Is this a good time to buy a house?

[Dottore]

Consider buying some land in a good location.

Lots of people having to sell.

There are opportunities.

[turbo6bar]

Originally Posted by onewhippedpuppy

I'm sure there's a lot of folks that are REALLY happy right now that they invested in stocks as opposed to paying off their house.

Do you hear the words that I am saying?

Imagine the nest-egg you'd be sitting on if you had extracted equity and dollar-cost averaged into the S&P 500 over the last 15 years?

There would be NO nest-egg from this strategy. It is but one facet of this faltering economy. Thrift and prudence are not in style. Perhaps this depression will inject sanity into this world.

[dad911]

Originally Posted by Dottore

Consider buying some land in a good location.

Lots of people having to sell.

There are opportunities.

As a developer, I suggest never buying land unless you are ready to build/develop it NOW, and have approvals in hand. Local governments change zoning laws at the drop of a hat, changing the use, or making it worth less.

[Porsche-O-Phile]

Originally Posted by turbo6bar

Do you hear the words that I am saying?



There would be NO nest-egg from this strategy. It is but one facet of this faltering economy. Thrift and prudence are not in style. Perhaps this depression will inject sanity into this world.

I hope so too, but I fear that the coming wealth destruction due to inflation will preclude this.

There's no point in holding cash when it's losing real value every day and has a "half-life"...

[911Rob]

Originally Posted by dad911

As a developer, I suggest never buying land unless you are ready to build/develop it NOW, and have approvals in hand. Local governments change zoning laws at the drop of a hat, changing the use, or making it worth less.

Hey Dad, a little off topic, but that's where ALL the REAL money in development is?

This is also why a developer MUST have some political connections and a system of networking. Ha, Ha; it's a big boys club you know.

Here in BC the Province took all our land and put it into an "Agricultural Land Reserve - ALR" and they get to pick who becomes a millionare or not? There is a true process to the art of development; it's very much fun, but grey hairs are a prerequisite to the processes. Excellent book written on the topic is "Buy it by the acre, Sell it by the foot"

As for making money in the development game; here's the processes of adding value to land:

1. Raw Land Holding (Agricultural, non zoned for dev) 5% to 20% if lucky?
2. Zoning and Planning stages to DP Permit..... ROI 500% to 800%
3. Development servicing, Sub-Div approvals to Bldg Permit.... ROI 10% to 25%
4. Building Stage, Resale Market..... ROI 25% to 60%

The REAL money in development is taking the raw land and making it into a glorious plan, all approved and ready for construction services. Although a true developer does all faucets, because one without the other usually doesn't work?

I just bought a piece of property that is in the ALR; paid a million bucks for it and my District is taking the property and putting it in their Overall Community Plan (OCP) this year.... the previous owner tried to take the property out of the ALR a couple times over the past 15 years. With the right political connections and knowledge, you track the future prospects and when the right piece of property comes into play; Bingo you grab a winning lottery ticket; Keeping in mind you still have to know how to do all the work; not childs play by any means.

Once the property is put into the OCP as a residential development area, with the City's services right on the doorstep, a school next door and the need for a good, strong affordable housing development.... you can pretty much guarantee that the property will be approved for removal from the ALR. With both ALR and OCP approvals, we can add a simple sub-div plan to the process and the property will be worth many times more than we paid for it.

I'm also a consultant with Genesis Land Dev Corp; which is Canada's largest publicly traded Real Estate Land Developer; they've been doing this process on a much grander scale for years and years; primarily in Alberta. It's a great science of opportunity imo.

[MichiganMat]

Ok, so here's another question:

A home Im looking at had its garage converted without permits. I would like to take that garage back to a non-livable, more car-friendly, state. What advice would you have for trying to buy this place? Are permit violations costly? Time consuming?

- m

[speeder]

I would not think that you would need any permits to convert garage back to its original (legal) purpose. Not like you're building anything, the garage is already there and part of the the original plan I imagine. One does not need a permit to do minor work inside of one's own house or garage.

[hardflex]

I had a conversation last night with a young friend of mine who's decided now IS the time to buy a house. Found a nice 112k house not in need of repairs, he can buy it from the bank for 80k. It's in a high foreclosure area, so it qualifies for assistance from the govt from the new bailout plan of 25k IF it is your permanent residence and you stay minimum 5 years it gets reduced by 50% (12.5k) After 10 years it goes away. So basically it works out that he pays payments on 65k for a 3 bedroom house with 2 car garage. Same payments he's made for a 1 bedroom apartment. He's lined up 2 friends to rent rooms from him.

I did the same thing in college and it worked out for me. I never thought that chance would come back, but here it is.

[Rick Lee]

I also had roommates pay my mortgage for me on my first house. My share of the bill was about $90 per month, which my tax savings easily covered. Sure, I was on the hook for repairs, but sold that house for about $180k more than I paid for it eight years later.

[911Rob]

+2 Very smart boyz!
I like that.
Plus being a home owner, renting to your peeps builds your "self esteem"; you start thinking "Hah, Donald Trumps got nothing on me!"..... that's a very, very good frame of mind to start building in your younger years! Go 4 it!

[Aurel]

Answer to your question: Yes, 2009 is a very good time to buy a FIRST house. Why?

-Interest rates are still very low
-It is a buyers market
-Prices will go up again with inflation
-You can get a $8,000 tax credit on the purchase, courtesy of us the taxpayers.

[Porsche-O-Phile]

You do have to pay that "tax credit" back over the next two years you know... It's really a loan, not a tax write-off.

It MIGHT be a good time to buy, but it depends on your job security first and foremost, which is something very few people have these days, and on prices, which are going to drop another 20% or so in most markets - minimum.

Consider your sources guys. According to the NAR and their ilk, it's never a bad time to buy. The National Cancer Institute could come out tomorrow with a study that links homebuying to rectal cancer and the NAR would still come up with some B.S. about how it's a good idea. A person with a vested interest in making money off of YOU - with no risk to themselves - will always tell you whatever they think you need to hear in order to "close the deal". They don't care about you or your interests - only your money.

That said, if you've got a VERY secure job and a strong stomach right now, and you're planning on holding for at least 8-10 years I'd say it's not a bad time to be looking.

[911Rob]

Consider your sources guys.

Exactly! People are starting to catch on

[Aurel]

Originally Posted by Porsche-O-Phile

You do have to pay that "tax credit" back over the next two years you know... It's really a loan, not a tax write-off.
.

It depends, the way I read it it can be a tax write-off:

"For some, who bought a home in 2008, the credit isn't a credit in the truest sense. As spelled out in the Housing and Economic Recovery Act of 2008, it must be repaid in equal installments over 15 years. That makes it more like an interest-free loan.

But the economic stimulus package that President Obama has signed into law eliminates the repayment requirement for purchases made in 2009, through November 30, provided the buyer keeps the home at least three years."

[Noah930]

From what I've read, that $8000 tax credit DOES NOT have to be paid back for a home purchased in 2009. It was in 2008 that the $7500 tax credit had to be paid back.

The other little caveat is that the credit is only available for families (joint filers) who earn less than $150K. After that, there's some sort of pro-rated credit, up to a max income of $170K. So for those making more than $170K, you're outta luck on this one.

There's also some stipulation that you have to live in the house for some number of years (3?). If you leave before then, then you have to repay the tax credit.

edit: Nevermind, as I see Aurel has already posted those limitations.

[Rick Lee]

I would buy a house tomorrow if I qualified for this $8k tax credit. My wife has never owned a house, but she is subject to my status for that tax credit and I still own a house in VA. Wish there were a way around it.

[Eric Coffey]

Originally Posted by Rick Lee

I would buy a house tomorrow if I qualified for this $8k tax credit. My wife has never owned a house, but she is subject to my status for that tax credit and I still own a house in VA. Wish there were a way around it.

Yeah, the only way around that is if it wasn't your "principal residence" for any of the past 3 years...

However, there are some ridiculous deals out there to be had, especially in the sub-jumbo market (lots of REO's). That, combined with super-low rates and recent FHA loan-limit increases on 96.5% LTV loans (only 3.5% down required) makes for a strong case to buy these days...

Disclaimer: Yes, I am in the biz...

www.sothebysrealty.com
www.ericcoffey.com

[Rick Lee]

If I don't get fired in April as I've been told I will be (though boss asked my address today to mail me new marketing materials. WTF?), I'll be shopping for a house very soon. I really need that interest write off again.

[Eric Coffey]

Also, some food for thought:

Our office tracks all of the pertinent stats and sends us updates every month or so. Here is the latest update on the following data:

For Maricopa County, AZ (Feb `08 vs. Feb `09):

Number of sold properties: 2,487 vs. 4,217

Number of properties for sale: 50,506 vs. 48,194

Average days-on-market: 98 vs. 83

Month's supply of inventory (the big factor): 14.2 vs. 5.9

[Eric Coffey]

Two last tidbits:

1) A good (historical) barometer of a healthy real estate market is the price-to-rent ratio. When you can buy investment property and the rents cover the mortgage payment on a typical 80% loan to value, it is a good time to buy. Most human beings are rational animals: If home prices get too high, many will choose to rent. If rents get too high, many will choose to buy. Not rocket surgery, and prices/interest rates currently favor buying. As an example, even here with Scottsdale’s "lifestyle premium" it is not difficult to find properties today where you can put 20% down and rent it out for more than the mortgage payment.

2) The average homeowner's net worth is 35x greater than that of the average renter.