For Sale By Owner Sign Says it All

When you can't get along with your neighbor, get a sign made, plop it in the yard, and move on.  It's that simple!

Buy Now!

Based on being a "natural contrarian", Brett Arends is giving the buy sign for housing.  He's not suggesting that homes have bottomed in every market, but does believe it's a good time to look in many, especially since mortgage rates remain extremely low.

Needless to say each purchase / deal has to be evaluated on its own merits, but I do agree with many of the points that Arends makes.  Even if homes haven't quite bottomed in your market, most likely they have already tanked from boom highs.  Furthermore, the glut of inventory is your friend as a buyer.  Even if homes in your market stand to fall another 10%, what value does this create for you if interest rates move a point higher and tightening supplies force you to submit a strong offer to compete against other competition?

In our own experience in the Phoenix, AZ housing market, it has been tougher to find our opportunities this year due to the huge increase in investor activity.  Even though values have trended lower in some segments of the market, the increased competition has led to higher purchase prices, a decrease in negotiation leverage, and smaller operating margins.

As always, run the scenarios before you make a blanket assertion on whether or not it's the time to buy, since value is not always what it appears to be!
 

Rethinking Homeownership?

A Business Insider article labeled this recent Time Magazine cover story as, "great news for housing market".  Needless to say, you're out of your mind to use a media cover story to guide your home-buying decisions.  There's no doubt that we can outsmart ourselves by complicating matters, but we can certainly do a similar disservice by taking too simplistic of an approach.

Media and sensationalism go hand in hand these days.  These dramatic statements sell product and help the bottom line.  In reality though, if you have the ability to purchase a home (especially if you're a first-time home buyer), should we really believe that buying a property discounted 50% plus at 3.5% - 4.5% interest rates doesn't make sense?  I'm obviously painting with a broad brush and can't speak to the validity of every opportunity in every market, since all deals aren't created equal and there are plenty of homes out there that still shouldn't be purchased despite how far they have already fallen.  However, there are definitely some great housing opportunities out there carrying extremely affordable price tags.  In fact, some price points make it much cheaper to own rather than to rent even when factoring in insurance, property taxes, and maintenance.

So ... no, I'm not rethinking homeownership and neither should you.  The housing picture remains grim, but don't check your brain at the door and get absorbed in this nonsense.  What's next, "Rethinking Investing?".  We all know that financial independence comes from a working wage, right?  Just ask Bill Gates, Warren Buffet, and nearly every other financially well-off individual.

CoreLogic: Home Price Index for July 2010

CoreLogic reported their home price index to be flat for July, 2010 and noted underlying weakness in housing as a growing number of markets are declining since the expiration of the federal tax credit:

SANTA ANA, Calif., September 15, 2010 – CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released its Home Price Index (HPI) that showed that home prices in the U.S. remained flat in July as transaction volumes continue to decline. This was the first time in five months that no year-over-year gains were reported. According to the CoreLogic HPI, national home prices, including distressed sales showed no change in July 2010 compared to July 2009. June 2010 HPI showed a 2.4 percent* year-over-year gain compared to June 2009.

CoreLogic made it a point to reiterate that the weakness in housing is spreading and the weakness is continuing to grow relative to market conditions a handful of months back:

"Although home prices were flat nationally, the majority of states experienced price declines and price declines are spreading across more geographies relative to a few months ago. Home prices fell in 36 states in July, nearly twice the number in May and the highest since last November when national home prices were declining," said Mark Fleming, chief economist for CoreLogic.

12 Month House Price Index Change: Single-family combined series

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12 Month House Price Index Change: Single-family combined excluding distressed series.

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This report continues to highlight the difficulties that remain in place for the U.S. housing market.  The lack of jobs and disappearing stimulus show how fragile the overall housing market is.  Even the absurdly low interest rates aren't enough to offset the poor underlying fundamentals.

Click the following link to view the actual CoreLogic report: CoreLogic Home Price Index Remained Flat in July [Actual PDF Report].