Patience in house hunting

My friend wants to buy a house.  She’s asked me for my advice and assistance.  I told her not to buy right now.  There is a lot of turmoil in the economy right now, and it’s fair to say that things will probably be as bad as they’ve been since the 1930’s.  Some people don’t believe that but from what I’v'e seen and read we are only at the beginning of our economic problems.  We’ve got banks and major corporations failing left and right.  We’ve got stimulus packages that are historically unprecedented, and yet we act like what’s another 75 billion program (foreclosure prevention) along with all the other programs that have been launched recently.

I told my friend that prices could still drop substantially as demand declines further.  Unemployment puts a major damper on home buying, and investors are probably becoming more cautious as well.  It’s easy to buy a cheap house these days, but not so easy to flip it at a profit,and who wants to hold the thing and risk price declines.

I hope my friend will exercise patience.  Buying just because you feel like it can be costly.

While I see very low interest rates as having potential to prop up the market and keep housing affordable, it’s never fun to lose money on your house and most people don’t buy and hold for 30 years.

With all that, keep a watchful eye on everything that happens this spring and don’t be too quick to jump into this real estate market.  We could see a spike due to the spring/summer buying season combined with low rates but I suspect that any spike or stabilization in prices will be short-lived as demand will soften further as the economic pressures mount.