State of the Market-Buyers Edition

The good news is that with mortgage rates so low, and the credit squeeze loosening, now can be a great time to purchase an apartment. Before you get all cynical ("of course she's saying that now's a good time to buy, she's a broker, blah blah blah) let me state my case:

First of all, I'm addressing this post to buyers who intend to occupy their apartment. If you're an investor, I'd still say there are some bargains out there, but that's not really the focus of my work.

For those people who are looking for a home, the market is loaded with opportunity. Prices are down 20%-25% from their peak. You may ask me, why jump in now when layoffs are just gaining momentum, and the economy is in a world of hurt? How do we know that prices won't fall another 25%?

I don't know for sure, but I really doubt it. I don't think that last year's $2 million classic six will sell next year for $1 million. That's wishful thinking, and for so many reasons, it's highly unlikely. But last year's $2 million classic six might go for $1.5 pretty soon. If you are buying it to stay in and raise your family, then you'll be there for 5-10 years. If you are an empty nester and are retiring here (I see that more and more often) then ditto, you're planning on staying for at least 5-10 years. If you don't think the real estate market will rebound before then, then you should move to Maine, stuff your money under the mattress, and wait for the aliens to land.

By the time people have figured out that the market has rebounded, it's already on its way back up. That makes you competing with many others and that's what drives prices up. That brings bidding wars.

In addition, the most important aspect of purchasing a home is quality of life. You can't quantify what it will mean to you and your family to have a home that you love. Granted, for most people, it's their most important asset, and they don't want to overpay. But I know so many people who have been sitting on the sidelines, waiting for this exact moment. They've spent years in an apartment that was too small, or too dark. At a certain point, the emotional needs can outweigh the financial paradigms.

I read a ton of postings by people who have no intention of buying an apartment, arguing that the markets will go down, it's stupid to buy, it makes more financial sense to wait etc. I don't think those people are buyers. They are observers. When you're ready to buy, you're ready because of so many reasons, market conditions being only some of them.

It's always better to start educating yourself about the market before you're ready. When you finally do see the perfect apt, you'll know it. The worst thing that can happen is that you fall in love with the first thing you see. Then you'll be afraid to jump in, and it'll be gone by the time you realize it was right for you all along.

Get yourself educated. Go to open houses...they are designed for tire kickers. Talk to brokers. See if you find any who you feel understand your needs and your particular situation. Even if you are internet savvy, a good broker can help with many aspects of a purchase...the board package for one. In addition, a good broker can negotiate on your behalf in ways that you may not be able to do for yourself. And a good broker has networks and contacts that a buyer does not have. If you love a particular building, your broker might be able to find you something that's not even on the market yet....not all brokers are used car salesmen...