April 16th, 2010 8:04 AM by Lehel S.
This was partially written by someone else and I peppered my own opinions here and there.
Recently there was an article in a newspaper about the pros/cons on whether or not it's the time to buy a house. Reasons to buy? High inventory, low prices, low interest rates, etc. Reasons not to buy? Prices still in decline, renting isn't a crime, financing is more complicated, etc. Good reasons, but what about addressing the real reasons that people buy and don't buy? What if, instead of providing biased opinions from those on each side of the argument, we broke it down and really made it easy to figure out if it's a good idea to buy or not to buy? What if some people don't really buy because of interest rates after all, and what's all this garbage about a market bottom? What if people buy because they're confident and don't buy because they're scared and the rest of the reasons are just fluff? If people buy because of interest rates, why did anyone buy a home from 1980 to 1983? Interest rates aren’t the key, market indicators aren’t the key, lifestyle accomplishment is the key.
First, let's get this "market bottom' theory out of our way. Market bottoms are only easy to identify once they've happened.
Why market bottoms aren't too cool? Because when they happen, there's usually too much fear in the market to encourage buying. What is true for the stock market is also true of the housing market. Market bottoms sound great in theory, but they're just too darn hard to identify while they're happening. Instead of an identifiable bottom, why don't we just focus on a bottom trough, a trough that we're certainly in right now.
Movements to either side of this current point are going to be prevalent, which is why we'll see positive housing numbers one quarter, and negative housing numbers the next. We're in a sideways market, and I'd suggest we're in a market bottom that we'll stay in for another year or so. As long as REO and Short Sale properties dominate the sales statistics, we won't see a true recovery towards a "normal" market. Jon Stewart fans, mock Jim Cramer all you like, but he had been saying that the time to buy a house is before June 30th, 2009, and he's probably going to prove to be right on the mad money with that recommendation.
So if we're in the market, why buy? Do you believe the market bulls or bears? Do you focus on the positive signs, or are you negative and you prefer to side with the cons? Go right ahead and rent for the rest of your life, and maybe, just maybe your landlord will let you paint a white wall tan. If you ask nicely. What if you just let the 5 reasons to buy and the 5 reasons to wait cancel each other out, and buy for lifestyle. Housing bull? No thanks. Call me a lifestyle bull. A lifestyle bull in a confidence sapped china shop. Buy because that house you grew up admiring just came on the market. Buy because you‘re confident in your job status, and that new development just slashed their prices 35%. Buy because your neighbor cuts his grass at 7 am on Saturday mornings.
Buy because you’ll walk a little taller if you live on that street where the Maples high overhead reach across the street and shake hands with each other Above all, buy because you want a better lifestyle for you, for your friends, and for your family, and the purchase you’re contemplating allows you to more easily obtain that lifestyle.
If you need fundamentals to buy, realize that interest rates are unbelievably low and inventory is unfortunately also unbelievably low. Realize that whether or not the market creates an identifiable bottom, you're not going to know when it does. If you're hoarding cash hoping for market bottom balloons to be released from the pink unicorns soaring in the sky, I hope you have fun swimming and boating in your money vat like a decidedly uncartoonish Scrooge McDuck.