Is Now A Good Time To Buy? Maybe, Maybe Not.
October 27, 2008This weekend I ran an open house and bumped into a young woman who had been to a few properties before visiting mine. She said that a few other Realtors she had spoken with were all touting “now’s a great time to buy!”.
I quickly congratulated her for having rubbed elbows with some fine real estate salespeople… but hardly real estate experts.
How can one possibly know if it’s a good time to buy if they haven’t asked you one very simple question first? The truth is, the only way it’s a good time to buy is if
- What’s it going to take to get you into this house today??
you plan on holding your property for the long haul, whether you’ll be the one living in it or you’ll be renting it out. It’s an instant litmus test. If you fail the test, you need to reconsider your decision to buy. I bump into people all the time that say they’re looking to buy. The first question out of my mouth is always “how long do you intend to hold the property?” If they reply “two years”, you know what I say? Rent.
Now, let me elaborate a little:
Due to uncertainty in the marketplace, you should feel comfortable holding your property for an appropriate amount of time for investment in real estate to make financial sense. How do you calculate your hold time? The answer is that different areas have different recommended holding times. Let’s say you’re looking at new condos in the Rincon Hill & South Beach area. Well, my personal opinion (and that’s all it is) is that you should be comfortable holding your investment for at least 7 years, preferably 10 or more. In other neighborhoods, ones that aren’t about to undergo massive jumps in inventory levels, you can get by with less, say 4 or 5 years. The bottom line is that it is NOT a good time to buy unless you know A) where you’re looking and B) what your projected hold time could be for each given area.
It doesn’t matter how historically low interest rates are, what conforming loan limits are, what type of market it is, or what anyone is touting (whether sleazily or not). What matters is the individual’s goals and future plans. Only then can you say with confidence if it’s a good time to buy or not. All the other stuff is just noise. Maybe I’m being a little tough on those other Realtors, but people… please! Understand the buyer before you blindly spout off Realtor rhetoric.
As for you, the reader, know your goals. Do you pass the litmus test? If not, please reconsider before just “jumping in”. If you do pass the test, then good for you. Interview some agents and good luck house hunting!
- Only interview agents who truly know what they are doing, like this Top Producer.
Every real-estate agent I have ever met, at every juncture of my life, and regardless of the state of my finances or the economy has told me that “it’s the best time to buy”. Right now. Do it or lose out.
Thank you for your valuable reminder to take stock and see sense.
Hi Tracey – thanks for your comment. While I certainly believe in real estate, investing in it all comes down to the individual and their unique situation. Only when you take the time to learn a little bit about them can you say “yes, you’re primed to be an owner” or “no, based on what you told me you’re better off staying out for now.”
It’s too bad most agents are salivating for the sale rather than watching out for the buyer. Not only is it bad for the buyer, it is a short-sighted business model for the agent and it certainly doesn’t do anything positive for public perception of our profession. There are truly honest agents out there, and it’s always refreshing when I meet or do business with them.
That’s my take.