Gina,

The elections won't mean bupkiss to the major financial markets for longer than a day or 3... the markets will naturally move as they do regardless. The MEDIA (and the realtors you are speaking with, apparently) will always look for a "reason" to lay blame in the rearview mirror... but the scapegoats are never really the market causes.

Without the benefit of a crystal ball, I am going back and forth about these options. Any feedback from you agents and other pros and investors out there?

Look for landlords desiring (or willing at your request) to offer longterm leases... and ask them if they'd be willing to sell to you on a longterm option agreed to in advance with the initial lease. You should expect to pay a minor monthly premium (which will apply to the ultimate purchase,) but you'll also be in the position to choose to abandon the purchase option at no further penalty should the market keep dropping.

Find someone very experienced in this (rarely a real estate salesperson) to guide you.

Luck!
Dave Donhoff
Strategic Equity & Mortgage Planner

"I've been told by realtors that they think the rates will go up drastically after the elections. And they are also telling me I should buy now or just after the summer high season, but before the election."

IMO, that's sales hype. As generalization, rates will rise if the Fed believes inflation is a larger concern than recession. Rates are lowered by the Fed as one possible means of stimulating the economy. Rates are tightened by the Fed as one possible means of reigning in the economy & balancing supply/demand. The Fed operates independant of the Oval Office.

"So I could look at this year as a grand opportunity to "move up" while sales are tanking and buyers get desperate."

Buyers are not desperate. Some sellers, in some markets, are feeling pressure. Whether 2008 is a "grand opportunity", or not, is a cr*p shot. Prices are still falling. If you're comfortable knowing that any property you purchase in 2008 may continuing dropping in value for a couple years before stabilizing...it doesn't matter...purchase what works for your situation.

"The worry here is - how low can it go?"

As a bank work-out officer during the late 1980s & early 1990s real estate crash, I saw hundreds (there were thousands nationwide) of condos originally priced around $150,000 sell for $10,000-$20,000. You couldn't give away a condo conversion. It took 10-12 years for these condos to regain their original sales price in value. How far will condo prices fall in this cycle? We won't know until they start to rise again. Those who purchased a 2 bed/2 ba condo in a good location for $15,000 in 1991 & held saw fantastic returns...but they had to wait ten years for them.

You're in CA, right? IMO, there's more air to come out of the balloon. You are at the epicenter of the subprime debacle as insult to injury. Inventory levels exceed demand. With those market conditions, I don't feel you're under any immediate pressure to make a decision. Watch, wait, be patient, learn your market, watch the inventory numbers...and toss the dice.

Over the long haul, real estate prices will recover & climb again. IMO, that's 8-10 years away though. If you're looking for a property to hold for a lesser amount of time...I'd wait until prices bottom & start to rise again. Rather than holding a property through the dregs, I'd buy when I see clear evidence of stabilization & that prices are again rising. I don't believe that going to happen in 2008.

/tricia

Oops, I meant sellers get desperate, sorry. Thanks for the input Dave and Tricia. I really appreciate it.

I'm in Los Angeles county coastal, which is pretty immune to rental fluctuations. No new building means no new apartment rentals, and therefore a stable rental market. These conversions have added some to the rental supply, but not enough to affect rents. In my calculations, a nice rental income beats the stock market, at least the way I conservatively play it.

On the high-end, where I would be looking to buy a home, it sounds like I'm taking a bigger risk buying this year. But then I worry about locking in a good interest rate and missing the opportune time to "move up".

Also, since it's a crap time to sell, noone's selling except retirees in homes that are completely crappy (haven't been remodeled since the 50s/60s and smell and are tiny, etc, etc. So you end up with a million-plus fixer/teardown. So I would have to figure in the cost of remodeling/rehabbing.

Sigh.

Gina, even with the market such as it is, I don't believe timing IS everything. Some buyers have been renting, lease is up, and they're tired of thowing money down the toilet~this was the story of one of my offers. Another gal had finally saved up enough for her down, and wanted to live 'only in that area'. The lady who finally bought had recently divorced, re-located from another state, and was living with her parents.

I'm in San Diego, and put my condo(San Carlos area)on the market in August and it sold the latter part of Nov., alomot 3 months to the day. I will honestly tell you I did encounter a few SNAFU's with my *very* emotional buyer, but the deal went thru and that's all that matters. I had two offers on the table at the same time, and made the choice to take her's because she put the offer in first. The amout of the two offers only differed by $3k, and had I known she was an 'emotional basket case', would have gone with the other offer.

The *right* buyer could possibly be out there looking, and his/her time is NOW. Get your condo 'model ready'(and I DO mean model!), and you'll sell much quicker that the other guy. 'Bad timing' is not enough of an excuse if you're serious about selling. ;o)

Gina, I wouldn't be worrying about interest rates skyrocketing any time soon.

/tricia

gina_w, am I reading wrong? You are looking to be a landlord?

Do you know what that entails and are you ready for it? I spent 14 years of my life as resident manager and I can tell you renters dont care because they dont own but they want everything NOW and destroy what they have.

Pattycakes I'm not selling anything.

Tricia, I wouldn't think so, but when tongues wag my ears do perk up, LOL.

Gammyt, yes, I'm looking to be a landlord. I have several friends who already are, and I know and am fully prepared for what I would get into.

Since the economy appears to be moving into recession, it's far more likely the Fed will cut rates, not raise them. In fact, Bernanke just said so. It's also doubtful the economy will be doing better after the fall election, so I can't imagine why these realtors you know are predicting a "drastic" raise in rates unless they're just doing it to scare buyers like you into buying now.

What what I've heard and read, the time period for a recovery in house prices keeps moving further into the future. Some experts are now saying 2010 at the earliest. They may be wrong, but who really knows?

So there's no reason to hurry because conditions are likely to be favorable for buyers for some time to come. OTOH, if you want to take the plunge sooner than later, why not? The chances of you buying at the bottom of the market are small in any case