With Pasadena home sales now taking in excess of 100 days to sell and selling at 95% of their asking price, price reductions have become commonplace. Houses are no longer stigmatized by being on the market and “For Sale” up to 4-6 months. Home sellers have now added the word “patience” to their vocabulary. Appointments to view a property are fewer and further apart. If an offer is presented be prepared to see a difference of 7 - 10% from the listing price, translating into several thousand dollars. In other words, serious money.

The perception among home buyers is that prices may fall further, and therefore there is no emphasis placed upon acting now, no sense of urgency. Recent media reports and monthly sales data seem to support this presumption. Real Estate trends indicate declining monthly home sales on a rolling twelve months, increased foreclosures and home financing harder to obtain. Human nature prohibits most of us from taking a perceived risk on something as major as a home purchase, when all of these external forces area saying now is not the time to buy.

The Upswing Will Identify the Market Bottom

The $64,000 question becomes “When will the bottom occur in the housing market”? And the answer is, no one knows. There are plenty of opinions, but the only way we will identify the bottom of the market is that it will become very visible in the rear view mirror. Once the pendulum swings, and the market begins to pick up, then and only then will we identify the bottom. Then its too late. Did anyone actually say in August 2005 that this will be the peak of the market, now is the time to sell?

Price is Just One Consideration

Many people think that they have the gift, the sixth sense. When the market finally reaches that proverbial bottom, they will know and swoop in. If on the other hand your crystal ball is a bit cloudy and unpredictable, maybe you should consider the other factors that are very favorable today, such as:

1. Plenty of Inventory - with close to a 10 month supply of homes for sale, home buyers have many choices available. You can afford to be selective and quite possibly set favorable terms.
2. Interest Rates - money is cheap right now. It is about the only thing that is inexpensive. If you are looking to buy, consider how long you plan to stay in your house. Most people move within 7 years. A very low interest rate may help to offset some of the increase in price, making your monthly payment more affordable. While refinancing may be an option, we don’t know what rates will do in the future.
3. Remodeling - the downturn in the housing market has impacted contractors as well. You may find them more negotiable and eager to find work today versus next year.
4. Tax Implications - you should have your CPA review your finances and see if its better to continue renting or is there a chance you can increase your current standard of living and save more of the money you now pay to the government.

The bottom line (no pun intended as to the title of the story) is there are many factors to consider when purchasing real estate. Evaluate the current market conditions with your current needs and long term goals or benefits.