’m hearing the question all the time right now from virtually all of my customers...”Is now a good time to buy?”  Let me explain to everyone here that I do not possess a crystal ball.  There are so many ways in which this market could play itself out that I can’t really begin to address them all, although I will attempt address some of the bigger issues. 

Since all real estate is LOCAL, I will begin with the following caveat:  I am from New York.  More specifically I live and work  in the lower Tristate area in the highly prized (and priced $$$) area of lower  Westchester, NY.  The center of my business is in White Plains, NY where I work and live.  So if you are thinking of moving somewhere within the Tristate area, this post applies to you.

It is Definitely Time to RENT if....

First, if you are relocating within two years and are weighing whether to buy or rent for a couple of years - please don’t buy.  RENT.  This advice holds unless you are in an exceptionally appreciating market. The market we have had for the past five years was decidedly not normal.  People made money buying junk and holding it.  In many ways it was “easy money.”  But all good things have to come to an end  and that market is gone; the mentality that went with it has to go as well or you could get burned.  Don’t forget that you have to factor in transaction costs, so that if you buy and sell at the same price, you still would come out behind. The other problem is capital gains. Should you make money on the transaction and sell less than 18 months after the purchase, you could take a tax hit. You really need to crunch the numbers on a short-term purchase, but for the most part, right now, it just isn't worth it. 

It is Definitely Time to BUY if.......

If you have a long-term time frame of  five  years or longer - there is no need to put off a purchase, in fact it might be foolish to do so.  People who try to  “time” the bottom of the market so you can get  a “steal” are generally the same people who end up renting for life.   Ever try to judge the “bottom” in a stock sell off?  Almost impossible. You only see the “bottom” through the rear-view mirror - when it is too late to do anything about it. No one is “making” any more real estate. Right now, the buyer has more negotiating room then they have had for years. Why waste the opportunity? Particularly if you know that over time you asset will appreciate.

Here is  common situation that hangs up a lot of buyers with long term goals.... 

If your dream home looks like this: 

But what you can afford looks like this:

You will need to better define your needs vs. your wants a bit better.  I have had many a family in my office telling me what they “must have” and I find that they are describing a house about $200,000 more than they can possibly afford.  Folks....please stop shopping with your eyes!  With McMansion fever going strong it is very hard to convince people that “less is more.”  But that is often the case.  Do you really think it is in your best interest to stay in a 1000 sq.ft. condo or coop and not buy a an 1700 sq.ft. houe with a yard because you really WANT a 3000 sq. ft. house with a bigger yard.  Even in a declining market you may have to wait a loooong time before that dream home becomes affordable - IF it becomes affordable at all.  Five years isn’t all that long.  I strongly urge people who feel like this to adjust their expectations, buy in where they can.  Most find that that extra 700 square feet, that small yard and a basement and attic space that can be finished goes a long way to making their lives far more comfortable.  It may not be their dream home, but it is vastly preferable to condo or coop living once there are two or more children in the family.  

 Bottom line: If you are bursting at the seams, but can't yet afford your "dream house" it is STILL a good time to buy a more modest house.