Home Sales Jump: 3 Reasons You Shouldn't

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House prices are not as volatile as stock prices so you don't have to worry about missing the "bottom" of the housing market. Once home prices are at bottom they won't bounce back up substantially like a stock would. The transaction costs are high for home sales versus stock sales and homes also take much longer to sell.
Anyone interested in waiting for home prices to bottom out will have plenty of time to do so when the market has stabalized at the bottom. It's misleading when people try to compare home prices to stock prices because they don't behave the same way.
Buyers, be patient and take your time to buy anything. In a year or less you'll get much more home for your money or you'll simply save substantially on buying any house.
Sellers, you're better off selling now since there are fewer homes on the market. There are a lot of home sellers waiting on the sidelines until next spring when they hope prices will be higher (they won't be higher). Unfortunately for the sellers there are a lot of townhomes and condos due to come on the market at the same time and the increased inventory will put further pressure on home prices to decline! Sellers will get over 10% more for their house now then if they wait until next spring.

DavidB - Seattle of WA 3:28PM November 08, 2008

Can anyone tell me when the stock market will hit the absolute bottom so I can make a ton of money. Or how about when oil will hit its bottom because I can make money there too if I know the bottom. While you at it, can you tell me when real estate prices will hit bottom. Waiting 6 to 18 months to buy a house that I need to live in is like telling me that todays temperature will be between 0 and 100 degrees. No "degree" of expertise with that kind of a prediction. I think its time to buy when the market is trending down and not wait for everyone tell me that we hit bottom 6 months ago. I don't think we'll know when bottom hits until we're several months past it. Just like nobody can pick the bottom of the stock market; I don't think anyone can pick the bottom or the top of anything. Just a few short months ago, all the experts were telling us that we'd be seeing gasoline costing $6 per gallon by Xmas. So much for the experts. I think this is a great opportunity for anyone wanting to buy real estate. Prices are back to the 2003 and 2004 levels so why not buy now? If I'm renting right now and have the means to purchase, why should I try to squeeze the last nickel out of the market when I'm already way ahead. Kind of foolish if you ask me.

Mike of AZ 11:56AM October 29, 2008

There's no doubt that unemployment is going to increase and that's one reason why many people will not be buying a house. Home prices will be decreasing because of the increasing economic pressure on them.
With the increase in unemployment pressure will be put on wages which makes homes at current prices even MORE OVERPRICED!
No one is going to be encouraged to buy a home today because they think their action will help the economy from going deeper into a recession. People will only buy a house if they believe it's fairly priced, they can get financing, and they feel financially secure.
I could buy a home today but I won't because I know prices are heading lower. If my job is in danger of being eliminated in 6 months then I'll be very happy that I didn't buy a home now too! If I were a home seller in this market I would seriously consider discounting my house below current prices to sell it because prices WILL be so much lower in 6 more months!
I'm willing to take the "risk" of higher interest rates because I have no doubt that home prices in Seattle will be significantly lower!

DavidB - Seattle of WA 2:11PM October 27, 2008

Hey all, if you cannot figure out how the Catch-22 works, you need to step back, and rethink. Common1sense seems to understand the issues well.
If no one wants to buy because they all think prices will keep going down, then prices will keep going down.
If no one buys houses, then grannie can't get into her nursing home, or pay for her heart surgery, or ... (put your own scenario here).
If no one buys houses, real estate agents, mortgage people. title insurance employees, appraisers, County recording office staff, refrigerator manufacturers and refrigerator sales staff, furniture manufactures (quite a lot is made in the US by the way), furniture designers, sales staff, builders will lay off carpenters, furnace companies will lay off furnace installers, furnace manufacturers will stop making furnaces ...
And if everyone is laid off,and things are not being manufactured, we'll see huge cost and price increases in a very few short years when we try to catch up.
If you can't see the Catch-22 which is that UNEMPLOYMENT will drastically rise if the housing market continues this negative spiral. Your job is at risk right now.
Tell me again how you'll be better off by waiting a year or so, only to find out that your job lays you off in January or February 2009.
Layoffs are coming to an employer near you. Maybe even your employer.

Rand of WA 8:52PM October 26, 2008

Mike, go ahead and take the plunge and buy a house. While you're at it, buy several if you think they're such good bargains.
My reasons for not buying now are sound and I know I'll be financially better of by waiting. Only people who work in the real estate market and have a self interest in the value of homes increasing will say now is a good time to buy. The smart buyers are waiting and we won't be scared into buying sooner based on arguments about how we're all going to be back in the market at the same time or buy now because interest rates will be higher next year.
What are your reasons for thinking interest rates and home prices are going higher within the next 6 months? There's no sound economic reason to think so. Haven't you heard that we're headed into a world wide recession that may last over 2 years? Haven't you read the headlines about companies laying off employees? Many of these employees will sell their homes or they'll go into foreclosure when they can't make their monthly mortgage payment. With more homes on the market prices will decline.
As I said before, sellers bear the greater risk by trying to get too high a price for their home now compared to cutting the price enough to entice any buyers off the fence to buy now. The smart buyers are going to make a very aggressive offer on anything that they buy now anyway because there is very little competition and so much risk that prices will be over 10% in Seattle within the next year.

DavidB - Seattle of WA 5:54PM October 26, 2008

Gosh, Catch 22, you sound JUST like a have-not, and your scenarios are just what keeps you missing the boat time and time again.
Today's interest rates are likely to be lower than next years, and saving a bigger down payment in a year or two isn't substantial enough for most buyers than just plunging in.
Smart buyers will buy soon, and find the best property because there really is no competition.
The risk today is really equal to sellers & to buyers.

Mike of WA 2:44AM October 26, 2008

Gosh, Catch 22, you sound JUST like a have-not, and your scenarios are just what keeps you missing the boat time and time again.
Today's interest rates are likely to be lower than next years, and saving a bigger down payment in a year or two isn't substantial enough for most buyers than just plunging in.
Smart buyers will buy soon, and find the best property because there really is no competition.
The risk today is really equal to sellers & to buyers.

Mike of WA 2:43AM October 26, 2008

It's not a catch 22 for buyers if they're waiting to buy because the odds are so much in their favor that they'll be rewarded by waiting 6 to 18 months for the real estate markets to settle before buying. The risk in this market rests solely on the sellers. A seller needs to decide if it's worth the risk for them to wait until next spring when prices are done another 10% or more or sell their property today when they can likely get more money for it.
Buyers who wait to buy will end up saving 10% or more on their purchase and when you're spending $700K on a house that's $70K dollars easily saved. Those kind of savings are not to be dismissed as insubstantial! That means you're able to put a higher percentage downpayment on the house and you're financing a lot less money. This principle applies whether you're staying in your house 5 years or 50 years!
Smart buyers are going to wait out this market until it settles and not listen to people in the real estate profession for their self interested advice!

DavidB of WA 4:27PM October 25, 2008

It seems to me that if people are urged not to buy, prices will more steeply decline. And, when the signal is given that the real estate waters are 'safe', then the lemmings all jump back in at the same time, creating a price incline, not decline.
Buyers, you need to choose for yourselves when your time is right. If you're buying a home, to enjoy living in with your family or just yourself, and want to live there for many years,then you are making a lifestyle choice.
Buying for long term is really where most people should be. Buying for short term is for risktakers who can shoulder both financial gain or risk.

Leanne Finlay of WA 1:40PM October 25, 2008