Unless you’re a professional foreclosure investor, on a company relocation package, too rich to care, or desperate to get away from a bad landlord situation with plans to live in a purchased property for the next 7-10 years, now may not be the best time to buy. This is hard to say as a Realtor, but it’s what I’ve been honestly thinking for a while now, especially given the Option Arm/Alt A wave yet to come.
A few days back, a comment from Commerical Lender caught my eye, and he articuated some good resons not to buy better than I possibly could have. In his words:
"1) Nobody but nobody can predict rates, period. and I’m in that business daily. But of course its fun to try.
2) If you are planning to own the home for the long term, then buy the house. If the market continues down and you maintain your ability to pay the mortgage, then fine. Might be upside down for a while, but all’s fine if you are not overextended.
3) Nobody but nobody can market-time, either, any better than flipping a coin. Sometimes you get it right, sometimes wrong, but making investment decisions on market timing is a great way to lose repeatedly. Read the tea leaves, but don’t cross the fine line into market timing.
4) Like Buffet, ‘buy when nobody is buying’, like now and the months to come. You have leverage and could get a comparatively good deal.
5) Don’t let anyone tell you that a mortgage or interest rate is a REASON to buy a home or investment property. We are swimming in a pool of foreclosures for this very reason, people who thought because they could GET a mortgage, somehow they should. Same with rates: a 4.25% or other rate is not in and of itself a reason to put yourself into debt, otherwise you’d go buy 20 Fords or other cars offering 0%. Its a nice to have, but not a reason! My industry is about to get hit for some of this very reason…
6) that said, I just re-upped my lease yesterday. Sitting on cash, no debt, great job (uh, knock on wood), housing in my area coming down… but I feel oddly complacent and somewhat OK with waiting another year. Certainly its a low-risk, sleep-at-night option for my family."
Personally I wish I were renting right now…