Timing the Housing Market

Everyone knows the housing market is in the dumps. For sellers that hurts. For buyers it could be an ideal time to get serious about buying a house. But here is the question. When is the right time to buy? Those who follow the 5 simple steps outlined below will be prepared to buy a home when the time is right.

I recently received a newsletter from one of my favorite stock gurus. His name is Alexander Green, Chairman and Investment Director for the Oxford Club, a private investment club. In the newsletter "Real Estate: Why Greenspan Is Right This Time", Alexander Green comments on remarks made by Alan Greenspan regarding falling home prices. Mr. Greenspan had said that home prices were nowhere near the bottom.

I don't have credentials like Greenspan and Green whom I greatly respect. I am a mortgage broker by profession. Before that I was a real estate agent. Before that my husband was a real estate agent. Together we have more than 30 consecutive years in the real estate business and more than 50 years total.

I mention this because I have experienced every type of market and lived to tell about it.

When we first became involved with real estate, we were living in Long Beach, California. It was 1979 and we were in the middle of the Savings and Loan Crisis, a crisis that was just as devastating to the real estate market as the Credit Crunch we are experiencing today.

Here is what I learned. Timing the market can be frustrating and discouraging. But this is a fact. When the media noise is the loudest and fear is the strongest, it probably means we are near the bottom of the housing crisis. I have seen many people try to determine the exact time to buy a house, believing that they could pick the perfect low point in the market. It rarely worked and most of the time they were disappointed.

Here is what I think. Contrary to popular opinion a house is not an investment. I tend to follow Robert Kiyosaki's view in this regard, the author of "Rich Dad Poor Dad". When he explains in his book that a house is not an asset, he is saying an investment is something that puts money in your pocket. For the most part a home is something that takes money out of your pocket.

However over time, home ownership brings financial stability to a family as long as the mortgage payments are affordable. In addition, if you look at home ownership statistics over a 20 year period instead of a 2 year period, it is almost impossible to lose.

So, here is my recommendation. First stop waiting for the media to tell you it's okay to buy a house. They don't know how to time the real estate bottom or the direction of mortgage rates. Honestly neither does anybody else. Even the so-called financial gurus received a surprise by the magnitude of this present crisis.

Second, start now to investigate your market. Begin looking for neighborhoods that you would like to live in. Study the prices. Use real estate websites to request notification every time a new listing comes on the market. Many realties now offer this service.

Third, on weekends take a little time to relax by visiting open houses. This can be fun. Talk to real estate agents. Get the lay of the land, so to speak. Familiarize yourself with your market.

Fourth, get pre approved by a mortgage lender. The most important part of buying a home is knowing how much you are qualified to borrow. Don't wait until you find the house of your dreams to consider what you can afford.

Fifth, save, save, save. One of the most important reasons for mortgage pre approval is to determine how much money you are going to need for down payment and closing costs. These are important numbers to know before shopping for a home, not after you make an offer. The safest way to eliminate surprises and remain realistic while searching for your new home is mortgage pre approval.

When the housing market is going to turn around is anyone's guess. No one knows.

However you can easily know this. This housing downturn will end. But don't wait to prepare. The buyers who do their homework now by following these 5 steps will be ready to strike.

Good luck.

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