It's a terrible time to buy a home

A couple of weeks ago, I went on a road trip with my wife and in laws to North Carolina for a week long mini vacation to visit family.  On the way back, we stopped in Nashville for a couple of days just to break up the ride back.  While there, we obviously had to go out to eat; our favorite pastime it seems.  While at a restaurant, I pick up a local free news paper.  On the 2nd page of this is an article titled  'Despite rates, it's a terrible time to buy a house'.  Immediately, my mind hits the phrase 'are you kidding me'?  But, me, being somewhat open-minded to differing opinions, I had to read what he has to say.

I'll spare you the details so here's the highlights;

• His basis for the comment is from a conversation from a principal broker of a commercial real estate firm who is trying to sell his personal home.  (He's obviously having an issue selling the house)

• He touts that sales are up from 2010 by 16% but said sales are 1/2 from what they were in 2006.

• Homeowner equity has appreciated from 3-10% per year since 1991 through 2006 - that's 15 years of growth.  But, during that time, 'it was simple to buy a home'.  You put it on the market, make a profit, invest some or all of the profit in a new house and 'carry on'.  He talks about how easy it was to gain financing and that now, 'there is no money available for down payments'!!!

• He states that money is cheap because there are no borrowers and prices are low because there is no demand for the product.  No equity in most houses and 'almost none of those bought in the past eight years!!!

OK, I get all the facts that today's market is different than in 2006 and even some before.  BUT, none of those topics make any case whatsoever that now is a terrible time to buy a house.  First, there IS money for down payments.  Especially for first time home buyers!!!  Do lenders want buyers to have 'skin in the game' or money at risk?  You bet and I don't blame them either. 

Used to be, buying a house was 'more simple'; Find a house, get it under contract, talk to the loan officer, complete the application, show you have 15-20% for a down payment, get a loan approved....maybe a week or two later since the application has to be reviewed by loan committee....then the appraisal and inspection is done......oh, I forgot to mention that interest rate is 9.75%.  If you were really lucky, you get 9.5% and 1 point.  For the sellers, their house is 'tied up' with the contract waiting for approval during that time so, in the meantime, other potential buyers cannot negotiate on that house until that contract falls through. 

Today, even in these tight times, you do have to still have some 'skin in the game' but for owner occupied houses, 10% down will get you in a house.  You can pre-qualify so you'll know exactly what your costs will be BEFORE you negotiate a deal and the seller is more apt to go under contract since your pre-qualified.  Approval is based on the appraisal and inspection which is done in 10 days and closing can happen immediately after that is done.  Interest rate.....you can negotiate if you've got excellent credit.

Only downside I see is that since buying a house is cheaper than it was in 2006 in both price and interest rate and you won't want to sell the house and ride the appreciation up when the market does pick up.

By the way, the only reason a house won't sell in today's market is because the house is overpriced for the condition it's in.

I'm writing an email to the author of the article to see if he'll gain a different perspective.....again!!