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Should I buy in a slowing housing market?
The word is out that the home sale market has changed. Interest rates are rising and, in some areas, homes are selling at a slower pace than they were a year ago. So buyers are finally gaining an edge. And this could be a good time to buy before rates rise further.
An increasing number of homeowners are convinced that now is a good time to sell, so the inventory of homes for sale is increasing. Why are more sellers willing to sell? They fear that the change in the market might lead to lower home prices going forward. Does this mean that you should postpone buying to see if they’re right?
No one knows for sure whether home prices will decrease from recent highs, remain relatively unchanged or continue to rise but at a lower pace as interest rates rise. There’s risk if you buy now and there’s risk if you don’t.
If you postpone your purchase and prices rise along with interest rates, you will pay more than you would today. In a flat market, you could also pay more by waiting if interest rates rise thereby decreasing your purchasing power. However, if you buy now and prices fall, you could lose money if you have to sell before the market cycles upwards again.
At the end of the 1990s, a San Francisco Bay Area couple regretted not buying earlier. They postponed a home purchase for a year so that they could save money to make a larger down payment. In the year they waited, home prices increased so much that the additional cash they saved had no effect on their ratio of down payment to purchase price. As fate would have it, they bought when the market peaked. If they’d bought a year earlier, they would have paid less and would have earned appreciation.
They stayed in the home for about seven years, during which time they remodeled to make the house suitable for their growing family. When they outgrew the home, they sold and moved to a more affluent neighborhood with a better school system.
Even though they’d spent money improving their home, they didn’t realize a significant profit when they sold. Home prices declined after they bought and were just starting to recover when they sold.
Would this couple have been better off if they’d continued renting? Not in their estimation. They enjoyed many happy years living in a home of their own. They were freed of the stress of having to find another rental at an inopportune time. They were free to modify their home at will. They also realized tax benefits and built equity by diligently paying down their mortgage. More importantly, they realized significant appreciation almost immediately on their new, more expensive home.
HOUSE HUNTING TIP: Over the long term, home prices in this country have tended to rise. But, they do fluctuate over time. It’s impossible to time the market. Still, you won’t realize any appreciation unless you’re a property owner.
We’re coming out of a period of extreme appreciation. In many areas of the country homeowners who bought two to three years ago and then sold did very well. But, this is not the norm. Your home purchase decision should not be based on the anticipation of continued appreciation at the recent rate. And, in most cases, it’s not a good idea to buy for the short-term.
THE CLOSING: Even though the market has slowed and appears to be heading towards a more sensible, balanced market, you may encounter competition for well-located, well-priced listings. But, where inventories are rising, you can expect to have more selection and more opportunity to negotiate with the seller–either on the price or on concessions for property defects.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books
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03 Jan 06 10:18 pm
The Real Ralph
For more than a quarter of a century,
Ralph R Roberts
has helped countless families from all walks of life realize the dream of home ownership. A recognized authority on the real estate business, he has taught hundreds of first-time buyers, renters, investors and entrepreneurs how to purchase homes with little or no money down and sell them for a profit through his four books, numerous public appearances, speeches and national media coverage.
Successful Entrepreneur Considered “the best-selling Realtor in America” by TIME Magazine and the number one residential real estate agent in North America, he has sold 50 times more homes than the average, or more than two homes per weekday. Roberts’ success isn’t due to any strategy or program, but to plain, old fashioned hard work. Considered a human dynamo, he regularly puts in 10-to 12-hour workdays six days a week, and has an uncanny ability to grasp the needs and wants of home buyers in the “affordable” range of the market. Other real estate agents often turn away buyers struggling to save for a home or who have credit problems, while Roberts will find ways to help them become homeowners. Whether it’s 10,000 or one million dollars, he gives the same great service. Just ask anyone who has been on board one of the Ralph Roberts Reality L.L.C. vans who enjoyed the convenience of a chauffeured, weekend tour of area homes for sale.
The son of a carpenter, Roberts grew up watching his father transform once vacant lots into bustling neighborhoods. Having witnessed the entire process from the laying of the first foundation stone to the signing of the closing contract, he understood early on all that underlies the fresh ink of that signature – the hopes and dreams of a family setting down roots for generations to come. In his home state of Michigan, he has offered innovative financing options and free services to struggling auto industry workers to protect the local economy in the hope of sparking a chain reaction across the country.
Fundraiser and Humanitarian
What began as an effort to help families buy homes regardless of price range has blossomed, as Roberts is continually called on by community leaders, politicians and heads of non-profits, whom he also serves with the same energy, determination and verve that he brings to his real estate business. He supports several Southeastern Michigan charitable organizations, who have watched their operating budgets surge as a result of Ralph’s fund raising abilities, strong community ties and reputation.
Philanthropist. In addition to regular volunteer work and donations to a number of charities, Roberts saved a piece of Detroit history. In 2003, he purchased the “Big Nail,” a 12-foot, 500 pound nail formerly stuck in the giant Uniroyal tire on Route I-94, for $3000 on eBay. The giant tire was originally built for the 1964 World’s Fair as a ferris wheel, and was later moved to Allen Park, Michigan. But when Roberts learned of the auction to benefit the local historical society, he wanted to keep the cultural icon in his home state. “The Big Nail” now enjoys notoriety at sporting and charity events and boasts its own email address and social calendar. Roberts has also established two awards, given annually to recognize individual acts of selflessness and courage. The first, the “Tough as Nails Award,” is presented to individuals demonstrating perseverance in the face of obstacles. To honor his heroic battle with cancer, Ralph presented the first award to his father. The “Nailed It Award” recognizes those who follow their dreams, reach the stars and go above and beyond. The first recipient was a fourth-grader who organized his own holiday fundraiser to benefit low income families at Christmas. Recently, Ralph celebrated the heroic actions of a Washington teen who reported alarming messages posted on a school chat room, averting a possible Columbine-style tragedy. He hosted the teen and her father during an interview with NBC’s “Today” show at his office in Warren, Michigan, and made them guests-of-honor at the one-year anniversary party of the Big Nail. Author, Teacher, Lecturer and Motivator A nationally recognized real estate, mortgage fraud and sales expert, Ralph has appeared on CNBC and hundreds of radio and television stations nationwide, and in such newspapers as the Los Angeles Times, USA Today, the Detroit Free Press and Realty Times. Called the “Doctor of Motivation” by Realtor© Magazine, hundreds of sales professionals have learned the art of networking and promotion in “999 Bad Ideas and One Nail,” gained greater enthusiasm and improved sales techniques in “Rev Up With Ralph” and how to list to the close in “Walk Like a Giant, Sell Like a Madman.” “A Day in the Life of Ralph” puts sales professionals right into the action as they spend the day shadowing him to learn his secrets and, as in the case of an agent from Mt. Vernon, Ohio, triple their current sales. He also teaches rookies to veterans how to build wealth by investing in single-family real estate for the long and short term in “Real Wealth Through Real Estate,” and teaches buyers, sellers, investors, government agencies and corporations how to spot and expose real estate fraud. He is also regularly invited to speak to international audiences, including the “World Masters of Business” conference where co-panelists included General Norman Schwarzkopf, Robert Kiyosaki and Denis Waitley. But for those who haven’t experienced Ralph’s energy and expertise first-hand, he has reached millions through his books “52 Weeks to Sales Success” (Harper), “Real Wealth by Investing in Real Estate” (Prentice Hall), “Sell It Yourself” (Adams Media Corp.) and “Walk Like a Giant, Sell Like a Madman”(Harper). He has also written a regular column for REALTOR© Magazine.
Family Man Ralph has been happily married to his wife Kathleen since 1985 and has three children. He has many outside interests, but particularly enjoys boating, seadooing, snowmobiling, hiking and herb gardening. He also takes great pride in his backyard gold fishpond and loves playing Monopoly, although he has considerable difficulty finding opponents.For further information about his real estate business, “The Big Nail” or to book him for a speaking engagement,
feel free to contact: Ralph Roberts
Real Estate Expert
30521 Schoenherr
Warren, MI 48088
Ph: (586) 751-0000, ext. 363
Fax: (586) 573-9845
ralphroberts@ralphroberts
08 Jan 06 9:06 am
And Ralph wins the award for longest “comment” in the history of Blogging…
13 Feb 06 3:24 pm
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16 Feb 06 6:14 pm
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06 May 06 4:24 pm
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