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There’s Never A Perfect Time To Time The Market

A report from KUOW on Washington. “The Northwest Multiple Listing Service says home prices are down in several areas across the county. They include south Seattle, Lake Forest Park, and Enumclaw. Andy McDonough with HomeStreet Bank says we’ve experienced a shift in the housing market. ‘Now, while it’s not officially a buyers market, if you’re looking to buy a home today you’re in much better shape than you were just a few months ago,’ McDonough said.”

“McDonough says the market will get even better for buyers soon with an influx of new condos opening. But that will come at the same time that federal interest rates are forecast to increase. ‘While you may be waiting for prices to come down you will also be waiting for interest rates to go up,’ McDonough said. ‘So there’s never, like, a perfect time to time the market.'”

“Home prices were down 3 percent in Central Seattle, Leshi Mount Baker, and Seward Park. They fell 8.6 percent in Lake Forest Park and Kenmore, and nearly 14 percent in Enumclaw.”

From KGTV in California. “When Cheryl Ripp moved from Las Vegas to San Diego, she immediately got hit with the sunshine tax. ‘I was paying in rent here with roommates what I could probably get a mortgage for back there,’ Ripp said.”

“Ripp spent the last few years living in a 400-square-foot apartment in Pacific Beach, paying $1,200 a month. She said she saw the rents rising around her and started to worry that she would someday be priced out of living in San Diego.”

“Ripp, a nurse, wanted to buy her own place but had almost nothing saved for a down payment. After meeting with a financial advisor, she set up an online savings account with an automatic transfer. ‘I never saw the money, and then I didn’t miss the money anymore,’ Ripp said.”

“But saving up was only one part. Ripp still had to find a seller willing to give her a shot. She was a first-time home buyer competing with all-cash offers. Ripp and her realtor David Spiewak looked for two years. They put in six offers, all unsuccessful.”

“Corelogic says the median home price in San Diego County is now $583,000, up nine percent compared to the same month last year. Sales, however, have slowed nine percent over the year, with 3,753 properties changing hands in August.”

“It opened the door for Ripp, who ultimately landed a one-bedroom, 700-square-foot condo in downtown for $317,500. She got it with five percent down, using her cash savings and borrowing from her 401(k).”

“‘At that point, I was so sick of putting in offers I barely even looked at the unit,’ Ripp said. ‘I was like whatever, I’m not going to get it anyway, and then we got it.'”

“Ripp’s mortgage payment is around $2,400 a month, double what she paid in rent in Pacific Beach. But she says she loves being a homeowner and feels it’s a path to bigger and better things down the road.”

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  1. ‘At that point, I was so sick of putting in offers I barely even looked at the unit’

    Click!

    ‘Ripp’s mortgage payment is around $2,400 a month, double what she paid in rent in Pacific Beach. But she says she loves being a homeowner and feels it’s a path to bigger and better things down the road.’

    ‘double what she paid in rent’

    Classic speculation

    1. “She got it with five percent down, using her cash savings and borrowing from her 401(k).”

      She’s going to need her savings to bring to the closing when she sells.

    2. I would never, ever, ever buy a condo. While she can probably afford it as a nurse, she will likely live to regret the decision.

    3. But she says she loves being a homeowner….

      Not to be a Debbie Downer, Ms. Ripp, but you don’t actually own “your” home until the final mortgage payment clears.

    4. ‘double what she paid in rent’

      Classic speculation

      Though to be fair, she is going to be stuck “owning” a 700 sq-ft condo, whereas what she was renting was only 400 sq-ft… So it is twice the cost, but also almost twice the size.

  2. ‘While you may be waiting for prices to come down you will also be waiting for interest rates to go up,’ McDonough said. ‘So there’s never, like, a perfect time to time the market.’”

    Au contraire, McDonough. When shack prices bottom out, that seems like a perfect time to time the market. We’ve got a long way to go. But we renters are a patient lot.

  3. She was a first-time home buyer competing with all-cash offers. Ripp and her realtor David Spiewak looked for two years. They put in six offers, all unsuccessful.”

    Did no one during this timeframe ever warn this FB-in-waiting that buying into a bubble is a road to financial ruin? I’ve warned at least a dozen friends, acquaintances, and family members over the years not to buy into a housing bubble – most of whom did so anyway. But at least they had fair warning, backed up with cold hard facts. Anyone who trusts a realtor to give them honest, objective, knowledgeable advice is in for a rude awakening.

  6. Haven’t signed the lease yet (likely to soon), but I’m about to sign on a ridiculously nice house (at what is probably also a ridiculous rent).

    On the up-side, they were willing to sign a 3yr lease, if I agreed to a rent increase in year 3; that kind of time-frame gives my family some extra stability, and it is worth the cost difference to me to provide that, even though I expect rents to continue to move the other direction.

    I’m guessing that the direction of the housing market will have become clear to everyone within three years, and I’m willing to splurge for a few years, in order to house the growing family and also to help the wife deal with bubble fatigue.

    Comments from the peanut gallery?

    1. Yeah – why in the heck would you do something so foolish? You’re in the most overbuilt market in the US where rents are cratering, and you’re guaranteeing the landlord a ridiculously overpriced rent for 3 years? What are you smoking?

    2. Happy wife = Happy life, but Id have some kind of out clause after a year and a half or so. Even two years at max would be my limit. Overall how much of a discount are we talkin about?

  7. “The Northwest Multiple Listing Service says home prices are down in several areas across the county. They include south Seattle, Lake Forest Park, and Enumclaw. Andy McDonough with HomeStreet Bank says we’ve experienced a shift in the housing market. ‘Now, while it’s not officially a buyers market, if you’re looking to buy a home today you’re in much better shape than you were just a few months ago,’ McDonough said.”

    Now imagine you were the bidding war winner from the last few months reading this now.

    “McDonough says the market will get even better for buyers soon with an influx of new condos opening. But that will come at the same time that federal interest rates are forecast to increase. ‘While you may be waiting for prices to come down you will also be waiting for interest rates to go up,’ McDonough said. ‘So there’s never, like, a perfect time to time the market.’”

    ==NOW IS THE BEST TIME TO BUY A HOUSE!

    “Home prices were down 3 percent in Central Seattle, Leshi Mount Baker, and Seward Park. They fell 8.6 percent in Lake Forest Park and Kenmore, and nearly 14 percent in Enumclaw.”

    SCHLOOOONNNGGGGEEED!!!! Now come on guys! Its just the first inning of the Housing Bubble 2.0 Burst!

  9. ‘While you may be waiting for prices to come down you will also be waiting for interest rates to go up,’ McDonough said. ‘So there’s never, like, a perfect time to time the market.’”

    Yes, but some times are (much) better than others.

    As interest rates go up, prices come down, since the mortgage “nut” needs to remain relatively constant and affordable for shelter-owner buyers that haven’t seen much wage growth at a time of rapid (rabid?) house price appreciation. Any realtor worth their salt knows this. Anyway, since interest rates are moving up and prices have gotten to nose-bleed levels, guess what happens next? Reality bites.

    The problem has been that shelter-buyers have be out-gunned by all kinds of speculators, flippers, all-cash foreign buyers on the way up, thanks to massive Fed stimulus (QE). However, now that we’re on the way down (QT), things are materially different. I for one wouldn’t want to be buying for at few more years here. Buying now (or recently) is likely to result in a “negative equity situation”. I also wouldn’t put much credibility in a realtor’s comments as seller’s agent as there’s a clear conflict of interest, since their objective is to maximize the transaction price (and associated commission). Caveat emptor. Do your homework.

    1. Supporting data & comment:
      Just saw this:
      https://www.attomdata.com/news/market-trends/home-sales-prices/q3-2018-home-affordability-report/
      U.S. Home Affordability Drops to Lowest Level in 10 Years
      ATTOM Staff
      October 2nd, 2018

      “Rising mortgage rates have pushed home prices to the least affordable level we’ve seen in 10 years, both nationally and at the local level,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

      “Nationwide, the median home price of $250,000 in Q3 2018 was up 6 percent from a year ago, twice the annual growth of 3 percent in average wages. U.S. median home prices have increased 76 percent since bottoming out in Q1 2012 while average weekly wages have increased 17 percent over the same period.”

      HT ZeroHedge

      My comments:
      1) Rising interest rates are only part deflating liquidity bubble.
      2) I don’t think real (i.e. inflation-adjusted) wages have grown even that much this century. Probably not.
      3) So WHY is home affordability at a 10-year low? The Fed + gov’t. have blown another gi-normous asset bubble via QE, near-zero Fed Funds Rate, FHA+GSE manipulation/easing of lending standards, and various other machinations; aided and abetted by other central banks who have encouraged rampant speculation on a global scale. Asset bubbles don’t end well; housing bubbles are extremely detrimental to the national economy since many “own” homes and houses are an illiquid asset, meaning not limited to the financial sector, and it takes YEARS for resolution of the whole mess. It’s not different this time. End the Fed. “Doing the most harm since 1913”. Debt is not the basis for a sustainable, organically growing economy.

      “Permit me to issue and control the money of a nation, and I care not who makes its laws.” – Mayer Amschel Rothschild, International Banker

  10. “So there’s never, like, a perfect time to time the market.“

    Seems like timing IS everything. Both interest rates and the average price of a home will fluctuate up and down over time. Once one signs on Mr Bankers dotted line special, the “purchase” price is fixed. However If interest rates drop after that date, one in therory could refinance their loan with a lower rate. Right? I don’t think one could refinance a lower “purchase price”…

    1. “the average price of a home will fluctuate up and down over time. ”

      Did a realtor tell you this? You know what they say about realtors.

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