Sunday, December 7, 2008

"Maybe It's Time to Buy That First House." Or is it?

The New York Times and The Washington Post both have opinion pieces about the current housing market.

Ron Leiber, who writes the weekly NYT "Your Money" column, wonders if we are in a "golden age" for first-time homebuyers. He cites declining home prices, mortgage rates at +/- 5.5% nationwide, the possibility that rates will go to 4.5%, and the huge selection of available houses.

He also mentions the need for a credit score of 720 or higher, a 10%-20% downpayment, and a desire to stay put for about 10 years, citing a survey from the National Association of Realtors that found first-time buyers stated they would do so (up from 7 a year ago).

Toward the end of the piece, Lieber warns that new buyers need to imagine what they'd feel like if their house lost an additional 10-15% of value over the next couple of years.

In the Comments section, Lieber is lambasted. The comments come from all over the US and from several foreign countries. The Commenters, including one from this area, offer all kinds of insight, information and extentuating issues that Lieber does not, including info on local and regional bubbles, inflation, price-to-income ratios, price-to-rent ratios, credit issues, unemployment, the recession. A couple of commenters actually wonder if this article was written by a NYT business writer or if it's just for amusement purposes only.

Don't miss it.

The Washington Post has taken a more considered approach to the issue. WaPo offers a "pro" buying piece v. a "sit tight" piece. Both concern not only purchasing a house, but also whether or not it's a good time to buy stocks. There's not a Comments function associated with these articles.

"Pro buying" is here.
"Wait to buy" is here.

For those who visit this blog regularly, you've noticed it hasn't been updated in a couple of days. We had a global collapse. We were finalizing a Q&A with Jason from The Mortgage Buzz when the blog went down; he assured us there's no connection. (In fact, it turned out to be an issue with Blogger, and impacted a random collection of blogs on an international scale.) The Mortgage Q&A will appear on Monday.

Since the blog was disabled, some important economic news transpired, and we're tossing in a couple of links to important recent news, below.

*President-elect Obama, on today's Meet the Press, warns the economy will get even worse.

Locally, Albemarle County has revised its budget deficit projection, again, now up to $7.2M. Libraries and Parks could suffer.


*One in 10 mortgageholders is experiencing some kind of trouble.

*Federal Reserve Chair Ben Bernanke goes on record saying that homeowners and potential buyers need assistance through foreclosure help, mortgage modifications, and Treasury's plan to initiate 4.5% mortgage rates, in order to stabilize the housing market and entire economy. (This is a significant shift from helping investment banks, brokers, insurance companies, possibly the auto companies, etc., which is where the $700B bailout funds have been directed.)

*The US loses 533,000 jobs, the biggest drop since 1974. However, this number doesn't include those who are simply no longer looking for work. Economists react to this news.

*November's retail sales, which included Thanksgiving weekend, of course, are the worst in 35 years. Prices are dropping in the luxury sector.


Anonymous said...

I've been watching several houses in the area which have come on the market since the spring, into the summer and in September. All are between $300-400K. Some have dropped 3-4% in price though they're just sitting on the market. A couple are vacant. I'd have to see a drop of at least 20% all at once, not a few thousand here and there, on one of these properties before I thought the seller was serious. My offer would still be 15-20% lower. And I'd have to have a 4.5% mortgage rate locked in 30 years fixed before I could live with myself for buying in this market. I have the downpayment and excellent credit but I'm not willing to risk wasting money when renting is still so much cheaper.

Darwin said...

Nobody needs to rush to buy around here.

Thomas J said...

I would sooner buy stock in the financials than buy something that requires going into debt for 30 years.