Home Front

A blog about the economy and the Sacramento-area real estate market.

September 5, 2008
Should he buy or should he wait?

 Dear readers, we have work for you today. Mike has written from Fresno asking the question on so many minds in the Central Valley: Should I buy or should I wait?

 As you'll see, he is waiting for the market to go lower. But he seems to want to buy and is expressing the confusion I have heard a lot about who is right in the battle for public opinion about this downturn. I asked him if it's OK to run his letter and seek advice and he welcomed it. So enough from me. Here is Mike from Fresno.

"I am just a little guy, a father of three who listened to the gurus at the WSJ who said, "Ignore all Realtors and their propaganda," during the real estate bubble. 

How happy I am for it is beyond words.
 Of course, I still want a home, and have been salivating as prices have crashed in the Clovis/Fresno area.  However, there still remains a large gap between what the prices should be vs. where they are now based on median income levels (score another victory for the WSJ crew who preached this way of looking at the market when creative loans were all the rave, wisdom aside).

 I also see that following the small reset of subprime loans, there is a virtual mountain  of 5 year resets on the horizon with California of all places leading the way.

Where I am going with this:  I know the tidal wave is coming, a wave of foreclosures, REOs, and auctions that will likely dwarf the subprime reset.  So, I am completely shocked at the number of realty-related talking heads who are staring blank eyed at the masses with giant car-salesmen smiles on their faces saying, "We are almost at the end, the end is in sight, the housing market is stabilizing, etc.."

And here is the punch line we all heard 5 years ago, "This is the best time to buy!"  

Am I missing something?  One group says, "Don't worry," and another says, "Run for the hills." 

My money is on being patient and waiting for the next (and bigger) batch of loans to default, even with the inevitable rise in interest rates over the next year.  My questions to you is this: do you see the conflicting lines of thinking and which do you feel is right?  More importantly, do you think I am doing the smart thing for me and my family by waiting until the first & second quarters of next year to buy a house?

 Thanks for listening, and hopefully responding."

 Mike Car

Fresno, CA

What should he do, Sacramento?

Image: kerincantell.files.wordpress.com

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