MQ wrote:

Hi,

Last month I told my wife I was sick of wasting money on the monthly
rent, so we planned to buy a house this year. But my friend told me
it's not a good time since the interest rate is still high. He showed
me the market and some indicators http://StockQ.org/

We can wait for 1 or 2 years if we can save more money. How do you
guys think?
Much thanks.

Housing values are dropping steadily across the US. We are only at the
beginning of a long downward trend. We have just come out of a several
years-long housing boom, so it'll take several years to wind back
down. Most of us older than thirty have lived through this type of
real estate cycle before.

The latest reports are that half of the homes for sale in the US are
unoccupied. That's a strong indicator that our housing stock is
seriously overbuilt. As demand continues to drop, so will prices. As
adjustable mortgages reset, more homes will go into foreclosure,
putting even more houses on the market and pushing prices down
further.

If you buy now, the odds are pretty damned good that the value of the
home will continue to fall for at least a few more years. So you'll
have paid more than the home is worth. It hurts to be making monthly
payments on a big loan for an asset that's worth less than you owe on
it. And if you end up having to sell it, you might find yourself
forced to bring cash to the closing to pay the difference between what
you sold the house for and what you had left owing on it.

It would be prudent to wait at least another year or two. It's typical
now to be able to rent a nice home for a good bit less than you'd be
paying to own it. So - save the difference between what you're paying
in rent and what you would be paying on a mortgage and earmark it
toward a bigger down payment on a future home that will also cost you
less.

You may find the Housing Bubble blog helpful:
http://thehousingbubbleblog.com/

HellT