Need advise... Should I buy a home in Round Rock now or wait another year speculating on continued price decline
No one has a crystal ball into the future, if we did, we'd all be rich. It is entirely possible that there will continue to be price declines into next year, but it is also possible that some areas of the country may begin to see prices going up in the next year. Interest rates may also rise in the next year, no one knows. In any event, interest rates are low, housing prices are low, lots of bargains and if you're a first time home buyer you may be eligible for the 8k first time home buyers credit which is set to expire Dec 1st 2009. Keep in mind that if you qualify for this credit you must close on the property by Dec 1st.
If you can find a deal and are planning on staying in the home for the long term, and willing to take the risk that the price of your home may still fall some before it makes any gains, then go for it.
I don't think Round Rock has had a huge drop in prices so if it goes down a little more and interest rates increase it could be a wash.
If it is in your heart to move, then move.
But, if I was a betting man, I would say that any further decline in prices is going to be washed out, and then some, by the rising interest rates.
One years rent at $500 month is $6000.
Substitute actual rent for the $500 and multiply by 12.
If you think you can do better than this number, wait. If not, then buy.
Crystal ball remains fuzzy but...
I think people that are waiting for more price drops at this point are optimistic. Housing numbers are showing the tide has turned for many (most) areas. Sure my area is a Seller's Market and we've gained value through the last few years while a lot of the country dropped in prices, but as ncrealestateguy pointed out, rates are going to rise. When they do, will the rise in interest rates be offset by a lowering in price in your area? Only you can make that determination (in your crystal ball).
hendricus, simple math is not comparing apples to apples due to income tax deductions. And for qualified first time buyers the $8K credit is available until November.
Are you looking for a home or are you trying to be a speculator in the property market?
If this is a short term investment, then I'd stay out of the house market now. Chances are, prices will be flat or declining for the next year or so and then see a very slow gain in the coming years. There probably won't be much market for "flipping" houses any time soon.
If you are trying to get into a home, then now is as good a time as any. You can find good deals and good interest rates. If you are going to stay there 10+ years, it really doesn't matter if prices move 1-2% down because it will have minimal impact on your payments. In the long run, a 1% increase in the interest rates is WAY more important than a 1% decline in home value.
Of course, that is assuming you are in financial position to buy a house. Do you have a down payment? Do you have your credit in good shape? Do you have a steady job? Do you have an emergency fund? You might get a great "deal" on a house at this point, but that won't really matter if you end up in foreclosure when you get laid off or the HVAC system breaks.
I agree with bill1. If you are a speculator, proceed at your own risk. If you're looking to buy for yourself, the low market represents a great buying opportunity. If you wait for the absolute low in the market, you'll miss it. If you buy something now that you like and looks like a place you'll enjoy living in for at least several years, then go for it.
I think I should point out that it is much better to buy a house when interest rates are high, not when they are low. High interest rates depress prices, which is better for buyers. When interest rates drop, you can refinance to a lower rate, but you can't refinance away a high purchase price.
So anyone telling you to buy because interest rates are low is incorrect.
I couldn't agree less. We have gone through a period where interest rates are incredibly low. There is absolutely no guarantee that interest rates will return to these levels once they go up. We hovered around 8% for all of the 90's. Let's not even talk about the 70's when inflation and rates were through the roof. If you buy a house when interest rates are high, you should be prepared to pay those rates for a decade or more.