Mixed Signals: bTo Buy or Not to Buy" now or later

Robin Fenchel February 22, 2012

I came across an article entitled bBuyers jump into murky housing market, by Zack Fox, a staff writer for the North County Times. The story is about how home prices in San Diego county’s Oceanside are finally becoming affordable enough for some buyers to btake the plunge, while others still are playing bthe waiting game. This concern can, of course, be extrapolated to our local market as well, here in Irvine, CA.

The article features a couple of buyers who have been waiting to buy for years, and with median prices falling, the question for them is whether to buy now or to continue their wait. Some real estate agents suggest that prices will not go any lower and first-time buyers should act now. Some economists, on the other hand blaugh at the notion and advise patience. One buyer’s view is voiced by an Oceanside teacher, Julie Beck, who is not as concerned with whether the real estate market has bottomed out or not, but rather she is btired of dumping $2,000 a month in rent into a property where she cannot paint the wallsbbI’m not looking at a home for an investment. I’m looking at a home for a home, said Beck, who said she plans to keep her 4-year-old twin daughters and 8-year-old son in Oceanside schools through graduation. bI won’t be ready to sell for the next 12 years, so it doesn’t matter if prices drop some more.

Does her sentiment make sense? In our experience it makes perfect sense, if and this is a big if

1. The buyer has a secure job, that is, no chance of being laid off or relocated in the next few years
2. The buyer plans to stay in the home for at least five to seven years (the normal course of a real estate cycle to come full circle)
3. The buyer has good credit (these days a FICO score above 700 is a must)
4. The buyer has the down payment, income requirements, credit history, job history, and can afford to make a housing payment (Principal, interest, taxes, insurance, and association) does not exceed approximately one-third of the gross monthly income
5. The buyer’s debt to income ratio does not exceed 38% of the gross monthly income (that is the total housing payment in #4 + revolving credit card debt (car payment, student loans, store credit card debt, etc.)
6. The buyer has access to a down payment (either from savings, gift, investments, etc.) of 20% of the purchase price (again, this is the CB”C”bB,Cbold school wayCB”C”bB,CB)

If you can say yes to the above, then, yes, it makes sense to move off of the fence/rental and into your very own home.

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