Dear Darrell,
I know you are probably predisposed toward someone buying rather than renting, but it seems to me that buying now is not a good idea since it looks like house prices are still dropping — at least that’s what I seem to be hearing and reading. Why do realtors keep telling me it’s a good time to buy? — Steve A.
Dear Steve,
I’m not necessarily predisposed to sales as opposed to rentals, but there are actually at least a couple of good reasons to buy now. I know there is the general idea that one shouldn’t buy before the market hits bottom. That’s good advice, but the only way to know when the bottom is reached is when one is looking back at the bottom. So it is a guess, and it involves other factors, the most important of which is mortgage interest rates. Even if one were to guess right about the bottom of the market, the interest rates at that time probably would have risen, and the advantage of buying at a lower price would be wiped out by higher cost of the mortgage. I say this with trepidation, but I see signs here and there that things are beginning to stabilize. Also, what you are reading is typically national news rather than local news. In fact, D.C. has fared better than most areas, and the bottom here will be different than the bottom elsewhere.
In the case of realtors who are suggesting it’s a good time to buy, I would quiz them about why they believe that to be a good idea. I’d ask them to go over the numbers with you so you can actually see whether it makes sense for you at this time or not. Also, renting is great in some ways, but it isn’t perfect either. If you decided to buy, keep these three things in mind: location; don’t overpay; buy what you can afford.
Darrell Parsons is the managing broker of the Georgetown Long and Foster office and abides by Equal Housing Opportunity regulations. Have a real estate question? E-mail him at darrell@lnf.com. He blogs at georgetownrealestatenews.blogspot.com.
