Comments on: Why Aren’t You Buying RIGHT NOW? Part 1 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/ Tracking Charlottesville's Real Estate Market since 2005 Fri, 19 Mar 2010 17:02:49 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Learning from the Bubble Blog | Real Central VA http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-25680 Learning from the Bubble Blog | Real Central VA Mon, 23 Feb 2009 03:11:13 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-25680 [...] can be a good time to buy - but not always, and not for [...] [...] can be a good time to buy – but not always, and not for [...]

]]> By: Finding the Bridge between Those who Are Buying and Those who Are Not | Real Central VA http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23947 Finding the Bridge between Those who Are Buying and Those who Are Not | Real Central VA Tue, 27 Jan 2009 22:02:26 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23947 [...] with UVA, others are professionals who are likely to remain in the area for several years, still more are in the position of downtownenvy [...] [...] with UVA, others are professionals who are likely to remain in the area for several years, still more are in the position of downtownenvy [...]

]]> By: downtownenvy http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23665 downtownenvy Mon, 26 Jan 2009 20:56:20 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23665 IMHO, I think that a lot of buyers who are aware of tightening lending standards are even more concerned than ever by true affordability of owning a home here. In the city of Charlottesville, if you look at median prices, and median salaries things here are still way out of logical alignment. Homes here are simply still too expensive. Just because a few sellers "get it" and are able to price their homes appropriately doesn't mean those are the homes that are going to make a great buy for everyone who is still waiting. Personally, we want a 4 bedroom downtown with a yard because we have a large and possibly growing family. We want a house this size because we plan on living in it for at least the next 30 years, and don't feel like doing a small starter home for 5-10 years, and then purchasing a "move up" home. Therefore, we have decided to bank our downpayment, eliminate all debt, and watch for the greatest deal we can get. We know which school district and neighborhoods that we insist on limiting our search to, and most importantly, we are willing to rent and wait. We love our rental home. If we had purchased it instead, we would be paying four times what we pay now. No thanks. You make some great points Jim, but we are still waiting for much lower prices. We truly believe the days of $900,000 family homes in downtown Cville is coming to an end for a while. Just our opinion, but we are willing to hunker down, and hedge our bets. IMHO, I think that a lot of buyers who are aware of tightening lending standards are even more concerned than ever by true affordability of owning a home here. In the city of Charlottesville, if you look at median prices, and median salaries things here are still way out of logical alignment. Homes here are simply still too expensive. Just because a few sellers “get it” and are able to price their homes appropriately doesn’t mean those are the homes that are going to make a great buy for everyone who is still waiting.
Personally, we want a 4 bedroom downtown with a yard because we have a large and possibly growing family. We want a house this size because we plan on living in it for at least the next 30 years, and don’t feel like doing a small starter home for 5-10 years, and then purchasing a “move up” home. Therefore, we have decided to bank our downpayment, eliminate all debt, and watch for the greatest deal we can get. We know which school district and neighborhoods that we insist on limiting our search to, and most importantly, we are willing to rent and wait. We love our rental home. If we had purchased it instead, we would be paying four times what we pay now. No thanks.
You make some great points Jim, but we are still waiting for much lower prices. We truly believe the days of $900,000 family homes in downtown Cville is coming to an end for a while. Just our opinion, but we are willing to hunker down, and hedge our bets.

]]> By: Mark http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23630 Mark Mon, 26 Jan 2009 17:18:42 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23630 Let's be honest- those may be crazy low rates, but the prices from 2000-2007 have been inversely "crazy high." One main reason such inflated prices flew was that the low rates meant monthly payments were relatively low for such a high priced house. Of course rates are low, because nobody's buying. I agree with BB that saying "rates will go back up" is a cheap scare tactic. So what if they do? Home prices sure won't go up any time soon, so it all evens out. Rates will surely go up after 5-10 years, when home prices have declined or stagnated vs. inflation and monthly payments are at an affordable level. We are nowhere near that equilibrium. Let’s be honest- those may be crazy low rates, but the prices from 2000-2007 have been inversely “crazy high.” One main reason such inflated prices flew was that the low rates meant monthly payments were relatively low for such a high priced house.
Of course rates are low, because nobody’s buying. I agree with BB that saying “rates will go back up” is a cheap scare tactic. So what if they do? Home prices sure won’t go up any time soon, so it all evens out.
Rates will surely go up after 5-10 years, when home prices have declined or stagnated vs. inflation and monthly payments are at an affordable level. We are nowhere near that equilibrium.

]]> By: Monday Morning Video | Real Central VA http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23600 Monday Morning Video | Real Central VA Mon, 26 Jan 2009 15:05:19 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23600 [...] Should you buy Right Now? post [...] [...] Should you buy Right Now? post [...]

]]> By: Jim Duncan http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23436 Jim Duncan Mon, 26 Jan 2009 00:54:33 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23436 Further on interest rates - I firmly believe that in a lot of ways they are a gamble. If you lock today, tomorrow is likely to be cheaper and if you hold off, tomorrow will bring more expensive rates. Either way, 5.5% - 4.5% are crazy low rates. Further on interest rates – I firmly believe that in a lot of ways they are a gamble. If you lock today, tomorrow is likely to be cheaper and if you hold off, tomorrow will bring more expensive rates. Either way, 5.5% – 4.5% are crazy low rates.

]]> By: Jim Duncan http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23434 Jim Duncan Mon, 26 Jan 2009 00:49:43 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23434 BB - I'll address the interest rates part first, and return a bit later to address the rest - a lot of what I am reading now is suggesting that interest rates may/will go up later this year. I don't want to instill fear, but do want people to recognize that rates right now are ridiculously low, and that they likely will not last. That suggestion in and of itself should not be the sole reason that someone should buy, but should be <em>a</em> factor in the total equation of whether to buy. BB – I’ll address the interest rates part first, and return a bit later to address the rest – a lot of what I am reading now is suggesting that interest rates may/will go up later this year. I don’t want to instill fear, but do want people to recognize that rates right now are ridiculously low, and that they likely will not last. That suggestion in and of itself should not be the sole reason that someone should buy, but should be a factor in the total equation of whether to buy.

]]> By: Real Cville - The Bubble Blog http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23419 Real Cville - The Bubble Blog Mon, 26 Jan 2009 00:02:53 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23419 Why won't the decline continue? That's what buyers would like to know. Why not? It's a nationwide decline, according to all economists but NAR's Yun. The "three industry" reason isn't holding here, since those industries are not producing buyers to eat away at the two year backlog of houses. 100 more properties came on the market in the past week, and this isn't even the "season." It's a question of supply and demand. There's too much supply now. As we said over there, for a real anti-buying bubble blog,check out patrick.net. They're not us. Btw, the comment over on the bubble blog AFTER the one you post here explains from a buyer's point of view why somebody would wait. Suggesting interest rates will go up is a way to instill fear. Why won’t the decline continue? That’s what buyers would like to know. Why not? It’s a nationwide decline, according to all economists but NAR’s Yun. The “three industry” reason isn’t holding here, since those industries are not producing buyers to eat away at the two year backlog of houses. 100 more properties came on the market in the past week, and this isn’t even the “season.” It’s a question of supply and demand. There’s too much supply now.
As we said over there, for a real anti-buying bubble blog,check out patrick.net. They’re not us.
Btw, the comment over on the bubble blog AFTER the one you post here explains from a buyer’s point of view why somebody would wait. Suggesting interest rates will go up is a way to instill fear.

]]> By: Jim Duncan http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23368 Jim Duncan Sun, 25 Jan 2009 19:39:01 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23368 Bill - Thanks for the comment and for reading as always. I didn't intend for this to be a "great time to buy for everybody" post, but to point out that for some, right now really is a great time to buy. Another point of this post was to encourage people to make their own decisions rather than simply stopping at the headlines. If that decision, after considering buying and renting, is to rent, that's fine by me - that's why I have told many people that they should rent rather than buy. I'm looking forward to writing the post for Tuesday where I try to find a balance (or bridge) between the results of the poll. 70% of respondents think the market is going to continue to decline, whereas 50% of people considering buying are doing so either because of low interest rates and/or because they simply want to own their own home. There's a way to correlate between those, but I haven't quite figured it out. Bill –

Thanks for the comment and for reading as always. I didn’t intend for this to be a “great time to buy for everybody” post, but to point out that for some, right now really is a great time to buy.

Another point of this post was to encourage people to make their own decisions rather than simply stopping at the headlines. If that decision, after considering buying and renting, is to rent, that’s fine by me – that’s why I have told many people that they should rent rather than buy.

I’m looking forward to writing the post for Tuesday where I try to find a balance (or bridge) between the results of the poll. 70% of respondents think the market is going to continue to decline, whereas 50% of people considering buying are doing so either because of low interest rates and/or because they simply want to own their own home. There’s a way to correlate between those, but I haven’t quite figured it out.

]]> By: Bill http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23351 Bill Sun, 25 Jan 2009 18:03:12 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23351 I did get kind of a bad vibe from this post (most of yours I really like) . This article fails to point out the fact that the cost of ownership of a 200k house vs. 300k is tremendously different i.e. taxes, insurance, and utilities (assuming 300k house is larger). When we discount these important factors we can make the numbers look very similar, but in fact they are not.... What is the average heating bill for a year for a person owning a 300k house vs. 200k house?? I'll bet there is a difference. My point is that right now there are a lot of people that only considered the mortgage payment and not these other factors, and are now in trouble because they discount these other factors.. Bottom line..... Affordability is not just calculated by how much the mortgage payment is... Just something to think about. Thanks Jim, Bill I did get kind of a bad vibe from this post (most of yours I really like) . This article fails to point out the fact that the cost of ownership of a 200k house vs. 300k is tremendously different i.e. taxes, insurance, and utilities (assuming 300k house is larger). When we discount these important factors we can make the numbers look very similar, but in fact they are not…. What is the average heating bill for a year for a person owning a 300k house vs. 200k house?? I’ll bet there is a difference. My point is that right now there are a lot of people that only considered the mortgage payment and not these other factors, and are now in trouble because they discount these other factors.. Bottom line….. Affordability is not just calculated by how much the mortgage payment is… Just something to think about.
Thanks Jim,
Bill

]]> By: craigger http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23207 craigger Sun, 25 Jan 2009 02:12:30 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23207 Hard to know where the depthfinder will stop ahead of time. But my anchor to pricing would be to pick a pre-parabolic pricing date and compound 3% inflation. I think this gets us to at least a 20% correction, so 240k pricing assuming a 300k start is not too far off. Whether you are talking about 225 or 240, it's just semantics if the question is to wait or not. I would bet lots of money (in fact, I am by not buying) that prices will be going down as long as we have 2+years of inventory. I think the difference between a very severe decline (-25% or worse) or not is going to be determined by the number of foreclosures we have, which have been below the rest of the country but are starting to pick up. (cough Hauser next, cough). Hard to know where the depthfinder will stop ahead of time. But my anchor to pricing would be to pick a pre-parabolic pricing date and compound 3% inflation. I think this gets us to at least a 20% correction, so 240k pricing assuming a 300k start is not too far off. Whether you are talking about 225 or 240, it’s just semantics if the question is to wait or not. I would bet lots of money (in fact, I am by not buying) that prices will be going down as long as we have 2+years of inventory. I think the difference between a very severe decline (-25% or worse) or not is going to be determined by the number of foreclosures we have, which have been below the rest of the country but are starting to pick up. (cough Hauser next, cough).

]]> By: Jim Duncan http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23199 Jim Duncan Sun, 25 Jan 2009 01:15:15 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23199 Patient buyer - I don't want to convince anyone of anything (but I'm suspecting you know that) - I just want people to make rational decisions for themselves rather than buying into the headlines - whatever they may be. There really are tremendous opportunities in this market right now ... certainly not everything on the market, but enough to warrant consideration. *btw - sorry it took me so long to approve your comment Craigger - Candidly, do you really believe that we'll see price drops of that significance? Patient buyer –

I don’t want to convince anyone of anything (but I’m suspecting you know that) – I just want people to make rational decisions for themselves rather than buying into the headlines – whatever they may be. There really are tremendous opportunities in this market right now … certainly not everything on the market, but enough to warrant consideration.

*btw – sorry it took me so long to approve your comment

Craigger –

Candidly, do you really believe that we’ll see price drops of that significance?

]]> By: patient buyer http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23170 patient buyer Sat, 24 Jan 2009 18:34:58 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23170 Jim, interesting arguments but not convincing... craigger, Great point! Jim, interesting arguments but not convincing…

craigger,
Great point!

]]> By: craigger http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/comment-page-1/#comment-23153 craigger Sat, 24 Jan 2009 15:14:17 +0000 http://www.realcentralva.com/2009/01/23/why-arent-you-buying-right-now-part-1/#comment-23153 Jim, you forgot to add a third example to your post. One that many other homebuyers have available to them throughout the country. A 5% mortgage on the 225k pricing. Because that is what prices have adjusted to in markets that have already corrected. To buy anything now in this region that is not at 1998 pricing + inflation with 3 years of inventory would be moronic. Prices willnot go up as the Cville region trends towards 5% unemployment. Jim, you forgot to add a third example to your post. One that many other homebuyers have available to them throughout the country. A 5% mortgage on the 225k pricing. Because that is what prices have adjusted to in markets that have already corrected. To buy anything now in this region that is not at 1998 pricing + inflation with 3 years of inventory would be moronic. Prices willnot go up as the Cville region trends towards 5% unemployment.

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