Bing Blog

Time to buy a house?

For Sale

So last weekend I was out on the west coast doing whatever it is I do on the weekends, and I noticed something interesting.

There's this little bungalow around the corner from where we live out there. Two bedrooms, but just. One bathroom. It rests on about a quarter of an acre. Most of the front yard is scrub and driveway. Up until last week it's been selling for $1.35 million. That's right. You read it correctly. One point three five. Every time I passed it during the last few months I got acid reflux. How dare they?, I asked myself. And the answer came back immediately via that little, cynical inner voice that is my constant companion. "Because they think they can get it," he said.

He's a pain in the butt, that guy, but I generally listen to him. He's often right.

In the last few weeks or so, I've noticed that the sign, which was all eager and bright and bushy tailed up until then (if a sign can be bushy-tailed), had lost one of its hooks and was now hanging askew. Also, the brochures that had trumpeted why $1.35 million was a great deal for a 500 square-foot abode were depleted, the little bin that held them gathering cobwebs.

Last weekend the sign was gone altogether. So was another one around the corner, which had been offering a slightly bigger cottage for $1.85 million.

I guess my bitter little inner man was wrong this time. Or working on old information.

I'm keeping my eye on that tiny house around the corner.  The headlines are once again a repulsive stew of doom and gloom, recession battling with inflation, thunderclouds obscuring the sun, that kind of stuff.

But one thing's for sure. For those with a little bit of actual cash in the bank, this might be getting within shouting distance of the time to start looking at that house we could never afford.

When that little shack gets to half its original value, I figure it might just be worth a look. It's in a nice, pleasant spot. And you know what they say about location.

11 Comments Add Comment

If "half its original value" means the after-tax house payment (net of interest and property tax deductions) equals the cost to rent, then yes, it might be time to consider buying it.

Then again, the bigger the boom, the bigger the bust... you might consider how the market usually overshoots going up AND going down. You'd be wise to wait until almost no one thinks the bottom has been reached. Historically that's when the smart money buys. And not a moment before.

That little guy sounds familiar.

If my judgement from a far distance is halfway correct, then the housing market still has plenty of room to the downside and those who are looking (and able) to buy should be patient and wait somewhat longer. It is tempting to step in now and say, who cares if prices fall another ten percent, buying now will still be a steal. But I suspect that worse is coming for debt-ridden homeowners and we will see another leg down in house prices. There will still be plenty of time to pick a nice piece of land.

Yeah, I've been eyeing my own little slice of heaven on the beach too. Problem is that in order to afford it, I've got to unload some other property. If the amount I can get for that other property keeps decreasing then I'll no longer be able to afford that slice of heaven. So, the Sysiphean endeavor continues.

I bought my small crazy overpriced home for an insane amount five years ago and it keeps going up...Here in Canada there seems to be the belief that this party will never end. Ha! Someone send greenpoon or persinke or whatever thier names is to burst this bubble! Old white guys are great at killing a good party!

Forget the market. Either you have the money to buy or you do not. Waiting for prices to drop is what poor people do. If you are poor, you should not be looking at expensive properties in the first place. Save your time and stop window-shopping.

Once again Yadgyu takes the award for the most ill-tempered and condescending correspondent. Keep 'em coming, Yadgyu! You never fail to satisfy!

Hey, one thing not mentioned that figures into this equation. Interest rates on mortgages. Hey if you can afford it all in one lump sum, GREAT! Get it while the gettin's good. Even if I were in that pool, I'd opt for a mortgage for the tax break. For the vast, vast, vast majority of people, even if you try to time the bottom of the real estate market, you also take the chances that interest rates may be higher thereby negating any savings you may have happened upon. So live your life, make your best calculated moves but don't get hung up in the determination of figuring out when the market is at the 'bottom'.
PS. My cottage on the river is a little slice of heaven until summer rolls around and the upkeep starts on mowing a few acres, cleaning up beaver downed trees and the lodges, getting the gardening beds back in shape from winters hell, but hey, the view is sweet during the breaks and at totty-time...

"Hey if you can afford it all in one lump sum, GREAT! Get it while the gettin’s good. Even if I were in that pool, I’d opt for a mortgage for the tax break." - Posted By Jessica, St. Cloud still cold as hell, MN

With that mentality, you will never be "in that pool".

Rich people do not waste money making other people rich. People with real money know that the tax breaks from mortgages do not outweigh the money you pay interest over the lifetime of the loan. Houses rarely help to make people rich because people are not smart about money. The fallacy of the mortgage tax break is the reason why Americans remain in debt until they die.

Do you how many people wish they had the money to buy their houses outright? If I could buy my house outright, I would not have to pay a mortgage. I would only have to pay taxes and upkeep. If I have a mortgage, I have to pay the mortgage, taxes, and upkeep. I could use the money that I am saving by not paying the mortgage and invest it to make more money.

I am happy that some people are not rich. Money in the hands of a fool is worse than a gun in the hands of a murderer.

Waiting for prices to drop is about as effective as waiting for rates to come down.

Both are impossible to predict.

It's like shopping around for that super great deal on your mortgage. The more you shop, the better the chances you will actually get hosed.

For the person in that "pool", the AMT will more than likely eliminate any itemized deduction tax breaks.

The real estate market is going to turn around when the cost of buying is less than cost of renting. We could very well see that rent will eventually rise and then it will make sense to buy a house again. That might be a few years from now. Something in the near future that I see could help the real estate market is inflation. I haven't seen or heard this anywhere so I may be going out on a limb here. Once people see that the cost of living is rising. They may very well be considering to get a fixed rate mortgage to lock in their cost of living for the next 30 to 50 years as far as shelter is concern. Another thing I haven't been hearing is about extending the mortgage terms. A 50 year mortgage for instance, will solve the monthly payment everybody is having trouble with by lowering it. The bank will make more money in the long term in form of the interest. Longer mortgage may make people less likely to move, therefore, getting the speculation out of the real estate market...more or less. I just wanted to get these points out there for people to starting thinking about it. Eventually making its' way to the banks where they will really start to help out their customers afford their mortgage. I though by writing to your blog would be the best way to get the word out, because I wouldn't begin to know where to start to getting these ideas out to the right people. Less from going to banks and start telling them to get their financial arms to start going out there and setting up the things they need to help out their investments and customers.