Homebuyers - first time and repeat..gems precious you cannot miss!

Once in a while, there is a gem of a post which wakes me up from my slumber to do the needful

The jokers over at WSJ are at it again - stoking. Here is the link to an article which they swear would not write back in 2008, http://online.wsj.com/article/SB10001424052702304563104576361522020024248.html

Most sensible comment from this gentleman and another follow up

• Ted Nicholas wrote:

Sure, housing will improve in the long run. But, as economist John Maynard Keynes said, "In the long run, we are all dead."

In the short run in which we all live every day, I consider the following when wondering if buying makes sense:

1. Mortgage recasts will not be complete on many of the adjustable and more screwy loans until about the end of 2012. Foreclosure sales are likely to continue to affect prices until at least then.
2. Do you have a down payment of at least 10% (preferably 20% to avoid PMI) and safe income to support a ratio of home price/gross income of 3 (not more than 4 with no other fixed monthly payments) and plan on living in the house for at least 3-4 years?
3. How many of the homes in your area and price range are being bought with all cash? This usually commands a discount and will affect comps.
4. Homes have appreciated generally in line with inflation over decades. Since the market took off about 1999-2000, just add about 30% to what your house of interest would have sold for (or was worth) at that time for a guesstimate of reasonable current pricing. Looking at % declines from the peak in 2005-2006 is like bargaining down from the dealer sticker price on a new car.
5. A price/monthly rent ratio of 150 on a given house is a good place to start thinking about buying vs. renting.
6. Like politics, all real estate is local. There will occasionally be good buys available. Following home prices in your area for a while will be helpful in spotting one worth considering.

Follow up:

• Roxie Radke replied:

The only thing I'd modify is planning to stay in the home at least 7 years. Entry and exit costs are enormous on a house and easily dwarf most security deposits in the tightest of rental markets.

Other than that, this is one of the best sets of guidelines I've seen. :) Maybe the WSJ should post this instead.

peace!