Should I Buy a House Now?

No suprise here, if you own a home right now and are trying to sell, or thinking of selling, you’re probably not enjoying yourself too much. For most housing markets around the country, there’s a little more supply than demand, and it’s only getting worse for sellers.

The number of foreclosures is at record levels, financing is getting costlier, and home prices are dropping. But what about buyers?

Buyers may be looking at things a little differently. Actually, a lot differently. I know–I’m one of them. I’m that guy that’s paying attention to the market–been doing so for the past few years, waiting it out, looking for that deal. I see plenty right now, but I’m not pulling the trigger just yet. I’m going to wait it out. Not too long a wait–because I do want to buy that house, maybe your house, for a lot less than you probably think it’s worth.

But there’s some thoughts going through my head before I take the plunge. Thoughts you’ve probably already had as a seller, whether or not you’ve tried to not have them. Thoughts that are the converse of mine.

1. Mortgage Rates
Mortgage rates are likely going to go higher. Based on bond rates, the current 30-year mortgage is around 6%. By next year this time, mortgage rates could be around 7% for a 30-year fixed rate mortgage. What does that mean for me? It means a couple of things. Lower mortgage rates means it behooves me to buy sooner than later. Home inventories are at historic highs, and mortgage rates relatively low. I can get a good deal, and I know it. But for how long I can’t predict.

2. Neighborhoods
We’ve all watched neighborhoods pop up around the country, big new homes that developers seem to be building as fast as they can.

Speculators and homeowners currently in foreclosure likely have bought a good deal of those homes, and they may be out of there just as fast as you saw the U-haul’s moving them in. What’s that mean for you and me? It means that the neighborhood is probably a shell.

No good schools, no great infrastructure (at least not as good as the one you’re already used to), and a lack of community. If you buy in one of these neighborhoods, you have a higher chance of seeing tumbleweed rolling down main street, and homes being left to wither away. If you can, stay to more established communities.

3. Homework
Do your homework. The only person looking out for your best interest is you. Sellers and real estate agents are out to make money, and none of them can do that if you’re not paying. It’s in their interest to sell–and your best interest doesn’t really factor into the selling of the home. Make sure you’re familiar with the comps in the neighborhood, what you can get for what you’re looking to spend, and be ready to walk if you’re not feeling comfortable.

4. Timing
I’ve been watching the housing market for a while, and just like you, I’ve been watching it tank. But as a buyer, I’m loving it. I’m loving the fact that I waited and watched, rather than jumping in and trying to buy something I couldn’t afford. But I also know that

I’m either going to take a short-term loss if I buy now, or pay more than I would now if I wait a little while. Why? Because I can’t time the real estate market and better than I can time the stock market. No one can. So, If I see something I like, and it’s within the next year, I’m buying it. I know that the price of the house if I were to sell it the next day will likely be less than what I pay for it. But that’s OK. I’m not planning on selling that quick. And neither should you.
Here are some real estate websites you should check frequently:

http://www.trulia.com
http://www.redfin.com
http://www.realtor.com
http://www.zillow.com

I use the above sites all of the time. There are also some sites like craigslist.org that have homes for sale, as well as many other real estate websites that might just cater to particulars you may have. Do some research on them. Set up email alerts so that you know when a new house comes on the market that matches your criterion. And be diligent, always. Happy house hunting!