From the Record:

Buying smart is all in the timing

After two years of home shopping — and one canceled deal — MaryAnn and Bryan Rust bought their first house, a three-bedroom Maywood ranch, this month. They were motivated by lower home values, inexpensive mortgage money and an $8,000 federal tax credit for first-time buyers.

“Once we had the $8,000 in tax credits, that was the deal sealer,” said Bryan Rust, a 31-year-old electrician. While it’s not a huge amount of money, the tax credit will give them a little cushion against the cost of unexpected repairs, he said.

“Knowing we have at least an $8,000 credit is putting us ahead of the game,” Rust said.

The tax credit, which went into effect this year in an effort to jump-start a glum housing market, has apparently brought some first-timers into the housing market.

Certainly, home sales activity is still down from a year ago. A rising unemployment rate — now above 9 percent nationwide — means that many people are out of work and in no position to take on a mortgage or are worried about losing their jobs.

Moreover, many economists and housing analysts expect home prices to drop further, and many potential buyers are waiting for bigger bargains.

Still, first-timers comprise close to half of all buyers, up from the typical 40 percent, according to the National Association of Realtors. North Jersey Realtors agree that the starter-home market is much more active than the luxury market.
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The Rusts first ventured into the real estate market in 2007 as the volume of home sales was starting to fall after the housing boom. Prices were still significantly higher than they are now. The Rusts signed a contract to buy a Ringwood house for almost $400,000, but backed out when a home inspection turned up serious roof problems.

They watched as that house later sold for $50,000 less.

“I felt like things were kind of making a turn south,” Rust said. “My wife and I decided to wait and see what the market does. Things started to come down. Houses sat on the market for a long time. A lot of the houses we saw two years ago are still on the market to this day.”

The couple used that time to pay down debt and save a bigger down payment. Then, as prices and mortgage rates dropped over the past eight months — and the federal tax credit kicked in — the Rusts felt it might be time to jump back in.
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Watching home prices drop over the past two years, the Rusts sometimes wonder if they will fall further and lead them to regret buying now.

“That’s a risk we’re going to have to take,” Bryan Rust said. “When are you ever going to have the perfect time? We felt this was the best time to make the move.”