Why would you NOT buy/own a home now?

[Demigorgon]

Seriously. Part of me thinks that this whole mortgage crisis is being propelled by the media. You could not have a better time EVER than right now to buy a house. Rates are at all time lows, prices are at all time lows. Hell, a lot of the sellers are even paying closing cost so people could get into a house for $0 up front. I dont get it.

[madurobob]

Sure, "buy low sell high" right? All you have to do is qualify. The press isn't saying there are no houses for sale or that prices are through the roof - quite the opposite. The problem is that lots of people were sold homes who should never have been in the market - they simply couldn't afford it. Now the houses are reposessed and back on the market, but banks have tightened up their lending policies so there are fewer qualified buyers.

Its simple supply/demand. Greater supply+lesser demand = buyers market.

Bottom line is that its a great time to buy a house if you can afford it. I've not seen anything in the press saying different.

[dudalb]

Blaming the Media for the Housing Market bust is pretty silly,and shows a real ignorance of the way the Market works.

[JoeEllison]

Originally Posted by Demigorgon

Seriously. Part of me thinks that this whole mortgage crisis is being propelled by the media. You could not have a better time EVER than right now to buy a house. Rates are at all time lows, prices are at all time lows. Hell, a lot of the sellers are even paying closing cost so people could get into a house for $0 up front. I dont get it.

That's a pretty big crisis for the sellers... Every week I see more and more homes foreclosed on, more and more houses for sale that no one's ever going to buy.

The mortgage crisis is a very real thing, and the fact that people are selling at a pretty steep loss should be your first clue. Or, you know, pat a couple more shovels full of sand around your head, just to be safe.

[bigred]

1 - can't afford it
2 - moderate to high chance of moving within next few years
3 - moderate to high chance of layoff or other career concerns

That's not me per se, just saying the reasons I can think of

[CriticalThanking]

Originally Posted by bigred

1 - can't afford it
2 - moderate to high chance of moving within next few years
3 - moderate to high chance of layoff or other career concerns

That's not me per se, just saying the reasons I can think of

Yep.

There are areas where property values will remain flat or continue to fall for quite a while yet. If you need to move (job loss/change, etc), can you take a loss? Even if you could get your money, in some areas the mean time to sale is getting very, very long. Can you afford to have your house on the market for 6-9 months if you need to start a new job in another state in 30 days?

The foreclosure rates will continue to be at record levels for the next few months at least. There will be a glut of houses entering the market.

If you have the spare cash to risk, go for it.

CT

[Huh-What?]

Most people are not looking to buy because they usually have a home to sell themselves. Although it is a great time to buy it is an awful time to sell (in most markets).

If you are a first time home buyer with no property you need to sell it is a great time to buy (providing you qualify which is more difficult now).

[CriticalThanking]

Originally Posted by Demigorgon

Seriously. Part of me thinks that this whole mortgage crisis is being propelled by the media.

Bolding mine.

Do you mean worsened/lengthened by or invented by the media, or something else? There are several large issues that have been discussed over several threads. There is the issue of foreclosures, which are at record (at least within the last 30 years) highs. The word "crisis" has been debated there by many, such as TokenConservative (RIP), though I use the term "debate" rather loosely in his case. Foreclosures affect individuals, neighborhoods, and lenders who now have billions in unproductive investments.

There is also the "credit crisis" eating billions in valuations as well as investors and entire companies. Sure, lenders can put money out there for new loans, but they need to package a large percentage of those loans for investors for cash flow and to spread risk. With questionable valuations and fear of risk, fewer investors are willing to sign up for anything but the best loans.

CT

[Francesca R]

Originally Posted by Demigorgon

prices are at all time lows

Er, what? Is your definition of "all time" equal to "Last couple of years I've been watching"?

[Kaizen]

I would not buy a home with the anticipation of equity growth in the short run.

[Kaizen]

Nor would I buy based on any strategy that relies on equity/ equity positions over the course of at least the next 9-15 months, depending on the local market you're in, with certain exceptions of course. If you don't already know what those exceptions are, then you shouldn't buy based on equity period.

[Cuddles]

It depends where you are, but in some places it's now cheaper to rent than to buy, over your whole lifetime (at least it was, the article I read was a couple of months ago). The main attraction of buying is that although it costs more now, it's cheaper in the long run. If that's not the case, there is very little reason to buy.

[Furi]

1, Can't afford it
2, Not likely to afford it in the near or mid future
3, What if I get stuck with the damned thing and I need to move to get work to pay for the pigging morgage
4, Can't afford it.

I for one would welcome a house price collapse here in the UK, 1st I don't own a house, 2nd maybe rents will eat up less than 70% of my income

[Winston]

Originally Posted by Demigorgon

Seriously. Part of me thinks that this whole mortgage crisis is being propelled by the media.

In the sense that this story is a fall back position for editors (i.e. "there is no exciting news today, lets do a story on housing"), this may be true. Often editorial decisions are not based on what is best for the society, the market, or the most important thing you as a reader need to know, but rather what helps sell papers and therefore advertising.

On the other hand, millions of people are directly effected negatively by the credit cruch and mortgage problems and go looking for such articles and create a "mini-media market" of thier own.

Real Estate classified advertising represents a large percentage of newspapers revenue so any story that effects that market will recieve priority.

[jimtron]

Originally Posted by Francesca R

Er, what? Is your definition of "all time" equal to "Last couple of years I've been watching"?

Good point. Prices are still relatively high. If you go to this article in the LA Times, and click on the graph, you'll see that although LA home prices are down 21% for the year, a steep drop, prices are still more than 50% higher than they were in 2000, and almost 3 times what they were in 1987.

Maybe it's a good time to buy, maybe not. Couldn't prices keep going down?

[Francesca R]

Originally Posted by jimtron

Maybe it's a good time to buy, maybe not. Couldn't prices keep going down?

There is an argument that home prices relative to real wealth (per capita) ought to mean-revert to a stable "equilibrium", with a lot of simplifying assumptions. As far as I am aware they are still above the average of the last few decades. So that isn't a forecast but an indication that they could indeed fall further. There was--after all--a real estate "bubble".

[dudalb]

There are some great bargins out there in housing, the problem is people are just unable or unwilling ,considering the state of the economy, to buy.

[skeptic of oz]

I agree with what one of the earlier posts said about people who shouldn't have been in the market buying houses (in my ltd knowledge of economics and housing)
I live in Australia but from what I've seen in docos (again watching with a skeptical mind!)about the sub prime crisis it seems these people should never have been offered deals in the first place and many people here in Oz are gouign through similar things and as we say they're up "S... Creek without a paddle!" They're finding it difficult to keep up the repayments but at the same time they can't really sell as an escape plan because the houses have dropped in value.

I must say I think that home ownership is good and preferable to renting but by the same token I cringe when I hear the oft-quoted saying about a house being a person's "greatest asset" An investment property can be a good asset but a house that you live in isn't really generating any income. Another thing to consider is the origin of the word Mortgage.
It comes from Latin words that literally mean "engaged until death"
That (to me anyway) says it all.

A good way of looking at business skepticism is to consider one of my favourite sayings and it can be applied to property deals (as well as "family like" cults and the paranormal)"If something sounds too good to be true...
THEN IT USUALLY IS!"

[JoeTheJuggler]

I was certainly able to take advantage of the situation. I've got a very low income, but good credit. (I juggle for a living.) I was able to buy a house with no money down. I even got a rehab loan (borrowed against the value of the house after repairs are made). I did the repairs in less than a month, and moved into a house appraised at considerably higher than my total loan, and my monthly payments are lower than what I paid in rent.

It's a very small house, but it's in a great neighborhood. There's no way I could have become a home owner but for the housing crisis, I think.

[NewtonTrino]

Nice move joe.

[ARubberChickenWithAPulley]

Originally Posted by Cuddles

It depends where you are, but in some places it's now cheaper to rent than to buy, over your whole lifetime (at least it was, the article I read was a couple of months ago).

I think the first part is the key: It depends where you are. I wouldn't touch a house in any very obvious "bubble" market at this point, even as cheap as they are getting. It's just too hard to tell where the bottom is going to be. But there are places in the country that are (at least right now) relatively stable -- e.g. housing prices were not swept up drastically in the bubble, and therefore, will probably not be cut down drastically either.

We recently moved to Louisville, Kentucky, which is a fairly good example. It didn't experience the gigantic boom of other housing markets (I think averaged 3-4% appreciation during the height of the "housing boom"), and as such, does not appear to be headed for a steep decline. Indeed, it is still projected for positive, albeit modest, appreciation (slightly less than 1%). I felt comfortable purchasing a home here. Had I been in Phoenix or Las Vegas or California, I probably would have rented.

[skeptic of oz]

I think this thread is a good example of how individual responses to questions and issues are more valuable than a universal one.
IMO that's what is great about skepticism.
i.e. not having a standardised response to everything.

[Free Thinkr]

1. can't get a loan
2. prices still on the way down

[roger]

Interest rates just spiked.

Which is a bummer as I am a few days away to establishing my 30 day lock for the mortgage I am applying for.

[Delvo]

Originally Posted by Demigorgon

prices are at all time lows.

No, they are not. They're just BARELY a smidgen below their all-time highs. The slight decline in prices lately has not gone on nearly long enough to undo the years of insanely excessive price increases.

Also, some people who live in rented properties (such as me) live in a relatively small space, and there aren't any equivalent properties for sale. Even if owning costs less in the long run than renting for the equivalent place, that difference is undone in the small-scale market by the complete lack of equivalent properties that are available for purchase. Then your choices are to live in the right size of place for a sane price, in which case you must rent, or to insist on buying, in which case you must get a place that's the wrong size and massively overpay for it.

Also, the "long-term" part is important. Most mortgages take almost half a lifetime to pay off, and most people spend a significant fraction of their lives growing up, so there's only a narrow window, after you've grown up but before your remaining years are less than the length of a mortgage, in which buying makes any sense. If anything prevents you from buying within that window, doing so afterward just means you'll still be paying for the rest of your life because you'll never finish. And that's not very different from renting anyway, except that it normally still requires a down payment the size of a car, which renting does not.

[autumn1971]

Before accepting that rental payments are usually far less than mortgage payments for similar conditions, remember that (in USA) interest on mortgage is deductible. Especially in the first few years of a home loan (I believe that, of my first month's mortgage payment, five bucks and change went to principle), this means a huge advantage, at least if one is committed to a particular area.

[tapman]

Originally Posted by dudalb

Blaming the Media for the Housing Market bust is pretty silly,and shows a real ignorance of the way the Market works.

WRONG!!!!

I own several properties, and trade real estate as a hobby. True the subprime lending, along with a bad economy has seriously hurt a small part of the market. However, the media's attention to it actually drove prices of ALL houses down. When people heard how bad the market was they never took the time to learn which part of the market is being affected.
The subprime hit all the lower end houses, the coverage of that problem made even people in the 1mil plus market hold on to their money. This segment of the marked should be recession proof when it comes to their real estate holdings because it traditionally has, however I have two million plus properties on the market currently and have had potential buyers say things like I'm waiting for the market to recover before I buy or sell my current home.

The media is in a way responsible for scaring people.

[Francesca R]

Originally Posted by tapman

The media is in a way responsible for scaring people.

I don't agree with "responsible" in any causal sense really. But do you think there is a problem with media reporting that needs fixing? Or is it just one of those things?

[Huh-What?]

There is a problem with the business of news. The more shocking the headline the more eyes on the medium. The more eyes on the medium the more advertising dollars that can be generated. Shock sells.

Unfortunately some adults seem to have a problem recognizing this and believe everything they read, or hear. Some of these adults hold political office.

I have no problem with a business making money. So I don't know who to blame, the media or the masses that don't want to think for themselves.

I wish more people would exercise their skeptical muscle.

[Francesca R]

Originally Posted by Huh-What?

There is a problem with the business of news. The more shocking the headline the more eyes on the medium. The more eyes on the medium the more advertising dollars that can be generated. Shock sells.

This is no different than the "conflict of interest" that is axiomatic with all forms of trade--the seller wants to get as much as possible and the buyer wants to pay as little as possible. Would you regulate news beyond existing laws?

[jimtron]

Originally Posted by Huh-What?

There is a problem with the business of news. The more shocking the headline the more eyes on the medium. The more eyes on the medium the more advertising dollars that can be generated. Shock sells.

Unfortunately some adults seem to have a problem recognizing this and believe everything they read, or hear. Some of these adults hold political office.

I have no problem with a business making money. So I don't know who to blame, the media or the masses that don't want to think for themselves.

I wish more people would exercise their skeptical muscle.

This is an important question--who's to blame, the media or consumers of media? The media does deserve much of the criticism they get, but part of the problem is that people like crap. If you're in the business of selling magazines, you want to sell a lot of them, and unfortunately, thoughtful, intelligent, balanced content is not what sells the most.

[JoeEllison]

Originally Posted by tapman

The media is in a way responsible for scaring people.

Is the media more responsible or less responsible than all the empty homes for sale, the empty lots, and the new foreclosures I see nearly every week in my neighborhood?

[Mycroft]

Originally Posted by Demigorgon

Seriously. Part of me thinks that this whole mortgage crisis is being propelled by the media. You could not have a better time EVER than right now to buy a house. Rates are at all time lows, prices are at all time lows. Hell, a lot of the sellers are even paying closing cost so people could get into a house for $0 up front. I dont get it.

Because many expect the decline in home prices to continue for a couple more years, which means if you buy a home today, you stand a strong chance of losing value.

Because with large banks failing, such as IndyMac, lenders are tightening up on who they will lend money too, it's not nearly as easy to qualify now as it was a few years ago.

Because prices are not really at all time lows. They are, for the most part, low in comparison to what they were one or two years ago, but that's after a long period of unprecedented home value inflation.

Because a lot of people today are hurting economically, and that's likely to continue. People who were employed in construction are now finding it very hard to find work and keep their own bills paid, and the rising price of gasoline will inevitably put inflationary pressure on everyone else. These pressures create a certain feedback on the economy such that most people should not assume they will be making as much money in the next few years (or that their money will have the same spending power) as they do now.

If you are in a position to buy a home today, it may very well be a good idea, but I would suggest you take your time doing it, do your research, and be conservative in your choices.

[Hamsterfan]

Not buying a house because:
1. even with rates falling they are still too expensive for what you get here in AZ (yeah, I know, cheaper than California, but too expensive for me)
2. probably going to be moving in the next 3-4 years and I don't want to get stuck with it if we are still doing this buyer's market then

[Mycroft]

Originally Posted by jimtron

This is an important question--who's to blame, the media or consumers of media? The media does deserve much of the criticism they get, but part of the problem is that people like crap. If you're in the business of selling magazines, you want to sell a lot of them, and unfortunately, thoughtful, intelligent, balanced content is not what sells the most.

I think a large part of the problem isn't that the media produces crap because crap sells, it's that they produce crap because they're not particularly educated on many of the topics they cover. They can only bring you the thoughtful, intelligent, balanced content if they're capable of recognizing it when they see it.

I'm not saying that reporters, editors and media types in general are stupid or uneducated, it's just that their fields of expertise are not necessarily those that make them capable of recognizing the important facts in any given story.