MONEY

The best time to buy a home

No one knows when we’ll reach a bottom, but you can get a great bargain, if you shop around.

Questions: Given all the foreclosures and other problems in the housing market and the economy, do you think this is a good time for someone to buy a house? Or would I be better off waiting for the housing market to recover? —Mari, San Francisco

Answers: If you’re asking me to predict when the housing market will hit bottom and when prices are likely to start climbing again, I’m sorry, but I can’t help you. My housing crystal ball is on the blink.

I can tell you, though, that at this point we’re still looking at one bleak house scenario.

If anything, the latest price statistics suggest that the market is still falling. The Standard & Poor’s/Case-Shiller Home Price Index for 20 large metropolitan areas was down 16.6% in August compared to its level a year ago. That’s more than the index was down for the year ending in July (16.3%) and in June (15.9%). National Association of Realtor stats for September also show a decline.

On a marginally positive note, there has been somewhat of an uptick in sales of both existing and new homes. But given the fact that foreclosures and mortgage delinquencies have also been rising and the job market and the economy generally have been softening, I don’t think anybody believes that the recent improvement in sales represents an imminent reversal of fortune.

I suppose it’s possible that the various government and private efforts to help homeowners avert foreclosure could help stabilize the market. When you look at the overall picture, however, it’s hard to imagine the housing situation improving significantly before the end of next year.

Don’t time the market

But I don’t think all this necessarily means that you should put off buying until certain prices have bottomed out, assuming you’re planning to live in your house for, say, at least five years as opposed to flipping it.

Why? Well, for one thing I don’t think it’s possible to time the housing market any more than it is to time the stock market. Sure, you might be able to get a somewhat better deal by postponing your purchase. On the other hand, it’s unrealistic to think that you’re going to be able to catch the market just as prices are ready to rebound.

Buying a house isn’t something you can do at a moment’s notice. You’ve got to find the house you really want, settle on a price and get your financing. Your chances of timing all this to coincide with the market trough – even if you could call it – are pretty much nil. Besides, even when prices do eventually start to rise, no one knows how quickly (or slowly) they’ll climb.

Do some legwork

That said, if you’re really serious about owning a home, you’re actually in a very good position as a buyer right now. Prices have fallen substantially over the past year or so, which should give you lots of leverage to negotiate a favorable price. And since there’s no immediate sign of a turnaround in the market, it’s not as if you’ve got to rush into a deal either.

So don’t. Use this opportunity to do plenty of research in areas where you might consider buying. You can do that online these days at sites like Zillow and Trulia.

But don’t restrict yourself to virtual legwork. Drive around a bunch of neighborhoods, talk to homeowners and business owners to get a better sense of how the area is doing and what it would be like to live there, stop by real estate offices and banks to get the current pulse of that specific market. You may even be able to pick up bargains among foreclosures or by working with sellers eager to avoid a foreclosure.

At the same time, you can start lining up your financing so you’ll be ready to move ahead should you find a home you like at a price you’re willing to pay. Remember, lenders are more picky about making loans than they were during the real estate bubble, which means they’re requiring more information about your income, assets and expenses.

You don’t want a snag in the mortgage process to hold you up when you’re ready to close a deal. So get all your financial paperwork in order ahead of time and scout out lenders offering competitive loan rates, which you can do by checking out our Real Estate section.

Bottom line: Without the benefit of 20/20 hindsight, no one can tell you when it’s the absolute best time to buy. But if you make a real effort to shop around and get a feel for the market, you can almost certainly increase your chances of getting a house at a price you can be happy with now and in the future.

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