Are you on the roller coaster? I'd like to hear your comments...

I get asked many times...."Do you think prices will drop further?", "What do you think are going to happen to rates?" If I (or anyone else) could definitively answer those questions, then I would be rich and sitting on my own private Island.

The real estate market has ALWAYS had ups and downs. The last time we had a significant drop in housing prices was in 1990-1991. Prices fell until 1994 and then the market began to rebound and prices continued to increase for the next 13 years.

Currently 30 yr mortgage rates are averaging 5%. For those of us that have either been in real estate or bought/sold over the last 20 years a single digit rate is phenominal. When I bought my first home in S.F. in 1986 the interest rate was 12.5% and that was a great "deal" since rates in the early 1980's were at 18%.

Timing is everything! Whether you are an investor or individual buyer, this is a fabulous time to purchase a property if you plan on holding on to the property and riding out the market. Property values will rise again and when they do, so will your equity.

I bought my current home in 1996. I watched the value rise over $600,000 during the peak in 2007. Since I had no intention of selling my home that equity was only "pie in the sky". As of today the value of my home has dropped by half since the peak. Am I freaked out that my homes value has dropped? No. I bought during a buyers market therefore I still have equity left in my home. I did not loose $300,000 because I never had $600,000 in my pocket. The only time the value of your home matters is the day you sell and the day you buy. If I was upside down in my home and am not planning to sell, then all I can do is continue to ride out the market and hope that when I do plan to sell the market is a sellers market.

In the meantime I am enjoying home ownership, getting the needed tax write-offs, and not giving my hard earned money away to a landlord so that they can get the benefits of home ownership.

What we can be sure of is that the market will ALWAYS flucuate and we can be sure that home prices and mortgage rates will continue to go up and down. Only you can decide if this is the time for you to take advantage of a buyers market. My recommendation is that you make the decision based on your personal situation and not based on the emotional roller coaster that surrounds you. How do you decide if the time is right for you to take advantage of this buyers market? Ask yourself the following:
Do I want to own a home?
Can I get approved for a loan?
Do I have money for a down payment?
Can I afford the monthly payments?
Do I have a back-up plan if I were to loose my job? (I know, a touchy subject for some people)

Is now the right time to sell? Only if you have to based on your personal situation.

Here is an excerpt from an article by Dean Rizzi at Guarrantee Mortgage. Is your choice to ride the roller coaster or to step off and make decisions based on your own personal situation? I would LOVE to hear what you think?

"We're all familiar with the bromide “talk is cheap.” Maybe it's not so cheap, if we are talking ourselves into a state of despair. People everywhere are likening the current economic environment to the Great Depression, which followed the October 1929 stock market crash and lasted until the United States entered World War II.

Revisiting the Great Depression might seem a logical consequence of our economic situation, but the constant comparison is contributing to current pessimism because too many of us are latching onto the Great Depression as a model of expectations. This latching on, in turn, is reducing consumers’ willingness to spend and businesses’ willingness to expand.

There's no reason to go down that road. Yes, unemployment is approaching 8%. Yes, housing prices have fallen off a cliff in some parts of the country (but in fewer parts then most would expect). Yes, the economy has contracted (operative term being “has contracted”). But there are many bright spots as well: We have little inflation, a very resilient economy, rising wage rates (it's true), 30-year fixed-rate mortgages at 5%, and unbelievable values in the housing market.

Yes, we can talk ourselves miserable, but why should we do that? This country offers too many positives and too much potential. Besides, isn't life just a little too short to be unnecessarily miserable?"