Saturday’s New York Times contained two rather provocative columns about housing, one of which surprised me by suggesting that buying now would not be a bad idea for some consumers.
If you haven’t been following my blog, you would expect me to unabashedly trumpet Joe Lieber’s stance in his piece, “In Defense of Home Ownership.” In fact, I do largely agree with him, but I have reservations that he doesn’t express.
Noting how low are mortgage rates, the columnist points out that paying back principal amounts to forced saving (though I must add the view that less saving would lead to a stronger economic recovery.
He says further that:
- Owning as opposed to renting ensures that no landlord will quixotically force you to move;
- Renting limits where you can live;
- Prices already are very low, while they could fall even farther;
- Keeping money in stocks and bonds “is no bargain either.”
What Lieber doesn’t mention is my advice that the right time to buy is when someone wants or needs to change a lifestyle and plans to remain in the home for several years, by which time the housing should have stabilized. He does point out this:
It is possible, as a homeowner, to make very little money but still buy plenty of happiness. So before you swear off real estate, reconsider a few of the basics.
In his column on Saturday, Joe Nocera assesses “A Market Frozen in Fear,” saying that the predictably optimistic economist Lawrence Yun of the National Association of Realtors “needs to get out a little more often” for his recent housing forecast.
The columnist conforms with the consensus opinion that housing cannot recover without lower unemployment and without a slackening of lender standards. Says he:
Essentially, every participant in the housing market has a reason to be afraid. And that fear is paralyzing.
Among other things, Nocera also credibly maintains that the so-called shadow inventory of homes waiting to come on the market is bound to dampen any hopes for average price appreciation. The shadow inventory includes condos in new developments, properties owned by sellers who unrealistically hope that things will improve for them, and homes that owners cannot help but losing to lenders.
There will be just too much supply in the future.
Nocera reserves his sharpest barbs for the federal government’s Fannie Mae and Freddie Mac, the rules of which “make it increasingly difficult to buy a home,” whether for owner-residents or investors eager to purchase the quantity of rental housing becoming necessary for former homeowners.
To the columnist, the July numbers are “scary.” He contends:
If the housing market is like an airplane on a runway, it is far more likely to crash at this point than it is to take off. That is why the July numbers are so scary to those in the housing business. . .
On the ground, they don’t look like a blip. They look like a very painful future.
I’m not about to argue that Nocera or the experts whom he quotes are wrong. I, too, have serious concerns about the future.
But Lieber makes a good case, too, and I believe I can sufficiently distance myself from my self-interest to maintain that anyone who doesn’t expect to remain in the new residence for at least five years and have an overwhelming need or desire to move should not take the plunge. Others should think about it.
Just as all real estate is local (as I stressed in a post last week), all real estate decisions are personal.
For anyone with more than a passing interest in the housing market, don’t you agree that the two columns arriving on the same day offer an abundant feast for thought?
Note: I tweeted about these columns when I first read them on Saturday morning. Following me is the best way to stay on top of the news in brief, while reading my posts is the most comprehensive approach to consider later on.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022