2009 To Buy or Not to Buy

Sue McAllister had an article in the Mercury News this morning outlining the sales that are taking place right now, and the customer profile of those buying.  Essentially first time buyers and investors are buying into the market right now.  This makes sense, first time buyers qualify for some government incentives and are able to get into home ownership with 3% down, and then qualify for FHA and VA loans. Additionally, they do not have to sell a house which may be worth less than they owe on it.  So it makes sense to buy in when prices have fallen quite dramatically, and people who never thought they could buy in CA are qualifying and securing great homes, and locking in solid interest rate loans. 

Investors are also entering the market, but I am surprised at how few are taking advantage of the opportunities available - cash flow properties in CA are not something we see frequently in this area! (This was the reason we went to TX originally - it was a safe haven for our funds and it cash-flowed).  These are the same "nervous nelly" investors who were buying at the top of the market when real estate was truly over priced trying to buy as much as they could not taking into account market conditions.   The thing to remember is that investing is a strategic game and noone can tell the bottom or the top but getting in gradually "dollar cost averaging" into a market helps to minimize the risk.   The main thing is how much can you comfortably afford to pay? does it cashflow?  What is my exit strategy for this property?

Gone are the days when one can get a great return in 3-5 years.  This is a buyers market certainly in many areas, but buyer urgency is really low right now.  Fear is still driving this market; additionally the media is validating all these fears.  The question to ask is "has the maket dropped enought to make this a good time to purchase".  I would say for some areas in our market right now this is a resounding yes - if you can get a 15% or greater return in your investment that is a good return on your money no matter what the market does - if you are in for the long haul you will be fine.  CA is still my favorite state to invest in - I am happy to be able to purchase here in my back yard!