Pricing of Real Estate is influenced by local and national events.

Our market has a ton of foreclosures. 65% of the current sales are REOs. Many Buyers are on the sidelines holding out for lower prices.

But we have seen a huge increase in the number of offers and pending sales.

While the media is focused on the Fed lowering interest rates, mortgage rates have been climbing.

NAR is predicting 6.3% next year. That could make next years house payment more expensive - even if prices fall.

I'm concerned. The public rushes in to buy at the top - fighting in multiple bids. And at the bottom - they wait for a better time.

What are your reasons this is the time to buy?

I thought you said you've seen a huge increase in the number of offers and pending sales. Sounds like people are buying to me.

Prices are more affordable.

This market will correct itself. When it does, those who buy now may enjoy lots of equity over the next few years.

Cave Man: "I thought you said you've seen a huge increase in the number of offers and pending sales. Sounds like people are buying to me."

Yes, there are a lot of offers and escrows. There has been a surge in the last few weeks. But there is a ton of pent-up-demand. The masses are sitting on the sidelines waiting for better days that they are sure will happen.

If NAR is right and interest rates go up 1 full point from this year's low - that is nearly a 20% increase in payments. If they are buying a 200,000 home this year, the same home next year might be the same price. But the payment will feel like they bought a 240,000 home.

It just kills me to see Buyers rush in to buy at the top and then freeze like a dear-in-headlights at the bottom.

Funny thing is the pros are no better. Look at the banks. The underwriting was very loose at the top. Now that we are down huge (in market value) and much closer to a bottom - they are eliminating programs or making it tougher to qualify.

You would think the banks would be much safer after a 40% loss in property values NOW - rather than at the top.

So it isn't surprising that the public gets it wrong. The media says the market is terrible. The banks are scared. etc....

So how do you motivate buyers to buy - when this is the best time to buy in years.

Because rents are high in my area. If you stay in a newer luxury 2 bedroom 2.5 bath townhouse which rents for $2,000 a year and if you wait a year, you will be out almost $25,000 without building up equity, no tax breaks and not enjoying being a homeowner.

Excellent point, My Agent, rents are going up. I know, because my rental business is booming. That brings me to the next point. Mortgage rates are not going up. Where did that come from? Yes, the fed is cutting rates and mortgage rates are not following at the same order of magnitude, but they are certainly coming down. Any movement upwards is temporary and could be attributed to the popular thought that the fed is standing by to cut rates ANOTHER .75%. Now is a great time to buy (and I am not the cheerleader type). The old quip "real estate; aren't making any more of it" still holds true.

Much more to choose from, easier to negotiate, etc.

Better to buy when there are more sellers, then you get the best price.

People who need to buy a house no matter what don't seem to be too concerned about the resale value when they move if they plan on living there for a really long time.

Your market may be going down and some markets may be going down but not all markets are going down.

There is no "national real estate market" but rather hundreds of smaller 'sub markets & areas'.

Local economic conditions have much to do with these areas and some are experiencing robust sales and price increases.

My local market's average sales price rose 4.4% in 2007 over 2006 which is about typical for this area.

This is where the interest rate opinion comes from:

REALTOR.org
Daily Real Estate News | February 7, 2008
http://www.realtor.org/rmodaily.nsf/pages/News2008020701?OpenDocument

Home Sales to be Flat Before Rise

"The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9 percent range in the fourth quarter, and then average 6.3 percent in 2009. “Affordability conditions are anticipated to rise 14.2 percent this year, permitting more people to become homeowners, but buyers should avoid aggressive lenders and not over-stretch to enter the market,” Yun said. NAR’s housing affordability index is expected to rise from 113.0 in 2007 to 129.0 in 2008."

I agree, prices are local - Interest Rate is National. I think buyers are focused on the past decline and ignoring the fact that we are at historically low interest rates. And that can change.

It sounds so small - just a 1% increase in interest rates. But that is a 20% increase in your payments.

Do you have other reasons that you feel this would be a good time to buy when an area has already seen a 40% decline?

In general, people should never, ever try to time or “game” the market. 95% of buyers are not trying to make a quick buck with real estate, but instead are trying to find a place to live. Between tax advantages and appreciation, real estate invested in the long term, no matter when you get in, you’ll win with real estate. It’s just a matter of fact.

So I guess is now a good time to buy? Yes! Was 2005 a good time to buy? Yes (provided you didn’t get an adjustable rate ARM with 1% payment option)! That is what I’ve always told people when they ask me that question, and I think it’s my best answer.

You buy now because you have a situation that warrants it. Growing family, lower housing expense, an asset that can grow in value over time, and all the reasons you bought in the past. The interest rates are low and you will get a better deal on a home than you would in prior years.

An investor buys now because bank owned properties have equity and the prices are lower than in the past. If they sit and wait they do not make money.

A better debate would be "Why sell now?"

An investor may want to wait and shift their efforts to creating monthly cash flow while in this slump then sell later.

What you people seem to forget is that WHEN YOU BUY A HOME YOU ARE ALEADY IN THE HOLE 7% (between commissions and closing costs)

FOLKS, IT IS IMPORTANT TO BUY AT THE BOTTOM, CAUSE WHEN YOU DO, YOU ARE NOT SELLING FOR AWHILE!!

HOUSES ARE ONLY GOING TO GO UP WITH WAGES (DUE TO NEW LENDING GUIDELINES). SO IF WAGES GO UP 2% GUESS WHAT, SO IS YOUR HOUSE. OH BUT WAIT, LET'S NOT FORGET INFLATION, IF THAT IS 2% A YEAR, YOUR HOUSE PRICE IS FLAT FLAT FLAT!!!!

Joe, can I borrow your crystal ball?

He can keep it. It's full of whine.

Sure,

1. Look at your current inventory levels vs your pending sales, which way are they trending, most of the country they are going in opposite directions
2. Look at average values month to month, which way are they trending, most of the country they are going DOWN STILL.

Wait till they level off for a month and you can be somewhat sure we may have hit the bottom.

If interest rates start to go up, this will cause and artificial bottom because it won't matter if you bought at 140K, cause unless your paying cash, it might as well have been 160K.

There you go... NOW GO OUT AND QUIT LYING TO PEOPLE! LIKE NAR DOES