Random Thoughts

Let The Home Buyer Be Aware

Are you considering buying a home right now? If so this article may help you value your prospective home in a fairer way, rather than only taking advice from your local real estate agent

Many estate agents are trying very hard to cover over the cracks in a fast falling housing market. Also, many people have speculated on flipping houses and are stuck with homes that are falling below their cost value. Therefore, it is only fair that prospective buyers should be made aware of the future course of house prices if past history is anything to go on.

In my humble opinion this time around it is a great deal worse than past housing falls. Brought on by the greed of a few clever people who devised mortgage backed derivative notes that may have little or no value due to excessive leveraging. This means many banks are in trouble and loans have become difficult for some and impossible for others ... Along with overvalued properties, this is a recipe for folks to tread very carefully. That said, houses will always be a good investment in the long haul but it may take another 12 years before they start to become an appreciating asset again.

In 2006 the housing market hit a peak in most areas. Since then we slowly entered a major housing recession and most houses have become a depreciating liability rather than an appreciating asset that they were from 2000 - 2005.

In a falling housing market there is always a stage of denial by owners and the longer a person waits to find the correct price level to sell, the higher the drop in value becomes until it eventually (18 months from now is my guess) reaches a floor. Then it stabilizes for about 5-10 years with very little increase if any.

People who are thinking of buying a home today should think how much will the house they are considering buying will be worth in a year to eighteen months time if prices keep on falling and adjust their buying price accordingly.

Advanced thinking by today's house buyers will pay dividends, for there is a strong possibility we will find that by the fall, the lower prices we offer now (below appraisal value), are more or less very fair, if not better than the value they will be in the fall.

In these hard times, a quick sale by a buyer is hard to find and thus anyone buying today deserves extra consideration from the seller. In other words this is a buyers market where cash is king. As the old saying goes; money talks and BS walks.

This article is done out of my experience as a financial writer who has a very good 43 year track record of making sense of the extraordinary times we live in. It is written to help both buyer and seller find a more comfortable zone to buy and sell homes in difficult times.

If an owner has to sell then the old adage, the first loss is the best loss may be great advice. Then again, if an owner does not have to sell then in 12 years time the prices will no doubt start to slowly rise again in a constantly changing world. 

31-Mar-2008

More by :  Michael Levy

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