Thursday, February 27, 2014

A House-buying Strategy for 2014: Accommodate the SDTs!

In my time as a real estate broker, buyers could usually find a home in three or four months. Sure, there were exceptions. But even when things got tight for first-timers in 2011-2012, they could usually find an acceptable house in that time frame. Pressure came from too many buyers, many of whom were downsizing Boomers or investors with cash. Also, many of the homes were short sale properties or even foreclosures that needed work. That was hard to accommodate with the few financing programs available.

The point being, if one is to be made, that there's always Some Damned Thing (SDT).

Now, it's a cacophony of media voices yowling like cats in a Jacuzzi. Prices going up (better hurry before it's too late). Now is a great time to buy a home (and it always will be). Interest rates are low (and they might go up any second). Not enough listings. Everything gets backup offers with escalator clauses. It seems as though that's all we're reading or hearing about these days.

Except the reporters' sources for their news are almost always real estate brokers. Isn't that like asking R.J. Reynolds if tobacco is good for you? It's the au courant SDT.

In reality, prices have either stabilized  or stopped their growth trend in most markets. Sales of existing homes have been off for several months, and the pace of new homes has slacked (of course, micro-markets have their own trends). Applications for purchase money mortgages have fallen off.

But still: What's a buyer to think? Well, The Captain has an idea: If you're thinking about buying a house, stretch out your time horizon a little bit. If I were still advising clients, I'd suggest moving their house-acquisition time up a good bit, like six months or even more--maybe even a year.

That way, you don't have to jump at the first house you see. If told you have to add an escalation clause or you'll lose the house, you can just say, "Whatever," instead of freaking out. If told listings are few and competition is tough, you can say the same thing.

Why? Because not only do you have the money, Honey, but you've got the time. You may miss out on a house, but if your time horizon is out there a ways, you'll find another one and make your decision without pressure.

And you can put any SDT to rest.