(post by Dee) 

Pro: Low Mortgage Rates

Rates are at historical lows, and for most credit-worthy borrowers, a mortgage of under-5% means hundreds of dollars saved in monthly mortgage payments, tens of thousands over the life of your mortgage.

Con: Frozen Credit Lines

Banks are still not lending. Yes, they received billions of taxpayers’ dollars from the Treasury, but most banks have frozen their lending. We see deals killed daily for no reason, and banks looking for reasons to not lend! Mortgage lenders are waiting for prices to bottom out – who wants to lend today on an asset/collateral that will be worth 10% less tomorrow?! 10% down is virtually unobtainable. 15% down is rare. Don’t believe the hype. And prepare to pay as much as a full point extra if you buy a condo.

Pro: Finally, some deals!

Prices have fallen and terrific values can be found. What many folks don’t realize is that in some neighborhoods, the prices have already been mostly flat between late 2006 and early 2008. That means no appreciation for 2 years, BEFORE the market decline, before Lehman, before the world financial system meltdown. Add that to a recent decline of 5-10% in prices of homes and condos in the strongest areas on NYC (15-25% decline in worse-fearing areas) all the way to a 45% decline in some parts of California, Florida and Arizona, and you see what I mean. We talk about the market still falling down, but we’ve now had no appreciation for 3 years!!! Values are there, and not just in foreclosures and short sales. Desperate developers and people on the brink of bankruptcy are taking lower offers.

Con: Watch what you’re buying!

While values can be found, the best areas (Upper East Side, Upper West Side, SOHO) and stable, desirable neighborhoods (Brooklyn Heights, Astoria, Forest Hills Gardens) have few really amazing deals. Those that you find come with problems. People who can afford to wait it out, will. Where values are, you may want to be careful. Deep downtown and Financial District of Manhattan, way uptown (LEH) and areas like Bushwick or Fort Greene in Brooklyn are where the best deals can be found on new construction condos. But those neighborhoods are not for everyone, and have looooong ways to go. And where hundreds of units are unsold, be prepared to buy in buildings where amenities and finishes promised in the brochure never happen, but you pay common charges for them for the first few years. That limestone swimming pool (20 Pine St? We’ll write about that building another time), a common roof deck or a gym may never be finished. Or half of the building ends up as a rental.

Pro: Plenty of Time, Plenty Inventory

A ton of stuff to choose from: hundreds of properties sitting on the market for months and years by now, means you don’t need to hurry or bid, like in those ridiculous years of the real estate bubble. Shopping around often means you will actually have a couple more places to choose from when a contract or two falls through due to the mortgage issues already mentioned above. There has been an overbuilding of condos and houses so plenty of new construction is sitting unsold out there. Take your time – just not on the best of deals and only for another 6-12 months or so.

Con: What if the bottom is still far away?

The mortgage banks are waiting for the prices to “bottom out” before they lend again. The commercial loans that are bad have yet to come out of the woodwork. While the residential market has been correcting itself quite a bit, the commercial market (except for the beaten-down retail) has not yet seen many write-downs, foreclosures and huge drops in values. And the economy? Who knows. We’d like to think we are close to the beginning of a recovery, but what if we’re wrong? You’d be buying real estate for more than its value, that’s what!