more interesting" than college studies, he says." Kids not going to college to do RE. Where have we heard this phenom? Kids not going to college to do daytrading. Kids not going to college or dropping out of college to join dot-bombs. Hmmm...
But is it not the cheap money that has caused the surge in housing prices, thereby rendering your argument as somewhat circular? Therefore, you could equally ask the question, "When has real estate last gone up so quickly and substantially in price?" Not that I know the answer to the original question. Real estate generally looks rather expensive to me right now. But then, I thought that the stock market was fundamentally overvalued in 1998, so what do I know? And what do you mean by hedge? Locking in the rate in one way or another?
FWIW-I recently sold some property in North Jersey and made a lot on it. I could not believe but there was a bidding war for it as my initial asking price was bettered by $15K by the first potential buyer. The realtor explained the market to me simply as there is essentially very few more buildable lots left. Some "onetime undesireable areas" are now seeing action as the "desireable" areas become very expensive. An example is Upper Montclair/Montclair. His opinion is it will take a recession or very high interest rates to see prices decline significantly. As far as renting, if the market is fairy priced you won't see much savings in renting and you lose tax deductions. Plus, if you are wrong about the market, you have another 5-25 % more to pay when you do buy. Good luck and keep asking so you are able to form an opinion and take action accordingly. A link that you may want to use to research (Newark Star Ledger): http://www.nj.com/rentals/index.ssf?/cgi-bin/realclas.cgi DS
I still think the key question is how much he is planning to stay. If he stays say 2-3 years then the huge transaction costs will probably eat any potential appreciation (if any). If he is moving for good it doesnât matter much bubble or not. He could compare rents with mortgage cost but again it depends how much he values being a homeowner. My perception of that value is significantly different than the one from my wife.