Is Now The Best Time To Buy A Home?

By Katie Adams | May 22, 2009 AAA
Is Now The Best Time To Buy A Home?

You're positively gleeful that you waited to buy. After enviously watching friends and co-workers snap up homes that seemed far beyond your reach, your patience has paid off. Their miscalculation has created one of the best buyer's markets in recent history and you're taking advantage of it.
You might want to reign in your enthusiasm, however, when meeting your new neighbors. They may seem a bit slow with the welcome wagon…and for good reason. According to New York Times columnist Paul Krugman, "between 2005 and 2007 alone more than 22 million Americans bought homes".

Chances are at least a few of your neighbors were in that number. If they bought at the peak of the market they paid a lot more (maybe as much as 30% more) than you did. In fact, they could be one of the 1 in 5 American homeowners that are underwater.

Because you were able to buy at such a low price, the value of their property has dropped and they're locked into a mortgage that costs more than their home is now worth. That's not the type of thing that makes for an immediate neighborly friendship. Adding insult to injury, your neighbor may wonder if you're getting that $8,000 first-time home buyer federal tax credit for buying at the "right" time.

With short sales and foreclosures at an all-time high, there's also a chance that your neighbors were friends with the previous owners – owners that had to sell because they lost their job and couldn't afford the mortgage payment or because their interest rate reset and they couldn't keep up. (For tips on how to help sell your home in a rough market, check out Closing A Real Estate Deal In A Bad Housing Market)

On the flipside, the fact that you were able to buy could be an encouraging sign for your neighbors that the housing market has bottomed and that their property's value will stop dropping. They're also likely to be grateful that the home is not sitting vacant (like 18 million properties currently are nationwide), further pushing their home's value down and potentially becoming an eyesore to the neighborhood.

And if they're struggling to keep their home they may be able to get some federal assistance too – in the form of a loan modification or refinancing.


So don't think too unkindly if your new neighbors don't show up with a plate of brownies and a friendly hello. Give them some time. They – like the housing market – are bound to come around. (To learn how to make money off soaring or falling housing costs, read Profit As Your Home's Price Changes)

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