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.
I answered your question here... But basically look for a 10% rental yield. That is a safe fundamental value... Or another version of the answer: When the cost of money is cheaper than the income renting it (on 100% of the value). http://scriabinop23.blogspot.com/2008/08/san-diego-foreclosures-out-of-control.html Basically some foreclosures are great deals right now, but the rest of the market is in fantasy land.
ET community of experts. LOL Anyway, I say it depends. If all you really want is to try to pick "the" bottom, the old wall street adage applies... if you think it's the bottom you're probably wrong. If you know it's the bottom, you're too late. And don't forget, even if you were correct in buying the bottom, by itself that does not mean lift-off. If you need a place a live, buying right now might be right. Another adage applies... just because you qualify for a million dollar mortgage doesn't mean you have to buy a million dollar property. Assuming you qualify in todays environment, as a hedge, buying a property somewhere within 30-50% of the amount qualified for is likely a safe bet, certainly prudent. Osorico
Be smart about it. Are you looking for a good investment or are you looking for a place to live, expand family etc? That is your primary concern, secondary is what price and financing you will choose... And Pabst is right - if you can improve a cheap house - then that is a lot of potential profit no matter the housing prices in general... Remember - location, location, location... makes sense long term and short term.
I dont see the high growth job environment in Southern California. Where are the jobs to support these valuations? I see two types of people in SoCal. There are the ones who have a lot of money and dont really need to work or maybe they dont work here in SoCal, but use SoCal as a waypoint (i.e. investment banker, business owner, etc). The other type of person is the average joe who works a job. I dont see either type making as much money as they did a few years ago and dont believe either could justify buying a new house. The top in housing in SoCal was 1991 and there was no bottom until 96-97 (5-6 years). I say history is a good guide and so you shouldnt waste your time looking for deals until 2011-2012. All of the housing price graphs remind me of tech stocks in 2001. They have come down some, but still there is a ways to go and will take time for it all to unravel...
I would like to think Im young, but in reality Im not that young and have not started a family. I'll meet someone in the next few years and a family will become a reality. My time frame to get a house is probably 3-5 years which is the timeframe for me to meet someone and start a family...
Now you are giving me advice? There are deals right now, but you have to be astute. They are going for that 10% target yield. These REO properties are moving for about a little over 1/3rd of 2005-2006 bubble top prices, or around 65% off. You don't need to wait 5 years to pick one up in certain zip codes. In nicer areas, maybe another year and we'll be there as well. It is important to realize that the alt-A/prime crowd won't collapse likely in the same manner as subprime, as people who put equity into their homes (10-20%+) are much less likely to take a loss and walk away unless they are destitute. 0% down subprime foreclosures are another story, since no risk or personal stake gave these people no incentive to stay.