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Thread: New home buyers?

  1. #1
    On the brink wolfboy's Avatar
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    New home buyers?

    I'm interested to see whether the new tax incentives and buyer friendly market have nudged anyone into the market. My fiancee and I had an offer accepted on a home on Monday. We're first time buyers, and the buyer friendly market combined with the new tax credit played a big part in our decision to house hunt.

    I'd heard throughout our search that it's a buyer's market and great deals can be had. While I feel that's true, it felt like we had to sift through a ton of garbage to find the gem. There are so many distressed homes on the market. I'm not talking paint and carpet or even a kitchen remodel. We seriously considered a home that had taken some bad water damage from a leaking bathroom upstairs. In the end, we decided on a home with no deferred maintenance. The distressed market was a bit too frightening for us.

    I think we questioned our decision to look for a home at different times, but the benefits of buying now versus later kept us going. Has anyone on the board had a similar experience? Have the buyer's incentives been enough to push you forward amidst so much economic uncertainty? If so, what have you seen out there?

    (I hope that this won't become a discussion of the merits of the tax credit and stimulus in general. I think we all know that some people are in favor while others are against. Personal views on stimulus and the tax credit are best left for the Peanut Gallery.)
    How do we know he's not Mel Torme?

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  3. #2
    High five! nate's Avatar
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    Re: New home buyers?

    I think it's always a good time to buy a house as long as you can afford it, have no debt and enough savings to keep yourself afloat for six months should you find yourself without income.
    "Bring on Rod Stupid!"

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    Re: New home buyers?

    My wife and I are looking as well, however we are not first timers, we have to seel our house first. I agree, it seems like 2/3 of the houses are short sale or bank owned, and almost all of those need 20-30k in renovations. Ironically, we looked also at a house that had water damage from an upstairs bathroom too, but figured the process of rehabbing a house with two small children is not smart. We are now focusing on houses that need minor ronovations (carpet, etc.)
    Always forgive your enemies; nothing annoys them so much.
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    Re: New home buyers?

    I'd still wait. You don't have to time the bottom because it'll stay at the bottom for a while.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  6. #5
    Pre-tty, pre-tty good!! MWM's Avatar
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    Re: New home buyers?

    Quote Originally Posted by nate View Post
    I think it's always a good time to buy a house as long as you can afford it, have no debt and enough savings to keep yourself afloat for six months should you find yourself without income.

    Not really. I bought in the peak month in the Twin Cities real estate. If you look at the monthly home values, the month I made my offer was the highest it ever got. But I didn't have a lot of choice. My job was moving me here and I have a family of 5. And I could afford it.

    Now it's almost 3 years later and I'm under-water by a significant amount (and I didn't overspend for a house). Coming out of grad school, I didn't put a lot down, although I did do a conventional mortgage and not one of those idiotic ones you read about. The value of my home has dropped about 20% and I just read at MSN that Minneapolis is the 4th worst real estate market right now.

    So I'm lucky enough to still have a good job and can afford the payment, it was not a good time to buy. But it's going to be 5 years mostly likely until I'm back to even. It could be longer. It's taken all bit of mobility away from me. Coming in, the plan was to stay 3-5 years and then look to see if I could trade in my experience here for something better somewhere else (very common in what I do). I have no options now. I'm stuck and I hate that. And on top of that, it's not all that temporary. It's going to be a while.

    If I had rented instead of bought, I'd be sitting pretty right now. Unfortunately, I didn't have a crystal ball at the time. I knew the market would slow down, but I didn't think THIS would happen.

    So I won't complain too much. I have a good job in a tough economy where I know plenty of people out of work. I'm grateful for that. But I wish I wouldn't have bought.

    The only way I'd advise anyone to buy right now would be if you know that's the place you'll be in for a LONG time, 10 years or more. If you don't have that certainty, stay away.
    Grape works as a soda. Sort of as a gum. I wonder why it doesn't work as a pie. Grape pie? There's no grape pie. - Larry David

  7. #6
    Danger is my business! oneupper's Avatar
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    Re: New home buyers?

    If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
    That mortgage is going to be your biggest asset a few years down the line.
    "A person is smart. People are dumb, panicky, dangerous animals and you know it."

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  8. #7
    Viva la Rolen kaldaniels's Avatar
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    Re: New home buyers?

    Quote Originally Posted by oneupper View Post
    If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
    That mortgage is going to be your biggest asset a few years down the line.
    I'll bite...what is coming...high interest rates? Superinflation? Lost Decade?

  9. #8
    Pre-tty, pre-tty good!! MWM's Avatar
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    Re: New home buyers?

    Quote Originally Posted by oneupper View Post
    If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
    That mortgage is going to be your biggest asset a few years down the line.
    oneupper would know and has mass credibility in my eyes. You are my new hero, BTW. Just thought you might like to know.

    At the risk of getting political (I hope it's not received as such), my guess is that he's referring to the level of deficits we're going to see real soon and the impact that *could* have on interest rates. It's just a matter how much of our debt will continue to be gobbled up by foreign sources. If that well starts to run dry, even a little, then we have to start looking internally to fund the deficit. That could drive interest rates WAY up (like more than we've seen in decades). Having a fixed rate with the rates where they are now might be the only way you can afford to buy that home.
    Last edited by MWM; 02-25-2009 at 03:08 PM.
    Grape works as a soda. Sort of as a gum. I wonder why it doesn't work as a pie. Grape pie? There's no grape pie. - Larry David

  10. #9
    Administrator GIK's Avatar
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    Re: New home buyers?

    Not a first-time homebuyer, but my wife and I purchased a new home in the Fall. It took a few months to find the right place, but in the end, we got a great deal (~20% lower than their already reduced list price...and about 50% below their original listing). First-time homebuyers are eligible for incredible programs right now...that new tax credit would be nice!

  11. #10
    Waitin til next year bucksfan2's Avatar
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    Re: New home buyers?

    MWM I don't know your exact situation but I dislike the way "underwater" is being thrown around. IMO the value of your house is what someone is willing to pay for it. Granted on paper you man not have the equity you want, if you aren't looking to sell then you aren't underwater. IMO equity over the past 5 years was a term loosely thrown around which got a lot of people in trouble. Just today I watched a yahoo video clip of a lady who bought a house for in the 30,000 to 50,000 range, refinanced and refinanced again as her "equity" went up and now owes in the range of 130,000. One plus for the value a house decreasing is property taxes are lower.

    As for interest rates it is inevitable that they will increase. It is yet to be seen whether those rates are kept in check or the spiral out of control. It is getting a little ridiculous that my interest bearing checking account is paying around .014% interest.

  12. #11
    High five! nate's Avatar
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    Re: New home buyers?

    Quote Originally Posted by MWM View Post
    Not really. I bought in the peak month in the Twin Cities real estate.
    We're not really in the peak times any longer.
    "Bring on Rod Stupid!"

  13. #12
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    Re: New home buyers?

    Quote Originally Posted by nate View Post
    We're not really in the peak times any longer.
    Yes, but we're still searching for the bottom.

    Here's the Case-Shiller index. We're getting back to 2003:

    YEAR QTR S&P/Case-Shiller U.S. National Home Price Index
    1987 Q1 62.03
    1987 Q2 64.09
    1987 Q3 65.32
    1987 Q4 66.18
    1988 Q1 66.67
    1988 Q2 69.27
    1988 Q3 70.50
    1988 Q4 71.22
    1989 Q1 72.43
    1989 Q2 74.40
    1989 Q3 75.22
    1989 Q4 75.37
    1990 Q1 75.58
    1990 Q2 76.42
    1990 Q3 75.84
    1990 Q4 74.59
    1991 Q1 73.43
    1991 Q2 74.75
    1991 Q3 75.16
    1991 Q4 74.65
    1992 Q1 74.30
    1992 Q2 75.48
    1992 Q3 75.40
    1992 Q4 74.74
    1993 Q1 74.46
    1993 Q2 75.48
    1993 Q3 76.06
    1993 Q4 75.91
    1994 Q1 76.46
    1994 Q2 78.06
    1994 Q3 78.23
    1994 Q4 77.89
    1995 Q1 77.74
    1995 Q2 79.28
    1995 Q3 79.87
    1995 Q4 79.51
    1996 Q1 79.61
    1996 Q2 81.11
    1996 Q3 81.72
    1996 Q4 81.18
    1997 Q1 81.82
    1997 Q2 83.55
    1997 Q3 84.37
    1997 Q4 84.80
    1998 Q1 85.71
    1998 Q2 88.30
    1998 Q3 90.10
    1998 Q4 90.81
    1999 Q1 92.08
    1999 Q2 94.75
    1999 Q3 97.03
    1999 Q4 98.29
    2000 Q1 100.00
    2000 Q2 103.77
    2000 Q3 106.33
    2000 Q4 107.90
    2001 Q1 109.27
    2001 Q2 112.69
    2001 Q3 115.50
    2001 Q4 116.23
    2002 Q1 118.00
    2002 Q2 122.24
    2002 Q3 126.13
    2002 Q4 128.58
    2003 Q1 130.48
    2003 Q2 134.20
    2003 Q3 138.41
    2003 Q4 142.29
    2004 Q1 146.26
    2004 Q2 152.92
    2004 Q3 158.53
    2004 Q4 163.06
    2005 Q1 169.19
    2005 Q2 176.70
    2005 Q3 183.08
    2005 Q4 186.97
    2006 Q1 188.66
    2006 Q2 189.93
    2006 Q3 188.11
    2006 Q4 186.44
    2007 Q1 184.70
    2007 Q2 182.98
    2007 Q3 179.75
    2007 Q4 170.16
    2008 Q1 158.93
    2008 Q2 155.44
    2008 Q3 150.00
    2008 Q4 139.14


    Thing is its likely to overshoot the other way.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  14. #13
    We Need Our Myths reds1869's Avatar
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    Re: New home buyers?

    We owned a house when we lived in Columbus and it took us four and a half years to sell the thing. All the while we were living in Cincinnati and renting. Once we sold the house we decided to continue renting. Oh, and we lost $80,000 in the deal!

    If you can afford a nice place to rent like we live in, it really beats the amount of house you can buy for the same money. We are paying $500 per month less for a two bedroom townhome with basement and two car garage than we were for our 3BR in Columbus. Not to mention there are no maintenance expenses (they've already bough us a dishwasher, garbage disposal and new furnace/heat pump since we lived here) and super mobility, which is important in a bad economy.

    All that said, homeownership is the way for some people to go, especially if they have children. I think that for too long the NAR has pushed the idea of homeownership as the American Dream and being so much wiser than renting. Owning has been pushed as a risk-free investment and it's not. I used to sell real estate and got out of the business before the bust. I am extremely glad I did.

  15. #14
    Pre-tty, pre-tty good!! MWM's Avatar
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    Re: New home buyers?

    I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.
    Grape works as a soda. Sort of as a gum. I wonder why it doesn't work as a pie. Grape pie? There's no grape pie. - Larry David

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    Re: New home buyers?

    Quote Originally Posted by reds1869 View Post
    If you can afford a nice place to rent like we live in, it really beats the amount of house you can buy for the same money. We are paying $500 per month less for a two bedroom townhome with basement and two car garage than we were for our 3BR in Columbus. Not to mention there are no maintenance expenses (they've already bough us a dishwasher, garbage disposal and new furnace/heat pump since we lived here) and super mobility, which is important in a bad economy.

    And you have to consider what kind of life you want. Do you have to live where you don't want to live just so you can own? Are you spending two hours daily on the freeway? Are you close to babysitting relatives? Your friends?

    Quote Originally Posted by bucksfan
    MWM I don't know your exact situation but I dislike the way "underwater" is being thrown around.
    It's thrown around a lot because its pervasive. A whole generation is caught in a wealth spiral and it ain't pretty.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle


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