Is Now a Good Time to Buy?

The average buyer probably doesn't have the cash to gamble on real estate--and shouldn't, at least for now. Income growth has stalled for the vast majority of Americans for the past eight years, and home equity has been vanishing rapidly since the peak of the boom in 2005. (Last month, median existing home prices nationwide fell 6%, to $221,900.) The roiling stock market is hardly a comfort either, as everyone who has peeked at a 401k statement over the past week knows.

The Wall Street Journal currently has a couple articles and editorial columns addressing this question. Here are a couple of my favorite excerpts:

Q: Given what’s happening in the financial markets, is now a good time to buy a home?

A: For some people, yes. If you…

• have access to credit
• have fat cash reserves
• aren’t already over-exposed to real estate
• have a secure job or income stream
• expect to hold the property for at least two years

…then now is an excellent time to buy.

The average buyer probably doesn’t have the cash to gamble on real estate–and shouldn’t, at least for now. Income growth has stalled for the vast majority of Americans for the past eight years, and home equity has been vanishing rapidly since the peak of the boom in 2005. (Last month, median existing home prices nationwide fell 6%, to $221,900.) The roiling stock market is hardly a comfort either, as everyone who has peeked at a 401k statement over the past week knows.

Jobs & job growth were cited as important indicators to monitor. Unemployment rose to a five-year-high to 6.1% in August. Eight consecutive months of jobs losses means many people won’t be able to afford to stay in  their homes. I would anticipate home inventories to remain abundant until the employment situation improves.

Not all news is bad though:

That doesn’t mean that the housing market is doomed; ultimately, it will get better. There’s even an upside: certain markets, particularly on both coasts, were driven up by speculators and became wildly overpriced during the boom. Falling prices means that housing in those markets will eventually become more affordable for average families. Credit Suisse estimates that, nationally, the ratio of median home prices to household incomes will return to their historical average of 2.86 in another 18 months.