By: Dennis Norman
Dennis Norman
So says Robert Stevenson, a Fox-Pitt Kelton home-builder analyst as reported by John Spence for Marketwatch. Stevenson said he thinks this year will turn out to be a “bad time to buy a home”. “While some suggest that now is a great time to buy a home given low mortgage rates and falling home prices, we believe that for most homebuyers, the opposite is true.” Stevenson said in a report to clients.
I don’t have the credentials or formal training that Robert Stevenson has however I do have 30 years of experience “in the trenches” and take exception to part of his statement. Stevenson says “….some suggest that now is a great time to buy…..we believe that for most home buyers, the opposite is true” and I have a hard time believing this. For starters I assume his statements are addressing the real estate market as a whole….every metropolitan area , large and small, as well as urban and rural areas throughout the country.
I think we have to remember something very important when discussing the real estate market….unlike cars, stocks, oil or gold, real estate is LOCAL. This means there is not a national market or a “market” price like is the case for many other commodities. When the price of oil exceed $100 a barrel recently that applied to the whole country…the price for oil futures was not cheaper in the midwest or more expensive on the east coast. Ditto for new cars as well as many other commodities. Real estate on the other hand is a different animal however. I remember when first entering the real estate business in 1979 when I was 18 and learning about various markets in the city of St. Louis that I was not familiar with since I lived in the suburbs. The interesting thing to me was where I lived values varied by “subdivision” however in the city they varied by block. For example I remember a house our company bought on Utah, the 3600 block of Utah…the hundred block was significant as this block was much more desireable, and brought higher prices, than the 3500 or 3700 blocks. I would say that is local. I could fill a book with other examples, property with a view of the ocean, next to high-tension power lines, etc, the bottom line is real estate is very local and affected by the local market.
Therefore I cringe when I see the media make these blanket statements about real estate. A good example is back in late 2006 when we were could see a slowdown in our local market in St. Louis I remember discussions I had with Marc Mink, the Senior Vice-President of my company, who would talk about how his sister in-law was an agent that specialized in Mercer Island real estate in Seattle and her market was hot as could be. Gee, do you think all the jobs (ie Microsoft, Boeing, Starbucks & Nordstroms) made a difference? Of course it did! It helped the Mercer Island market but didn’t do squat for St. Louis. This illustrates my point that real estate is local so when the media starts making blanket statements, bad or good, about the market, I say ignore them and look at what is going on in “your” world.
I wrote a post a couple of months ago about buying a home in this market and addressed some of the issues to consider. You may want to check it out if you missed it. The bottom line is when it comes to deciding whether now is a good time or not for you to buy a home there are a lot of factors to take into consideration and most of them are “local”…an analyst sitting in a high-rise in Chicago or New York can’t tell you if it is a right time for you, nor can I. You need to look at what is going on in your world and market. If you take things like the following into consideration and base your decision upon your situation in your market you will probably fare better than most…
There are many more things to take into consideration but these give you a few to think about. The main thing to remember is that you need to look at your local market and your situation before buying and decide if it is right. Oh yeah, don’t forget, if you are buying a home to live in that in addition to being an investment it’s primary purpose is to be a home. I wrote a post about this a while back you may want to check out.
Related posts:
- Home Sales in 25 Metros Up 600% in January 2009 from January 2008
- Number of metro areas with declining home prices drops to 199 for first quarter 2009, down from 312 in 4th quarter 2008
- Florida’s Existing Home, Condo Sales Up in November 2009
- New home construction shows modest increase in July; Numbers for 2009 still way below 2008
- Foreclosures and Short Sales Dominated the U.S. Housing Market in 2009