The last few months, I have read differing opinions on whether now is a good time to buy. Some say it is the perfect time, while others are telling people to wait. Some even go so far as to say the real estate industry is feeding the public false information in order to booster our own sales. I honestly laugh at this one, like there is some big conspiracy going on behind the scenes.

I am of the opinion that there has never been a better time to buy then now. Prices throughout the Twin Cities have dropped and there are tons of deals out there just waiting for a buyer. In fact the housing affordability index is back to 2003 levels, meaning homes are even more affordable then ever.

  • Builders – many have over built and are looking to dump inventory to recoup any remaining profit, or to halt any further losses. I have seen some homes with a $50,000 – 100,000 price drop, with closing costs paid by the builder, just waiting for buyers to come along.
  • Foreclosures – there are thousands of homes in foreclosure and as 2008 proceeds, banks are going to begin dropping prices lower, realizing that the losses they will be taking are necessary in order to rid the properties from their books.

As a buyer, what you need to understand is that you have never been in a better position to negotiate. If a builder is promoting discounts, don’t be afraid to ask for MORE! If a property is in foreclosure, don’t be afraid to offer less. If the listing agent tries to talk you out of doing so, ignore him. The final decision lies with the bank. If you can show you are a serious buyer, pre-approved, and ready to close, you have a better chance of making a real deal in today’s market.

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  1. Anonymous January 17, 2008 at 9:57 pm - Reply

    There is much more to the story than what you are saying, however. How do we know that the affordability index won’t get better?

    I think it is professionally very risky to state that any time is the ‘best’ time to buy.

    Do I think there is a ‘conspiracy’ among realtors to dupe people in to buying? Of course not.

    They are doing what comes naturally – selling. That said, the economic advice that is given by people who do not make their income from real estate is often very different.

    Let me put this plainly. In my view, real estate agents are great for the house-finding, negotiating, and transaction pieces. I want a skilled agent to make sure that the whole transaction goes smoothly and my interests are looked after. Like a lawyer does.


    REALTORS ARE NOT economic forecasters. I cannot stress this enough. What training do realtors receive in economics and finance? What about forecasting? What about interest rate risk in a buyer’s or seller’s market?

    On top off this, I note that many agents tend to view prices relative to previous prices. Without, however, comparing them to historic rents, incomes, and projected changes in those factors.

    Every day I hear agents give advice in a cavalier fashion that professional financial advisers would be loathe to give.

    If I was an agent, I would never let the words ‘this house is a great investment’ escape my lips. Nor the phrase ‘now is the best time to buy’.

    Look at David Lereah and Lawrence Yun from the NAR. They have been wrong nearly every time, and they have PHDs in economics.

    I apologize for my bluntness, but we buyers have very LEGITIMATE reasons for caution, and we are not interested on falling on our swords for the good of the market while prices are still declining.

    We are in a standoff with sellers. Time alone will reveal the winner.

  2. Ed Kohler January 18, 2008 at 1:38 pm - Reply

    Now does seem like a good time to buy. In fact, that’s what I did in November. Is it exactly the best time? I bet next month might be even better than this month, but that’s not taking into account the emotional side of finding the perfect home that happens to be on the market today.

  3. Jennifer Kirby January 18, 2008 at 4:10 pm - Reply

    Dear anon,

    How do you know the affordability index won’t get worse in two years? You don’t.

    I waited two years for the housing market to bust and prices to fall before I finally bought late this fall. For two years, we have been renting and living in a very cramped townhome, for the sole reason of waiting the for the overpriced Twin Cities market to bust and fall. So pardon me if I say that now is a great time to buy. It is! For two years we looked for a home, resale and new construction, and finally went with new construction because the deal was just too sweet to pass up. I know what I am talking about because I have been living as a buyer for two years.

    Contrary to national real estate trends, the Twin Cities market is showing signs of leveling out. 2008 is going to be just like 2007…it is not going up, but neigher are their signs that things are going any further down. Prices are not declining in alot of areas of the Twin Cities.

    When we first moved here, we were told by a local agent that we didn’t know what we were talking about when we commented that the market was at its peak. We didn’t buy then because we had just lived through the Florida bust. The signs were all on the wall. But just like Florida, prices will only go down so far, so anyone who thinks prices are going to go down to 1990 prices, needs to wake up to reality. It just isn’t going to happen.

    You mention that I shouldn’t ever day “now is a great time to buy”. Well, I disagree, 2004-2006 were terrible years to buy, but 2008 is going to be great. Deals are everywhere, and if you treat a home like it should be, as a home, then you don’t need to worry about your “investment”. In fact, I hate it when people call a home an investment. It is a LIABILITY, always. Only when it produces a cash flow can you call it an investment.

    But if you want to make money in real estate, you buy when prices are low, and hold for the long term. Robert Kiyosaki made his wealth when he bought during a low market, when no one esle was buying. If you want to make wealth here in the Twin Cities, then you should be buying now, not waiting for three more years when things get better and then the demand is bigger. It is so easy to look at all the bad, and neglect to see the opportunity just waiting for people out there.

    You also comment that agents are not Economists. Yeah we aren’t. But I don’t see the past 10 years of every decreasing mortgage rates as a great economic decision passed by the government, especailly by those who have been economists their whole lives. They make mistakes just like everyone else. This country lives on too much credit, easily given to anyone by our wonderful government who keeps printing money to keep us out of a recession.

    And I guess I just don’t see the standoff you are talking about. Sellers are offering tons of incentives and price reductions to buyers. Buyers can almost get the moon. But buyers need to realize that there does come a time when the price they want are just unrealistic. If a seller says no, just move on to the next house. If buyers can leave emotion off the table, they can make a steal off homes today.

    Thanks for your comments. I agree with some of them. I was going to make the post longer, but having the flu made me cut it short and not go into as much detail as I wanted. In a few days I will pick up the conversation when I am feeling up to it.

  4. Jennifer Kirby January 18, 2008 at 4:21 pm - Reply


    If we would have waiting another month to buy, we probably could have gotten a better deal on the home we contracted to build. But then we would have lost a lot we really liked and still be living in a tiny townhome.

    The simple reality is this, only each individual buyer can say if the deal is good for them. Saving $20,000 is good for some, but others want to see huge deals and won’t buy anything unless $50,000+ has come off the home. Some of these people could wait too long and miss the perfect opportunity.

    We feel we made a great decision. Granted saving a few dollars would have been great, but you just can’t dwell on it, and get the greedy bug. Doing what is right for your family is the only thing that matters.

  5. Jennifer Kirby January 18, 2008 at 4:23 pm - Reply

    Sorry, but my spelling and editing is off. I am still not well, and reading too much is hard. Please don’t attack me for spelling errors. 🙂

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