A common question I get, especially from first time homebuyers, is “is now a good time to buy”.  This is followed by questions about buying a foreclosure because they are perceived as being a “good deal”. Typically the questions are about real estate prices having hit bottom and the natural human desire to get a “good deal”.

I respond by saying that a really “good deal” is buying a home that is well suited for your needs and well priced.  I also submit that the property that best fits that description may or may not be a home that was foreclosed on.

Sellers of individually owned homes that are currently on the market are largely aware that they are in competition with many distressed (bank-owned and short-sale) properties.

As a result, there are many bargains available on non-foreclosures, which are very often in superior condition to foreclosed homes. As well, individual sellers tend to be vastly more negotiable on terms like repairs, included personal property, etc., when compared to banks.

Now, let's turn to the question of when the best time to buy is or will be. Overall, the best time to buy is the time that makes the most sense for your family's life, plans and vision for the future. This is also a very frequently asked question, though, especially from those buyers and investors who are fixated on market timing, so let's talk about whether the market has hit bottom.  The truth is that it is impossible to know with certainty whether the market is at bottom.

And frankly, trying to time the bottom is a fool's errand on at least two levels. The first?  It's impossible. The second: The desire to time the bottom arises out of a logic flaw called “myopic loss aversion”, which causes consumers to be more afraid of losing money than they are excited about gaining a similar amount of money, or equity.

The fact is this: We all know that prices and mortgage interest rates are very low compared to historic norms.  So what is worse, holding off from buying because they think losing even a dollar's worth of equity would be painful; or, in that desperate attempt to avoid a post-purchase loss in value, waiting so long that prices will go up and experiencing the opportunity cost of lost appreciation they might have realized had they bought a bit sooner.

Studies have long shown the human tendency when trying to time the bottom of the market is to wait too long. When prices hit bottom, everyone wants to buy, sending prices right back up. What’s stopping that today?  The dual problems of unemployment and conservative mortgage lending guidelines.

And therein lies the opportunity.  This might be a great time for your family to buy, if it's a good time in the context of your lives, and if you are comfortable making the commitment to owning a home for a good five to seven years, plus or minus a bit.

With a longer-term view, you can feel much more comfortable that you'll come out ahead on the purchase and don't have to be fixated on whether the value of the home rises or falls by a percent here or there in the very short term. But to do that, you have to let go of the all too currently common fixation on getting the absolute most for the absolute least, and decide to be OK with buying very, very low.

With the complexity in today’s mortgage and real estate market you will benefit from the advice and guidance of an experienced and knowledgeable mortgage and real estate professional.  I’m always available to answer your questions or discuss your concerns.  Just text, call (650 325 7877) or email me for a prompt response.