Three Key Rules for an Unpredictable Housing Market On Feb. 19, I wrote about the housing market, and news out of the National Association of Realtors that home prices were starting to stabilize in many markets. The NAR's most recent report showed that 78 U.S. markets experienced growth in the fourth quarter of last year, and existing home sales were up 15.4%.

This was good news: It, along with better jobs numbers, indicated that slowly, the economy is recovering. But now, just a few short weeks later, some signs are pointing toward a double dip. The S&P/Case-Shiller home price index that came out Feb. 22 said national home prices fell 4.1% during the last quarter of 2010. Robert Shiller, the co-founder of the index, predicted that prices have the potential to fall another 15%, 20% or even 25%.

"There are several measures out there -- the National Association of Realtors, Case-Shiller, CoreLogic (CLGX), which follows closely in methodology to Case-Shiller. And then there's the Federal Housing Finance Agency, which tracks Fannie Mae and Freddie Mac loans. Basically, they're showing, in many markets, a return to year-over-year price declines. There are a lot of reasons to believe that in many markets, prices are continuing to soften," says Eric Belsky, the managing director of Harvard University's Joint Center for Housing Studies.

Here's the thing, though: Getting caught up in all of these national measures will drive you crazy. Yes, they're important. They're particularly helpful if you want to sell your home and you're waiting for the value to come back before you put it on the market. They can also give you a rough idea of where the market stands, if you're a buyer wondering whether to jump in. And of course if you're an investor considering putting more money into (or taking it out of) real estate related stocks, those measures matter. So by all means, you should keep an eye on them. But there are several tenets of the housing market that you ought to follow, no matter what:

• Think local. I've said this before, but it bears repeating: You need to look at your local market, not national, state or even, to a certain extent, city data. These numbers are all well and good, but if you're seeing stabilization in your neighborhood (homes are selling faster, for more than they did last year or even last month), it might be time to pull the trigger on a purchase or think about putting your home on the market. On the flip side, if there's a wealth of inventory and a lot of empty homes in your area, it could mean that average prices are still going down. Vacant homes tend to signal distressed sales, because people don't want to pay for a house they're not living in, so they're more willing to price to sell. This can drive home prices down, at least slightly, across the board.

• Take your time. We don't know if we've seen the lowest of the lows, or if this double dip will materialize. That is, of course, the frustrating thing about the bottom: You can't put your finger on it until it has passed. That's why most experts will tell you not to to try to time a market bottom. Instead, take your time finding a house you love in a neighborhood that you'll remain in for at least five years or so.

"We'll always tell you, it's really difficult to time the markets, and it's especially difficult to time when to jump into the market," explains Belsky. " But buyers don't have to have a sense of urgency. Interest rates have drifted lower again, and house prices don't appear to be going up in lots of markets."

• Make sure you can afford it. Home ownership is just one goal among many others, including retirement and a healthy emergency savings cushion (always important, but even more so when you're on the hook for a mortgage). By all accounts, rising gas prices are going to put some added pressure on household budgets. That doesn't mean you can no longer buy a home, but it does mean you might want to take a closer look and make sure all of your wiggle room hasn't been eaten up by the increase. You don't want to stretch yourself too thin. When you buy, you want to be able to afford the home -- and any unforeseen expenses that pop up along the way.


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Robert & Lisa

We're getting ready to try to buy our third house in as many years. Thanks, Obama and thugs. Our socialist public educational system has indoctrinated our children into believing capitalism and freedom is bad and socialism is good. If Socialism is so good, why does the long time socialist government of Mexico boast of being the #1 producer of silver, plenty of oil, and the richest man in the world, yet 99% of their people are in the poverty level making an average of less than 6 dollars a day. Corruption is rampant. The evil, ultra rich see Mexico and want to implement socialism here, where they can have all of the wealth and power and the middle class will now be among the poor. That is what their Demoncrat puppets in the white house and senate are doing to us.

March 15 2011 at 6:38 PM Report abuse +3 rate up rate down Reply
jamesbnetzer

Many buyers have lost the fact that the primary factor for most families in buying a house is that it should be for shelter and not a short term investment. If you are looking at buying a house (or condo) you should take a long term view (10+ years) and not try to time the market. For a house to be a "good deal" in the long run consider the following: 1) do you like the neighborhood, 2) does the house meet your needs, 3) can you afford the payments (including taxes, insurance, maintenance, etc...)? If you can't answer a resounding yes to these three questions (especially No. 3)then it is not a "good deal" and you should move on.

March 15 2011 at 12:21 PM Report abuse +2 rate up rate down Reply
lelandwmckee

We will enter a planned double dip, as planned.

March 15 2011 at 11:38 AM Report abuse +5 rate up rate down Reply
dray907023

THE HOUSES ARE STILL WAY OVER VALUED . THEY ARE CLOSER TO FALLING OVER THE EDGE AND GOINING UNDER WATER THAN ANY GAIN IN REAL VALUE.

March 15 2011 at 11:24 AM Report abuse +2 rate up rate down Reply
Mark

Here is the logical solution to fix our sick housing market and our economy!
The "One - Year Mortgage Holiday" 9 Point Economic Recovery & Jobs Plan as fully detailed at www.saveoureconomy.com is indeed the silver bullet solution to solve the current housing, credit, banking, financial crises, that will immediately jump start our economy, create millions of new Jobs, stimulate growth and generate long term economic prosperity through out America! The Mortgage Holiday Plan is the bold, ingenious ultimate "Trickle Up" stimulus plan that will help all home owners, renters and small/medium businesses that will actually work to stabilize the housing market and get America's economic wheel of commerce rolling again, which will also help balance the Federal budget and help start reducing the National Debt, which will strengthen the American dollar.

The Mortgage Holiday is a fair and balanced legitimate stimulus plan, Of, By and For the People, Main Street that empowers We The People, allowing us to have a well deserved one year time out from making our monthly mortgage payment, so that we can decide how best to save, spend & invest our own money. Renters of apartments, office & retail space will also receive a monthly savings and partial rebate in rent.

If you should agree, then we urge you to speak out in support of the "One - Year Mortgage Holiday" 9 Point Economic Recovery & Jobs Plan, that is supported by a majority of American's across the country, that actually take the time to simply read the Plan at www.saveoureconomy.com!

Mark

March 15 2011 at 10:42 AM Report abuse +2 rate up rate down Reply
manmi1

With the new batch of republicans a further depression is almost a certainty. They have already had to lay off thousands in the state of Wisconsin, although unless you know the true story, the news never tells it. One city has already laid off one third of the teachers. These supposed job creators are really job killers and the next two years will show it. Will the republicans then say they're sorry and vote in their own best interest next time.... or will they continue their journey to the dark side?

March 15 2011 at 10:41 AM Report abuse -5 rate up rate down Reply
joej666

When people start thinking of a house as a place to live first, investment second, instead of the other way around there will be more stability. That being said, new regulations in April will make buying more difficult. There are too many factors that can determine interest rates, so all you can do right now is think price. Those who price too high will see prices fall, those who price right will see stabilization.

March 15 2011 at 9:24 AM Report abuse +4 rate up rate down Reply
ump495

close all the banks. have the government seize all their money and take them over. then the government can create jobs once owned by the corrupt banks and make loans and with money made put it towards our debt yea let the goverment be the replacement for the evil/corrupt j managed banks and start loaning money to people to buy up the millions of deserted homes now setting and wrotting as we speak. then the building of new homes can began and we may start an upward turn. then along with this, start dilling in dakatos and anwar and flood the market with oil and gas and gas will drop to under a dollar a gallon. also good for working people and the economy. pass a law the kids must ride a bus to school - no more hundreds of cars parked on school lots when bus service is available. put a very small surcharge tax on everything from bubble gum to dish detergent for a perod of 3 years. start a united states lottery in every state. only do it once a month on the first saturday of the month so as to not interfere with state lotterys. reduce the national highway speed limit to 55mph and have benefits for those that carpool. not financial benefits but maybe a half day off on friday for carpooling. creat a flat tax on every person in america that makes any amount of money. STOP atm cards for welfare. create more jobs by creating warhouses that hand out food to those that need it. yea, 3 chickens, 3 pounds of blongna, some cheese, powered milk, crackers and little fruit. no ice crea,, steaks, cookies, or atm withdrawals for cash at casinos. if america really wants a future for our kids and g-kids, we all will have to pay. but with my plan, and i have other suggestions. we can beat this thing it we do it together and stop the games in washington. can you imagine the money being wasted in our budget by dong a line by line elimination of things that are pure pork and a pure waste of money. yea lets all start fixing the problem instead of arguing like the idiots we have in washington. come on people, we can do this with not to much of a prolem. i really do have some other dam good ideas to help the economy. there are thousands of items in the budget that would shock the average american if they only knew how our money was being so wasted...we have to get united and real - less we are doomed

March 15 2011 at 8:48 AM Report abuse rate up rate down Reply
cyberfreddie

O.K. Let the criticism of Obama begin!!

March 15 2011 at 8:48 AM Report abuse +1 rate up rate down Reply
lenders1

It seems many giving advise truly needs some themselves!

March 15 2011 at 8:45 AM Report abuse +1 rate up rate down Reply