2008: The Year to Buy a House?

Anyone who has caught a glimpse of the news over the past year has heard of the black cloud hanging over the American housing market in regard to the sub prime mortgage mess. Record numbers of home buyers defaulting on their loans has had a tremendous ripple effect on everyone from lending companies to major banks, and the U.S. real estate market has shown the strain. Prices have retreated and supply has grown as lenders have tightened down their lending policies and mass foreclosures have become common place. As the saga continues the question is whether 2008 will be the year to buy a house? This question has become personally relevant as my wife and I prepare to purchase our first home sometime next Spring depending on where the Air Force decides to send us after Pilot Training.

After a little research the answer is mixed at best. For one, as real estate agents are often fond of saying, "real estate is local." Some markets are expected to continue their decline in 2008 at double digit rates while others, mainly those catering to vacation home buyers, may already be close to bottoming out. A recent CNNMoney.com article provided the following table listing those areas predicted to be hit worst by continuing declines in housing prices.

Secondly, the answer to whether or not to buy in '08 hinges on how long you plan on keeping your house after the purchase. While opinions on the time frame for a market turnaround are incredibly diverse, almost everyone agrees that in a few years the crisis should be over. Meaning, if you buy a house tomorrow, as long as you're not trying to flip it in the next year or two, you should be fine.

Keeping these things in mind the best thing for a potential buyer to do is scout the area and put their "House-Flipping for Dummies" book at the back of the shelf for the time being.

Barbara Corcoran, the real estate contributor to CNBC, MSNBC and NBC's TODAY show explains, "Give yourself a crash course on home prices in your area by visiting the open houses of homes similar to the one you've got your eye on. Then, get three competitive brokers to give you a cost estimate of what the home is worth. Once you're armed with information, you can put in an educated offer. A nice place to start is 15 percent below the asking price, if it's properly priced, or 15 percent below what you believe the value is if it's not.”

Here are some good sites that can also help you research the local markets by providing tons of great information on the prices of recently sold homes, for sale listing, neighborhood information, trends, etc.:

1) Zillow.com

2) Trulia.com

3) Redfin.com

As Marelize and I go on our own little journey through the world of the first-time home purchase next Spring I will be sure to keep you updated on the process.