November 30, 2007

Should I Buy Now?

This week, I was appraising a very nice 1400 sq.ft, two bedroom, plus a loft, 2.5 bath condo in Stevenson Ranch. The homeowner told me that she is looking to pull some equity out of her home to maybe purchase a house and rent her condo out. She asked my opinion if this is a good time to buy.

I responded by saying, “…that really depends on your own personal situation. The days of flipping a house in a few months are gone. But if you are looking for a long term gain, I would say, yes.” It was announced today that the Feds are going to meet next week to talk about reducing interests rates again. So with lower home prices and lower interest rates, the conditions to make a home purchase are very good.

I don’t care what critics, news reporters or economists say, no one has a crystal ball to see the future. We don’t know if home prices will continue to drop in 2008 or will suddenly start to turn upward. In 1996, I remember when I made my first home purchase in Los Angeles (Studio City). It was two years after the Northridge quake. The roof of the Fashion Square Mall caved in, apartment and condo complexes collapsed and the foundations of many single-family homes were cracked. The real estate market plummeted. No one had confidence in Los Angeles real estate because no one had confidence in the land the homes were fixed on. And we were constantly being reminded of the strength of that 6.8 quake from the several aftershocks that followed years later.

When I came across my Studio City condo, I loved it and wanted to buy it to make it my home. Several of my friends strongly advised me not to make that purchase. The condo complex had been completely remodeled by a new developer and the building had been retrofitted. Still everyone was saying to me, “Los Angeles real estate is declining. Don’t buy today, ‘cause prices will drop again tomorrow.” Because I wanted to live in this great condo, I didn’t listen to them and made an offer. Today, I am so glad I listened to my gut feeling and ignored the comments from my friends, because a few years later, we saw Los Angeles real estate climb upward and I ended up selling my condo in the year 2000 for a $100,000 profit.

So because I shared this story with the lady who owns that Stevenson Ranch condo, she is going out this weekend shopping for a new house. I am sure she will find a great deal for herself.