With no bottom in sight for the U.S. housing market, buyers are in game-show mode.
There are plenty of deals out there, yet you have to make some decisions if you are buying a new home. Choices flash in front of you as if a host is badgering you to decide your next move. Do you wait for prices to fall further? Or do you buy now and take the builder’s incentives or their financing?
Whatever strategy you adopt, you will need to ignore some of the bells and whistles being offered and focus on price. You don’t want to be caught buying a home today that may be marked down $50,000 next month.
With more than 4 million unsold homes on the market, the buyer with good credit and cash for a down payment can do well.
Builders are doing whatever they can to move properties. In February, almost half surveyed said they cut prices, according to the National Association of Homebuilders, a Washington-based trade group. More than half “reported offering optional items at no charge and 44 percent said they paid all or some of the closing costs.”
Itching to buy? Let’s say you are considering a second or vacation home. You are confident that the market has bottomed and you don’t want to miss out on the best prices.
Playing the waiting game? If you delay your purchase, you may be rewarded. Home prices are forecast to fall 12 percent this year, according to Richard Syron, chief executive officer of Freddie Mac, the second-largest provider of money for U.S. home loans. Housing starts may plunge 22 percent in 2008 and remain at their lowest level in 16 years, he said in a speech to the homebuilders association on Feb. 13.
Prices are going to fall a lot more than Freddie Mac’s forecast 12 percent in the most overpriced areas, which may experience 50 percent declines or more.
Patience is a virtue in this market. It will also net you a better deal if you can turn off your game-show impulses.