Ten good reasons to buy a home

According to the Wall Street Journal. The author repeats what was said here last week: now that Time Magazine has come out with a cover story saying you shouldn’t buy a home, the market’s just about hit bottom. Time, after all, ran a cover story urging homeownership in 205, just when the market was topping.

Apparently there are a lot of buyers who agree that it’s time to buy. Fudrucker and I were just discussing this morning that it’s time (past due, actually) to invest in a customer tracking system. And, charming and talented as we are, surely not every would-be buyer is choosing us.

From the Journal:

But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.


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6 responses to “Ten good reasons to buy a home

  1. out looking in

    Oh- so you read it there and NOW YOU AGREE? I guess my advice is just chopped aligator liver!

  2. Retired IB'er

    The fundamental question for real estate in the N.E. (NYC metro area) is whether the stock market will continue to be levitated by FED policy. If the DOW drops significantly (i.e. 8,000 to 9,000) housing prices will drop significantly from where we are today as well.

    Moreover, the vast majority of sellers still have their houses priced well above current market. That continues to suggest to me that the vast majority of sellers in the NY metro area HAVE NOT capitulated and so applying “Time Magazine” bottoming logic clearly does not apply in this market. FL or AZ or NV most likely, here, no way…

  3. atticus

    Then I guess we don’t need this:
    Momentum Gathers For A New, Massive Bailout Of Homeowners

    Given that mortgage rates are at historic politically manipulated lows, I would think prices today are pretty much a ceiling.

    I wonder what home prices will do when interest rates ramp up big time?

  4. SouthernDiscomfort

    Considering the fact that the average homeowner stays in their house 7 years, and we are “4-5 years into the biggest real estate decline in modern times” does not provide me with much confident. If I buy a home, it will increase in value if I wait long enough. Typical real estate agent line. Long enough in the majority of cases is 7 years, not 20 or 30 years. Since the current disastrous real estate market is 3/4 of the way to 7 years, its unlikely that people who bought five years ago have held their home long enough not to worry about appreciation.
    The current real estate market is not going to change drastically for another 3-5 years. If there is another 9/11 type event, or worse, some middle Eastern disruption or fear of disruption of oil, the economy will along with real estate will tank further. Add to the reality that the current historically low interest rates have had no positive effect on real estate prices, the prospect of 6, 7 or 10 percent mortgage rates will only further depress real estate. Instead of everyone looking at the current real estate situation as a temporary, burp in an otherwise upward trend line, I propose that what we have experienced is a sea-change in the real estate market that will not revert back to the previous normal most current real estate professionals know and love. Real estate has to be viewed as an expense, and not an investment. At best you will get back what you have spent on your primary residence. Remove the real estate commission and lower your expenses. In 5 years this blog, the MLS and the retail real estate business as we know it will not exist. The housewives and kitchen brokers who have been lucky enough to survive in the real estate game milking sellers will no longer exist. Talk to a travel agent see how they are doing compared to 5 years ago.

  5. Anonymous

    @ Southern Discomfort

    Whatever happens to real estate, many of us will bet that this blog will be around in 5 years!!

    Meanwhile, leave us be, we need to pattern and zero to get ready for the upcoming turkey and deer seasons. 🙂

  6. Anon E. Moose


    I agree that a customer tracking system would be a boon to activity. Imagine if instead of metered access to information through paid members of the guild, buyers could cross reference factual historical data (not ‘refreshed’ DOM; expired/withdrawn/relisted offerings; asking price history; etc.), not to mention a database of inquiries and offers (instead of “There’s someone else just comping to buy this [overspriced shack that’s been for sale for two years] if you don’t offer above listing price today!”).

    Sellers don’t appreciate that what they percieve as protecting their price is actually paid for in time to make the sale. It’s highly likely that they’ll have to lower their price later anyway.

    If a professional or group thereof wanted to do a service to buyers as their fiduciaries, I think that’s what would be developed. Instead we (most of us outside of Greenwich, CT that is) get is NAR members pretending to represent buyers’ interests.