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The Real Estate Deal

Editor Cindy Zetts dishes on real-estate and development around Puget Sound: She lived in apartments, townhomes and houses -- a dozen of them in four states -- before settling in the Seattle area in 1997. After taking a bath on the sale of her first home, in South Florida, she vowed to wise up about real estate. She bought a house in Covington 10 years ago because, well, she could afford one there.

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September 10, 2008 5:50 PM

Is it a good time to buy real estate?

Posted by Cindy Zetts

When the Northwest Multiple Listing Service released August home-sales numbers Tuesday, it alluded several times to that oft-repeated line that makes some people laugh: "It's a great time to buy."

Agents, lenders and others in the real-estate industry have been saying that for so long, it's become tired. Some buyers are reluctant to commit, hoping for a lower price, a better interest rate -- maybe a more secure job in a better economy because God knows this one is nothing to write home about. Oh, there may be more jobs, but are they jobs that pay living wages?

But I digress.

The industry has a theory (hint: bad press) about why some buyers are so reluctant. But it's not that simple, folks. If every media outlet in the world reported tomorrow that "it's a great time to buy," the intelligent people would ask for proof. Many would not get it.

For years, the housing market was booming. The industry was in fat city; sellers were benefitting from multiple offers because of high demand for homes and a low supply of them. Lenders, with lots of creative financing, were handing out mortgages to everyone and his sister, so pretty much anyone could buy a home. Agents were making good money.

In short, there wasn't a whole lot of bad news about real estate (save for those who rightly foretold
of problems because of all those subprime, no-doc and low-doc loans, but few people listened to them).

Now real estate is troubled. And no number of positive stories is going to change that unless people see true signs of recovery. Guess what? They don't. No amount of lipstick is going to dress up this pig. (See? I'm up on current events!) That's a bit harsh: The industry isn't a pig. It's just troubled.

There are pros to buying now: With homes aplenty on the market (more than 16,000 in King County and more than 7,000 in Snohomish County), buyers have quite a selection to choose from. Rates are low and, since the government moved to take over Fannie Mae and Freddie Mac, they've fallen.

The cons: Prices could go down. Maybe. Possibly.

A recent Redfin analysis in the Seattle area showed that most price reductions are less than 2 percent. As much as buyers want the best deal, sellers want to make as much money as they can. Those are polar opposites, folks. You can't have it both ways.

Is it worth gambling? I mean, if you find a house you want, why sit back and wait to see whether prices will go down? They could go up, you know. And mortgage rates could go up, too, which means the cost of that house would go up even more. And guess what? The house will appreciate (that's not a news flash), so you'll make money if you're not flipping (and you shouldn't be flipping).

Anyway, here's my question: As a consumer, a prospective home buyer who hasn't committed to buying, what will it take to get more buyers out there?

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