…Given the trajectory of home prices over the past couple of years, there's a large contingent of buyers who are afraid that after they buy, home price(s) will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the bottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities) -- from a Trulia.com article entitled “6 reasons Buyers aren't biting (and what Sellers can do to change that)!”
Chances are if you are reading this, you suffer from schizophrenia because you are both a seller and prospective buyer. You want to move to that perfect golf community home but you hate the thought of selling your primary home for 25% less than you could have fetched for it four years ago. And, as Trulia.com indicates, you are probably nervous about buying something that might depreciate in value over the coming years, given the political climate and all the foreclosures and other economic badness that could be on the horizon.
Although our anxieties about the next year or two may be realized, I suggest we put aside those fears
You can do a couple of things to make yourself feel better (and protect yourself) on the buy side (besides deciding to rent for the rest of your life or live out of a Winnebago). Negotiate the best possible price you can, but don’t abuse the seller (remember how it feels as a seller yourself when you have to parry ridiculously low offers). If you find a re-sale home in a golf community that you like, go low with your offer but not so low that a counter offer will seem useless to the seller. On the other hand, if you are negotiating directly with a developer, go as low as you want. Most developers have developed thick skin and many are desperate enough that they just might surprise you with a reasonable counter offer.
The Trulia article suggests that, “Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.”
The best trick, though, is to put yourself in the mindset that lifestyle is the most important consideration for you at this point in your life, and to get over the fear of falling prices. If the market is not yet at its true bottom, you may lose incrementally more in the sell than the buy transaction. But what you lose in your net worth will be more than compensated by what you gain in lifestyle (golfing as often as you like, for example). So…..
In your life expect some trouble,
But when you worry
You make it double.
Don't worry, be happy
Homesites in Powell's Point, NC's Kilmarlic Estates, close by the excellent Kilmarlic Golf Club, have dropped in price from around $200,000 at peak to around $70,000 today. They are currently bank owned.
Photo coutesy of Kilmarlic Golf Club.