"Hell Toupee" wrote...

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

We can wait for 1 or 2 years if we can save more money.

If you can put down 20% so you avoid PMI, and can afford the resulting
mortgage at standard terms (fixed or variable rate, no "interest only"
stuff), go for it.


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.

Not the case everywhere, so it really depends on where you live. If you're
in the Seattle area, housing prices continue to rise at double-digit rates,
so it may be too late for you to break in. In other areas, though, you may
find affordable houses in good neighborhoods.


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.

That's fine if you happen to live in one of those areas where there are so
many houses available. However, again, your LOCAL market is the only one
you need be concerned with. If you live in Montana, Seattle prices or
Oklahoma defaults have NOTHING to do with your decision.


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.

In general, the local market IS a consideration if you intend to move in a
few years. However, if you are buying to stay, a short-term decline won't
hurt so much. If the prices in your area are indeed in a decline AND there
are a lot of houses on the market, just make offers for significantly less
than asking prices. Eventually one of the owners will be desparate enough
to accept!