Is it the right time to buy, or will prices go lower?
Buyers have choice, leverage
Will prices fall further or should you leap at a deal now? Yes. To both.
If that sounds confusing, such is the state of the real estate market some 30 months into a slump, with no obvious end in sight. On one hand, record foreclosures, tightened lending, and uncertainty about housing values are weighing down the market, and on the other, falling prices, low interest rates, and anxious sellers are presenting opportunities not seen in years.
So it's understandable if buyers are racked with indecision.
"Whatever side you're on, the key is to know whether or not you're the 'right' buyer for this particular market," said Greg McBride, a senior financial analyst for
Buyers today also need to have some skin in the game, he said, meaning that enough money for a down payment, proof of income, and strong credit are no longer a bonus, but a must. Though first-time buyers have a slight advantage in this market because they don't have to sell a property, McBride said purchasing is a more cash-intensive process now for these buyers than it was just nine months ago because mortgages are no longer as easy to come by.
"Even up to a few months ago, if you could breathe, you could get a mortgage," said Adam Rosenbaum, a realtor at Century 21 Adams in Arlington. "With all the subprime fallout and the rising debt, that's no longer the case."
Now, Rosenbaum said, many of his clients - faced with having to come up with heftier down payments - have begun inquiring, not about square footage, but how much he thinks a particular property will appreciate.
"I'm not a prophet, I'm a realtor," he said. "I tell them it really depends on why they're looking to buy a house in the first place. Some people have to move right now. Others don't. While I anticipate prices will come down a bit more, I tell my clients if they see the right place right now, and have the down payment, buy it. It's not going to change your mortgage payment all that much in the long term. And if you're planning on staying there more than five years, you're probably not going to lose money."
Tony Annino of Belmont has seen about 50 properties in his home search and though he's been interested in a few places, he's in the "wait and see" camp.
"My fiancée and I have our eye on three places in Waltham right now. We've visited some of them two or three times and would probably make a move if the prices fell a little more," he said.
Still, Annino, who is renting in Belmont now, said his job in the finance industry and his reading so much about the economy and the housing market have made him nervous about buying now.
"I'm definitely cautious," he said. "We're looking to buy a place primarily for the equity. I don't want to buy something if we're in the third inning of a nine-inning game here. If we want to upgrade in a few years, I don't want to be selling the property for the same price I paid for it."
Jon Gollinger of Accelerate Marketing Partners, a residential real estate consultancy, said the market is still seeking a bottom in terms of single-family homes and condos but the seeds for a full recovery are being planted now.
"When we hit bottom, I bet we'll see price points around 2004 levels, plus or minus, depending upon the neighborhood or region," he said. "After that, the market will begin to recover."
Still, it's difficult to predict when the market will actually reach the bottom, according to Preben Christensen of RE/MAX in Northborough.
"Buyers should know they tend to be in a better negotiating position if they buy right before the market hits bottom," he said. "The sellers are willing to negotiate on the way down, but once the market goes back in their favor, not as much."
Right now, with the supply of unsold homes on the market, buyers have a lot of leverage in negotiating prices and are being offered all kinds of seller's concessions, from free TVs to six-month condo fee waivers, Christensen said.
Kimberly Richman and her husband recently closed on a two-family home in Westborough after a six-month search and found they were able to negotiate not only a lower price, but also to have the seller pay a portion of the closing costs. "We had enough money saved for the down payment so we didn't feel we needed to wait any longer once we found the right place," she said.
Then there is Michelle Peck of Foxborough, who just started looking for a home. She said she's neither encouraged nor deterred by the current market.
Married with two children, she and her husband plan to upgrade to a home with more space and a playroom for their young children.
"The next house we buy will hopefully be our last. So, for us, it really doesn't matter whether the market is up or down," said Peck. "We may get our next house for a lower price now but we're also going to fetch a much lower price for our own house when we sell it. It all evens out."
Correction: Because of a reporting error, the name of Accelerated Marketing Partners was incorrectly spelled in a Boston Sunday Globe Real Estate story on home buyers.
