Is a distinction made between the DINK's looking for an artsy fartsy living experience with those lifestyle amenities vs the young families looking for playgrounds, public schools and convenient shopping?

I suspect the two types will pretty much separate the city vs county buyers and as the (now 67 posts) Silo Point thread shows it really doesn't serve anyone to try to discuss the choices without those sorts of distinctions being clear at the outset.

Back to your Q... The reasons to buy are (imho) pretty clear and the same basic sociology as has always been the case: a buyers financial ability combined with their sense of social stability justify the commitment to a purchase and with the responsibility of ownership offset by the financial and social rewards of ownership they will park some of (perhaps all) of their ready cash into a down payment.

The tax credit, some incentives from my job, a decent income, enough money saved up, and low interest rates and falling property prices all made me want to get into the fight.

While home prices could continue to fall, I don't plan on going anywhere, so I'm willing to weather that storm.

Of course, I would never consider the city because of the taxes and what it would do to my car insurance. Forget it.

I finally saved enough to make a decent down-payment. That's my real reason.

we thought about buying at the start of the drop in the real estate market. we thought that we could get a good deal and stop wasting money on rentals.

but after dealing with a mortgage guy who kept trying to push us into homes that were more expensive than we were comfortable paying, we decided to sit tight for a while and save more money for a better down payment.

I'm a first time home buyer. I decided to enter the market because it was the right time for me - I have a sizeable down payment, getting married in the fall, settled in this area with a stable job, and sick of a tiny apartment.

Yes, the drop in prices has been encouraging. However, I think most first-time buyers activity is still in the condo/townhouse market - the tax credit doesn't help those with income high enough to afford a nice single family home in the county.

I was tired of paying someone else's mortgage with rent and knew I wasn't going anywhere anytime soon. Low prices made buying a home accessible for moderate to low income individuals such as me. Also, it feels good to know that I'll at least get the money back that I pay each month.

Every time I smell the neighbours' cooking in our kitchen (gross!) or hear their, ahem, too passionate love making at night, I think that we have to move. But then I remember that instead of 1300$ rent we'd have to pay about 2500$ (mortgage, PMI, taxes, insurance, etc.) for a privilege of living in a modest townhome in AA county, where we could still have the same problems without an ability to move away. So I pop in the earplugs, spray some air freshner and carry on with my live in an apartment.

1st time buyer here.

Have saved for 20% down, married now, (we are DINKS). Looked into Baltimore as we would rather live in a city but, the combination of higher taxes and longer commute do not make it a practical decision.

Current issues delaying our purchase in the suburbs are:

1) Job security concerns. (This is a big one, everything else is minor)
2) Macro trends - it is not like we will see a big rebound in the next few years.
3) Current market overpriced. i.e. nice homes listed above FMV due to seller being underwater.
4) Pushy Realtors.

Not a first time buyer but a first time buyer just bought my townhouse which enabled me to move up. I know he was motivated because he receive a grant and also the 1st time homebuyer credit.

I moved because of the historically low rates as well as the great prices. I know they may drop further by this is a long term investment and it was worth the risk.

Nick T. - excellent analysis.

Joe - ESPECIALLY these days, a home is not a long term investment. It is a place to live. Another 25% drop between now an 2012 will very likely never be recovered in your lifetime. So I hope you are really really really happy with your home, enough so that you will stay there a long time - if so, you have done OK.

Got plenty of money saved up, looking through listings everyday, holding off on renewing my lease....

But homes are still overpriced!

I won't buy a home until it's within arm's reach of a comparable rent. I'm saying the monthly payment (mortgage + tax + insurance) should be within 10% of monthly rent. Go ahead, tell me I'm dreaming sellers!

Darwin Rules - I am Happy with my investment. Even If I don't make a penny over the next 25 years I will be able to deduct all of the interest and it will be paid off.

I have a house that I will live in until my kids are grown and it will be paid off in 25 years so I don't have to worry about the price going up/down.

Yes there are some properties that are grossly overprice but you are living a dream if you think prices are not going to be where they are now in 25 years. Look at prices 25 years ago. Many people thought they were hight then.

Darwin Rules - So what you are saying is the home prices are going to be at 50% less then what they we in 2006? I just bought a house that was valued at $650K in 06 for $480K.

I agree that values are going to drop a little more but you can't make blanket statements for all markets. Obviously markets in Florida, California and Arizona have depreciated more the others. You also go as far as looking into specific areas - Homes with better schools/amenities are going to hold their value more then the "transitional" or neighboring communities.

Darwin Rules - how is your cabin in the woods and manifesto coming along?

nice try - living on the golf course and living well below my means. No manifesto - just simple common sense living until the great shakeout is over

I am a first-time who has not purchased a home yet. I was in the market last year, and luckily chose to wait.

I'm out in Howard County, and I still see the same problems I saw last year. Home prices are still too high, and the housing stock at the low price range is in really bad shape. I'll likely wait until next year.

And the $8000 credit doesn't really make a difference here. When the home is $400k, the $8k credit is only 2%, and that's if you qualify for it (in my case I don't).

Darwin Rules-

Many experts believe the values have hit bottom already. Most experts are wrong most of the time, but an additional 25% drop over a 3 year period as you predict sounds a bit steep. Inflation is going to be a problem and that will most likely mean home prices will eventually go back up, but instead of 20% to 30% a year, it will keep up with the pace of inflation which is normally 3% to 5% a year.

When the foreclosure crisis is over, and it will at some point, you will not see the fire sales you see today. There will be a lot less homes on the market. Supply and demand will find a higher equilibrium. The real estate bubble will never happen again. Yes, your home is the biggest investment you will ever make. But when you pay down the principal and have 5% appreciation per year, you do just fine...

Also, the $8,000 tax credit is not just for those who want to buy a home for the first time. It applies to everyone who has not owned a home in the past 3 years!!!!!

Frank - agree inflation will be a big issue down the road. For now, however, we are in a severe deflationary period. Material and labor costs are way down. Inventories are overstocked. Unemployment at highest level in 20+ years.

I would like your opinion on the following. Why are prices so much higher than the late 1990's? Are personal income levels increased since then? Is land a now scarce commodity? Are homes better constructed out of premium material? IMHO, the answers to these questions are all a resounding no. Please educate me on why the price per square foot of homes doubled since 1999! AS I have previously stated, I see nothing to stop the bell-shaped curve of housing prices from reaching the pre-bubble baseline. Even today's news of Obama considereing letting people stay in their hoems for free.

@jfg

Seems like we're in the same exact boat. Why does it seem like half the sellers HoCo haven't heard about this housing bubble popping? I'm still seeing houses listing at 2005 and 2006 prices!

Darwin Rules:

Please provide me with evidence that the median price per square foot has doubled--accounting for inflation (whichever benchmark you choose)--since 99 in the Baltimore metro area (not nationwide).

Financing rates affect the supply/demand curve which helps dictate pricing, whether for good or bad. Who knows if inflation will come... and how it will affect things. But without it; it's a hard sell that houses are unaffordably high all things considered.

Kevin look up the address on the SDAT website and you will quickly see why the seller wants to hold onto the high price: they genuinely need to either from the initial purchase or from the la de dah redecorating loan they have.

Also, and as Jamie told you before... "go to mdlandrec.net, where you can look up mortgage documents. You won't see how much a homeowner owes as of now, but you will see how much he or she borrowed to buy the home and whether he or she borrowed against the home later."

The alternative to the high price is (too often) to enter the swamp of the short sale. Can't say that I blame them but that doesn't mean I' willing to bail them out either.

Darwin,

Frank and the other "realtors" seeing tons of first time buyers coming through will never answer your questions - "Why are prices so much higher than the late 1990's? Are personal income levels increased since then? Is land a now scarce commodity? Are homes better constructed out of premium material?"

They will never answer them because they have no answer. Fact is - the housing market in Maryland is nowhere near bottom. Nowhere near. Unemployment is only going up. Salaries are coming down. We just came out of a global crisis b/c banks were handing out free money..they are no longer doing that. Where is the money coming from. Are the Joe Towson State grads who have loads of school debt going to start ferociously buying all the "under 250,000 homes" that nobody else wants? NO. Some will yes. But the smart ones won't.....I still see insane new listings where people who bought townhouses in 2003-2007 asking double the price today. What exactly goes through their minds? They are playing the lottery. Just please stop with the "housing is bottoming" talk.

Kevin R - It's because they can't afford to sell for less. The house that are priced right and are in good condition are selling fairly quickly

Yes, thank you everyone. I'm pretty aware of the rationale for why prices are being listed so high and am very familiar with mdlandrec. I was just throwing it out there. Something definitely gets lost between hearing someone say something and reading what they say.

Also, Mr. Rational. Are you stalking my comments? haha, it really feels like you're keeping track of EVERYTHING I write here.

I did a search, and Jamie posted that reply to a comment of mine on March 1 of this year. Did you really remember a comment from that long ago? Kind of odd...

Ok I agree - the data out there is specific to median prices rather than price per square foot, although we do know median prices did more than double from late 90's to peak.

I prefer to look at the change in price per square foot when looking at specific homes. That way you are comparing apples to apples for the specific home.

well here is an example of a home just listed today. This looks like a nice mid-upper family suburban home.

http://www.drodio.com/maryland-real-estate/bel-air/1111-pinebury-ct-bel-air-md-21015-hr7109015.php

In 2001, sold for $108/square foot. Today listed at $199 per square foot.

A 84% increase since 2001. WHY?? Did they put in gold toilet seats since then?

Darwin: why does anything go up in price? I honestly have no idea how anything is priced anymore- it certainly isn't from labor or true cost of materials. Nor do people's wages make sense. Ditch diggers get paid less than office assistants. So I guess it comes down to desirability. That's incredibly subjective of course.

Kevin, nothing so diabolical.

When Jaime posted it back then I copied the comment to a background stickie for later follow up... and it has remained there since.

Another: Persons attempting to find a motive in this narrative will be prosecuted; persons attempting to find a moral in it will be banished; persons attempting to find a plot in it will be shot.--Mark Twain

Darwin Rules - The house is a bit overpriced if you take into account a 5% return over the past 9 years it should be $168/sq ft but they could have done some upgrades - there is no way to tell.

One thing you need to remember is that the Seller determine price and many times the sellers don't take the realtors advice. This example could just be another one of an overpriced home on the market that will sit there until it is reduced.

Leslie - the answer to your question: prices typically go up due to increased demand. In the case, the demand was artifically fueled by easy credit that turned homes into ATM machines, and allowed the part-time employed to spend a few weeks and $$ getting e real estate license, followed by huge easy paychecks. There is no such thing as a free lunch. What goes up must come down. The jig is up.

Joe applying a 5% annual rise (compounded yet!) for each and every year is just as wrong as any of the other models for appreciation.

The 'common wisdom' says 3-5% but it also wisely avoids actual specifics.

eg: In growing suburban areas the construction of a school nearby (or not) and other such factors completely independent of the structure must be accounted for too. In the example above the 2001 price may have been lower than otherwise justified because that school wasn't built yet.

Which is where DarwinRules and his assertions comes into play... There are no absolutes. Hyperbole or not, to infer that the physics laws (gravity?) apply even though it may appear to be a factor is absurd.

And FTR, I also agree that most RE in the region is still over-prced; perhaps even all of it. But by how much is pure speculation that none of us will know for five years to come. To imply otherwise is facile and presumptuous.

Darwin Rules:

The house you posted is more an example of an unrealistic listing than what is actually selling. There are plenty of examples of delusional sellers out there: this is a standard house in a normal neighborhood. Nothing that would warrant a price appreciation only marginally above inflation.

I'd call this an outlier at best, irrelevant at worst. It won't sell at close to that price.

I'm not as sanguine as Joe. It's not a special neighborhood and the building quality is ordinary. I'd say that those types of houses should only pace inflation at best--and your more interesting stuff: either exclusive neighborhood, beachfront, etc.... brings in supply/demand curves.

$350k and no more.

I found a house I liked.

And like every other FHB I got an absolute steal.... the best deal in recent memory.