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Wrath and Derision, Just for Wanting to Buy a Home

It takes courage to admit that you want to buy a home now. In Sunday's Washington Post Magazine story, Take a Deep Breath by Christina Ianzito, Diego and Jessalynn Gomez allow us in on the search for their first home. They finally decided on a townhouse being built in Gaithersburg, which they're buying for about $380,000.


Jessalynn and Diego Gomez look at the view from the foundation of their new home. (Sean McCormick).

If you pay much attention to some of the comments posted online with the story, and those submitted for yesterday's Web chat, you would think they were trying to pull a Bernie Madoff on someone. Yet this couple seems to have researched the market fully, accepted the risk that prices may decline more, adhered to their budget and -- brace yourselves, here's the root of their madness -- decided to do what they think is best for their family. They even have the audacity to talk about their excitement about the deal, envisioning where their hoped-for children may play someday.

Certainly would-be buyers have plenty of cause for concern about housing values, job security and the rest of this economic mess. But I wonder if they aren't being needlessly driven off by a smug peanut gallery of cynics rooting for an even worse meltdown. How many of those unnamed cynics might actually be cash-heavy investors hoping to drive prices down, down, down until they can grab some deals? Is the nay-saying limited to online forums, or are buyers hearing it from family and friends?

And has buying a home of your own really become such a radical choice? What do you think?

By Elizabeth Razzi  |  March 4, 2009; 6:00 AM ET
Categories:  Buying  
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Comments

At the risk of sounding like a realtor, now seems like a great time to buy a home if you're in a position to afford it. Lots of choice, rock-bottom prices (I hope--certainly a lot better than any time recently) and really low mortgage rates if you qualify. So long as you don't think you'll need to move in a couple of years, it seems like there's a lot more upside than downside at this point.

Posted by: ah___ | March 4, 2009 11:12 AM | Report abuse

I took the time to write a thoughtful comment hours ago. please tell me why it isn't posted?

Posted by: kparcell | March 4, 2009 11:38 AM | Report abuse

Kparcell-- We love thoughtful comments! We're not holding back on you and don't know why yours haven't appeared. (I promise, we're looking into possible glitches). If at all possible, please re-post your thoughts.

Posted by: Erazzi | March 4, 2009 12:28 PM | Report abuse

I think the negativity towards this particular house-buy is mostly about the location/value of the townhouse. What affects value most? Location, location, location! (I am NOT a realtor.)

Why? Location affects all of the following: school quality, neighborhood safety,convenience to job and errands,insurance rates, and eventual re-sale value.

How long is the commute? How much does it cost for car expenses/metro/bus/parking. Also, try valuing each commuter's lost family/personal TIME at $20 an hour. You can't buy back lost time.

Check the crime stats. Going up or down? Currently worse or better than other areas? Drug/gang activity present? You want to be able to enjoy your new home and walk the neighborhood, especially when you have kids. You want to be able to live with or even like your neighbors.

How many of the dwellings in your development are "lived in by owner"? How many are empty? How many are temporary or permanent rentals - not necessarily a bad thing but someting to consider? Are the finances of the management company solid - are the homeowner fees being paid on time?

I remember reading, before we purchased our first house many years ago, that a buyer should buy the smallest,lowest price house in the very best neighborhood/schools s/he could manage.You can certainly make some trade-offs among size/condition/price but you can't do much about the location. Choose that most carefully - rent there first if you are not sure.

On the other hand, maybe now that only the solvent can get mortgages, whole new neighborhoods of young families will bring stability and improvement to faltering areas. It could take awhile, but THAT would be GREAT!

Posted by: bernadete | March 4, 2009 12:32 PM | Report abuse

Erazzi, thanks for the response, and I'm sorry to use your blog for this problem but there isn't any other working email link! I sent the comment again after my short note. It includes a web address so maybe it's flagged? I'll try it now without the address.

Posted by: kparcell | March 4, 2009 4:01 PM | Report abuse

Okay, didn't go through, maybe too big, so here it is in shorter segments:

I've been blogging on a possible solution to the economic/housing crisis at twomillionhomes(dot)net, so I think I have a rounded view of the situation you're asking about.

Your questions:

How many of those unnamed cynics might actually be cash-heavy investors hoping to drive prices down, down, down until they can grab some deals?

Not many. Prices are tumbling because there are 3.7 million homes on the market, two million more than a healthy 3-4 month supply. And the cut-throat speculators have all the low fruit they can eat already in distress sales - about two million last year. In fact, plenty of auctions have no bids at any price.

(continued)

Posted by: kparcell | March 4, 2009 4:08 PM | Report abuse

(continued from above)

Is the nay-saying limited to online forums, or are buyers hearing it from family and friends?

Online forums give license to express the mean-girl in all of us, so no, not so much derision face-to-face. And one simply cannot assess actual attitudes from the garbage that mean people post.

And has buying a home of your own really become such a radical choice?

Here's the thing: When interest rates started to rise, prices began to sink, so speculators rushed to sell, flooding the market. The oversupply began the downward spiral because it's tough to get a mortgage when banks can't trust the value of your purchase. BUT most folks believe that the problem getting financed results from a combination of high prices and a credit freeze. In fact, prices are now at a median national price of $170-180,000, which is a good range when measured by national median income and longterm trends. : prices have now corrected; but that won't stop the collapse because it's driven by oversupply. And even though our government is shoveling money into the banks faster than banks can stuff it into bonuses, we can't expect the banks to write mortgages on sinking properties when we are blaming them for getting us into this mess in the first place through writing undercollateralized mortgages. The tight credit reinforces the assumption that the problem is high prices, so it seems radical to buy now since everybody expects lower prices, and maybe it is a little.

(continued below)

Posted by: kparcell | March 4, 2009 4:09 PM | Report abuse

(continued from above)

The housing collapse underlies the entire economic crisis. And as long as prices continue to tumble, the economy will continue to sink with it. But we can buy the surplus two million homes at median price for $340 billion, which is less than 20% of what we've already allocated to save businesses downstream. If the US commits to taking those homes off the market, buyers will rush in because that will define a bottom to the market and banks will write mortgages knowing that prices are heading up. So we can define a bottom to the recession right now and start the recovery.

What are we waiting for, may I ask, when everyday sinks our boat a bit more.

For my answer, check out my website:
twomillionhomes(dot)net

Kevin Parcell

P.s. I suggested buying the excess homes on "Talk Of The Nation" yesterday when Neil was speaking with Jeffrey Sachs. Jeffrey said he thinks the problem has gone way beyond this solution, but I think that none of the bailouts so far will work because none of them can work while the housing surplus continues to drive prices down and accelerate the collapse. The facts so far support my argument 100%.

(that's it, thanks :)

Posted by: kparcell | March 4, 2009 4:11 PM | Report abuse

"But we can buy the surplus two million homes at median price for $340 billion, which is less than 20% of what we've already allocated to save businesses downstream."

You can't have house values outpace income and not avoid a correction. Taking 2 million homes off the market would not correct the fundamental problems. And solving the mortgage problems does nothing about the credit problems in the country that have nothing to do with houses. Household debt has peaked at GDP (13 trillion), there has never not been a severe recession when this occurs.

Posted by: prokaryote | March 9, 2009 3:06 PM | Report abuse

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