Would you buy in current market conditions?

17 years ago

We are in the process of making an offer for a condo for my daughter in St. Louis area while she attends at SLU.

We have noticed that prices have come down a bit in the last few weeks. Our offer is about 10% below listing price.

We have learned from this board that in some markets, the prices have dropped to 2005 price level. We also learned that there will be true test of housing prices in August/September.

How can we make an offer in the way that it will protect ourself from the drop in prices in August/September? Should we wait until August/September by purchase the condo?

The price range we are looking at is 120,000-160,000. Would 10% drop be the worst case? If there is 10% drop then the one year rent will make it up for that?

Any input is appreciated.

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Comments (13)

cearbhaill (zone 6b Eastern Kentucky)
16 years ago
I think if you need a condo then buy a condo. Trying to outwit the real estate market is a fools game.
I just sold one home very quickly in a depressed market and then bought another in one as well- got a heck of a deal, too. If I had listened to the gloom and doom news reports I'd still be waiting for the right time to do anything.

If you are buying a home for a child whose education you are also paying for, then obviously this transaction isn't going to break the bank. Buy now, get the best deal you can find, and be happy.
triciae
16 years ago
Anybody making predictions here on this Forum are just offering opinions, including myself.

If you need to make a home purchase then make it. Might it fall in value...maybe. Nobody knows for certain.

Nobody can tell you where the market bottom is either. Will a condo lose more than 10%? Nobody knows. Historically, condos lose more than singe-family homes in a down cycle. In the last downturn, 1987-1993, condos certainly lost more than 10% but this time...who knows? There are differences in every cycle.

You have to make your decision based on the best info you have at the time of the decision. Your real estate market may be entirely different than national trends...either for the better or worse. We don't know your local market.

My best advice is to take a look at what happened to the condo market in the last down cycle, look at today's supply/demand, speak with your banker (they have a lot of trend data at their fingertips), & then make your decision. Also, since it sounds like you'll be owning this condo for a few school years...what happens in the market over the next 18-24 months might not be too relevant.

Tricia
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chrisdoc
16 years ago
If there is 10% drop then the one year rent will make it up for that?

What will you be paying in interest, closing costs, maintenance fees, taxes, repairs, improvements etc. (+ realtor commisions if you plan on selling in 4 yrs) Will one year of rent also cover that?

If you really do the math you will probably find out that unless there is a decent rate of appreciation, you will most likely lose on purchasing realestate for the short term.
dssxxxx
16 years ago
Buy now..........just closed on a second home March 1.
chisue
16 years ago
Do you want to own a condo in St. Louis as an investment? I ask because I know a LOT of kids who do not finish at the school they attend as freshmen.

Taken as a business investment, no, I would not buy anything right now. Maybe the condo-cum-dorm market is different. I'd say we have at least 18 mos. more of shake-out and dropping prices in real estate in all of the US except the NW and a few other areas of job growth.
peppermill
16 years ago
I'd rent her a nice apartment in a safe neighborhood convenient to her school. Unless you plan to keep the condo for more than 4-5 years, it's not worth it.
susana_2006
16 years ago
I would emphasize peppermill's advice-- "safe neighborhood". I knew of a family who did buy a condo in St. Louis for a student and then were shocked to find that the windows had been broken by gunshots on New Year's Eve.
A nightmare for sure.
Good luck
Susan
johnmari
16 years ago
Ditto peppermill and chrisdoc on the potential wisdom of rental, and ditto chisue on remembering the possibility for transfer to a different school. I did (my financial aid went kaput), and my folks would have taken a bath if they had bought me a condo when I started out or even at the school I transferred to. (There is also significant merit IMO, at least in later academic years, of the student being in charge of finding and at least partially paying for his/her own living space rather than having Mummy and Daddy do it for them. Makes the eventual Introduction To Reality a little less unpleasant.)

Does this school not have dorms? Or are dorms too "uncool" for your offspring?

As for would I buy in current market? Heck yeah. Rents are absurdly high in my area, especially if you have a dog bigger than the average purse - we could pay a mortgage, taxes, insurance, water and sewer on a pretty decent if small house on what it costs to rent a much smaller dog-enabled apartment (not including utilities). So if we want somewhere to live, we gotta either shoot the dog or buy something, and I'm kind of averse to shooting the dog. He's annoying but I'm kinda fond of him, y'know? ;-) I'm hoping we sell fast because I'm already in love with a house...
quip
16 years ago
Well, I transferred after one semester as an undergrad. I'm glad there was not a condo to consider. A friend bought a condo for his daughter when she went away to school; they sold at a loss within a year when she decided go to school closer to home. Personally, I would not buy for an undergrad, though I might consider it for a student in graduate or professional school.
chisue
16 years ago
Even if your child uses the condo for 4+ years, you have no idea what the market will be when you want to sell. Your only option may be to rent to college kids -- oh, please, don't go THERE!
saphire
16 years ago
As everyone else said, unless you are planning to use the condo as your vacation home or retirement home or where you will downsize to when she is done with it, I would not consider buying her a condo. One thing that was interesting about the thread I posted last week that NOVAHOMESICK said was about rents being cheaper than owning. This is without calculating sales and closing costs. So unless you have pets or special circumstances, in many areas it really does not pay to own. Sure if this were 2000 it might make sense, but today in a market that most believe is going down. No way
sharlee
16 years ago
Yes, I would buy in this market. Lots of good deals now. Here in Oregon, however, prices are going up in the mid-range condo market as the High End had been HOT & is yet. Not everyone can afford those, though, so your price range should be a good investment.

Are you able to rent out this condo should something with your daughter's schooling change?

One condo I purchased last year to live in can be rented should I want.

Another one I currently lease to renters is grandfathered in as the current buyers must be owner-occupied. Just a thought.

Let us know what you decide.
Sharlee
disneyrsh
16 years ago
Have you considered the option of renting?

I don't think any of us here has a crystal ball.

When the market goes soft, though, traditionally condo prices sag the most and are the last to come back in demand.

Would you buy in current market conditions?

Comments (13)

cearbhaill (zone 6b Eastern Kentucky)

triciae

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