It'll be a good time to buy when the tax credit goes away. If the seller knows you're getting a bonus if you buy by a certain date, they're going to ask more.

Wait until the stupid bonuses and credits are gone and then go shopping. I can get a better deal on a car now than I would've during cash for clunkers because the moment that thing was announced prices shot up.

The threat of further depreciation is very real. However I think many people view houses incorrectly. They really aren't an investment, even though most of us think of them that way. At best they're a piggy bank that prevent you from "throwing money away" on rent. But you should have no expectation of making a profit on the purchase. After all, you need a place to live anyway, right? If the value of your home keeps pace with inflation and you sell it at that price (purchase price + inflation) when you're ready to sell, you'll have recouped the purchase price and you'll get the money you paid for it back. As well as having a good place to live in the interim.

Having said that, it still makes perfect sense for some people to rent. For instance, if they can't afford the downpayment to buy a house, or if the cost of renting is sufficiently low enough for them to save money. Or their credit sucks and they need an exotic loan product to make a purchase.

@xenth: sellers are just as impatient as buyers (because, in most cases, they are buyers themselves).

Use the tax credit. Take the incentives. If you can afford it, now does not seem like a bad time for a home purchase.

A single family house with a white picket fence used to be the American Dream. Home ownership still is. Paladin_11 is right in saying that renting housing makes sense in many instances, but the government has encouraged home ownership through the deductions for mortgage interest and real estate taxes, even before the credit programs. Prices are starting to inch their way back up and as long as interest rates are as low as they are, it may make sense for people to consider buying rather than renting. What they have to do is figure out their real cost after deductions versus the rent they'd be paying. Historically, housing has increased in value faster than the rate of inflation. It's not an investment; it's a place to live, but the idea of owning an asset that will generally hold its value is really attractive.

The UK had 2 false housing bottoms. The price drop slowed and then started again. Just as likely normal variation.

The trend will continue downward. ...

I have a feeling that home prices in many U.S cities are being kept artificially high right now (sound familiar?) because banks are holding on to foreclosures, not releasing them for sale. Because of this, supplies are artificially short. Demand is high, because you'll see a home listed on the MLS for a nice amount, but then you find out that 35 people are bidding on it and the price is now actually 20-30% higher.

Once these foreclosures are let loose, you're going to see prices start to plummet again.

I lol'd

@Paladin_11: If you break even on a house, that's the best investment you can ask for.

*sigh* I really wish I could take advantage of this right now. I had a house available in my hometown (win!) that had four bedrooms (family win!) two baths (morning win!) a garage, a nice basement (catbox win!), and a good yard (son win!) for a little over $70,000. Thus, with the $8,000 tax rebate, it would have been $62,000. A crazy awesome house in crazy good condition with low property taxes and everything I'm looking for in a house.

Unfortunately, I'm just going to be done with school in December, and between student loan payments and payments for the loan on my car, I cannot afford a mortgage payment as well; and I really don't want to take it and default on it and become part of the housing market problem.

Oh well. Hopefully sometime in the future.

Don't forget that when your home value goes down your property taxes go down too.

So if you're not planning to sell your house anytime soon the lower values actually put more money into your pocket.

Go Reno! One of the worst.

Glad I'm a renter right now. Very glad. Extremely effing enthralled, even.

I wish my co-worker the best buying a home here, and I'm halfway tempted now to print this out and show him exactly WHY it's not always a good idea to buy. he seems to insist buying a house will always make you money. Enough money to flip it in 5 years for profit, every time. I told him Economics disagrees and he told me "The economy has NOTHING to do with buying and selling a house!"

It's saddening. I guarantee the guy's going to be debt-wracked like mad.

70 @ohenry:

70 grand? For a house that isn't condemned from being used as a meth lab / crime scene / filled with spiders?

I want to go to there.

Wife and I are house shopping. In LA, if you want a house that is A) not a gang warfare zone and B) not currently on fire, you're looking at $500K, easy. Oh, you want neighbors that don't take dumps on your porch? You have to move to a nicer area. $750K please. Ugh.

This makes me sad. I never intended on buying my house to make a profit.
My little 1 bath 2 bedroom starter house will also be my ending house. With 20 years left on my mortgage and the value now 70,000 less then I owe I will never "move on up" Oh well, hopefully I will be lucky enough to be in my house to the end...

Hopefully though, my kids (teenagers) will be able to afford a house easier then I did if the prices stay so low.

@dorianh49: Based on my own anecdotal observations, I'm inclined to agree. I live in a neighborhood with a pretty substantial number of foreclosed houses. There are several properties nearby that have been vacant for 9-12 months and I've seen little to no effort to market them.

The whole thing is such a cluster$%^#. Why kick people out of the houses so the properties can sit empty and rot for a year? At least when people lived there the snow got shoveled and the grass was mowed more than once every couple of months.

@RandomHookup: as a homeowner, i'm really just pretty excited about not having elephants thundering around upstairs and not having to share a water heater. for me, it would be worth the increased cost.
except, as a homebuyer in an area that's on that list my mortgage and insurance is about $21 higher for 900 more square feet than the last apartment i lived in so it's a huge improvement

@ohenry: my mortgage is lower than my last rent [which was on a smaller house] and i got 100% financing for a first home buyers plan through my credit union. if you are not yet a member of a credit union but have the opportunity to join one, it might be worth checking out their mortgage options and see if it's worth it for you.

I need to find a place in Northern Va with cheaper rent. I just do not have down payment money yet.

I'm floored that CA only placed once in the list.

@ohenry: butbutbut your mortgage payment would be less than $350 not including taxes and insurance. That's cheaper than most rent. At least then you'll probably get that money back in the end. With rent, you get back nothing.

Believe me, when the right place falls into your lap, sometimes it's best to go for it if you possibly can. Work the numbers. You already know what the loan payment on your car is, and you should be able to find out what the total payment on your student loans will be in the future.

If you don't have a lot of down payment, and want to avoid PMI, look into a 30 year fixed-rate "piggyback" loan, AKA 5/15/80 loan, putting down 5%. So, at $70,000 with 5% down (plus buyer's expected closing costs) $4,000 down. Subtract the $8,000 credit= $58,000. At current interest (5.5) you're looking at around $340 per month on a piggyback. (not including taxes and insurance)

OTOH, if you're thinking of moving out of town in the next two years or so, and your apartment is $300 a month, including electric, water, and cable TV, it would be better to stay where you are for now.

@Ratty: Why anyone would want to live in Reno is beyond me. That place is a cesspool.

@Mr.Duke: Indeed. I hear Detroit is offering a full city block for free.

@SGriswold: Hey, Griswolds! If you're in tech or medical, come to my neck o' the woods. Houses in our area of NC go anywhere from $50,000 up to the millions (McMansions, bleh). You can get a nice place with acreage, great layout, etc. for $190,000 - $250,000. And we've got sweet tea. That should be a deal-maker right there.

@dorianh49: This is why they are holding on to them, they don't want to see their investments drop like a rock any more than anyone else does -- if they are able they will likely let them out in a long trickle to keep that from happening.

@Trai_Dep: That may or may not be good news. I guess Detroit is not on the list because they can't even give house away there. There *is* no further 'down' there.

The only reason Flint Michigan did not win is that houses there have already lost 90% of their value from 2002.

@SGriswold: Yeah, that's pretty much the case here in the DC area too. I've seen some much older houses that hover around the $300k mark, but they all required some renovation. One house we saw had a boarded up basement - who knows what was living down there. They were asking $350k! And it had all sorts of crappy things the previous owners had done to it. All of the newer homes pretty much start at $500k, with the larger McMansions going for anywhere from $800k to millions.

@sonneillon: Us either. What areas are you looking at? The outer suburbs (Fairfax, Vienna, Falls Church) or the areas closer to DC (Arlington, Alexandria)?

I don't really know many people that want to move to Joliet anyhow. I am sure that there are lots of nice people there, but where I live, we just call it "prison town". Perhaps it gets a bad rap for no reason, but I don't know many people wanting to live there. Naperville, now, lots of people want to move there.

Go Lansing/East Lansing! If only crime rates weren't going up like crazy and there was something to do here besides drink, I might actually buy a house...

That is because this report is from the Q3 of 2009. CA house prices have already dropped significantly. Most of the damage is done there already, and probably will continue to decline. If this report was in, say Q3 2007 or Q# 2008, CA would probably dominate the list.

"Want a bargain on a house?" If you do, keep waiting. Not many bargains yet, but its getting better.

@xenth: I don't agree. I think everything is totally dependent on the specific market. Especially if you are looking at foreclosures or short sales... banks are not increasing the prices due to the tax credit. Most sellers just want out quickly. This is a perfect time to buy.

@Paladin_11: I always had trouble with the idea of considering your home as an investment. Most investments fall through (due to inexperience for the most part). Is it really a good idea to make your home such a big liability?

@Antiks:

Have you ever been to the area? This is the typical response for someone thats either never visited or visited their relatives somewhere in some awful suburb in the valleys.

Even in this craptacular economy and the fact that Reno-Sparks is #8 on that list - you're still seeing several Million plus dollar homes selling and the market is picking up here.

Lets see - 25 minutes from Lake Tahoe and no more than about an hour or two from 20+ Ski resorts. Plenty of entertainment, shopping, etc. Good schools, I wouldn't want to raise my kids anywhere else.

I'm so sick of hearing a 'Reno is XYZ' comment with nothing of value to back up as to why you think so.

@Paladin_11: Tax breaks also play a huge part in the decision to buy vs. rent. If you @Incredulous1: You are ten years into your mortgage and 70K under water? How much was your house to begin with?

@colorisnteverything: Yeah, it's really hard to see what is really happening when they lump Chicago-Naperville-Joliet all into one bucket. The truth is that there is variation even from one Chicago neighborhood to the next.

@xenth: I bought a house a few months ago, and I remember thinking about this exact point you're bringing up. There's no question that the tax credit is inflating the price of homes right now. It's creating a lot of artificial demand.

Sure, the impact is probably negligible on foreclosed/shortsale homes, but when a realtor is pricing out a home, there's no question that he factors in the $8k the buyer will get. It's a good selling point and a good reason to bump up the asking price.

I really wonder how much I could have bought my house for if this tax credit didn't exist. My guess is that I could have probably saved at least $10k on the mortgage.

That list is incredibly confusing:

How can you have:

24. New York-Wayne-White Plains, NY-NJ -13.9%
23. New York-Northern New Jersey-Long Island, NY-NJ-PA -14.1%

Those aren't "cities" those are areas of NY AND NJ, that's not one city, but several.

The report is for the MSA not specific cities. The MSA is Metropolitan Statistical Area. To see what areas are included in this go to [www.census.gov] and it will show you a breakdown of the counties and cities included in each MSA listed.

@pecan 3.14159265: Well I work in both Arlington and Woodbridge. I would like to split the difference with Springfield that would be perfect, but as you know the closer to the beltway you get the more things cost.

@portishead69: Banks may not be increasing the prices due to the tax credit, but you better believe that the offers accepted are well above asking price.

@LadySiren: which area of NC? DH and I are both in tech and love NC...

I'm a victim of the price erosion taking place in Phoenix. My house is worth 35% less than it was when I purchased it 1 year ago. I thought the worst was over then, and boy was I wrong. I think that anyone who buys right now in any of these troubled markets is just asking for trouble. Right now in the Phoenix area houses are selling at the rate of about 8000-9000 units per month. The biggest problem is that right now the foreclosures in this market are - SURPRISE!! - around 8000-9000 units per month.

There will be no recovery in prices until the number of units selling is greater than the number of foreclosures. In Phoenix right now the market is still headed down sharply, with no real end in sight.

Buyer Beware!

@amberlink: agreed. and same thing with:
21. NY: Newark-Union, NJ-PA -14.8%
20. Trenton-Ewing, NJ -15.0%

how can you go from newark all the way through pennsylvania, but not include philly, camden, and have trenton/ewing as separate?

what's really weird about ny/wayne/white plains is that wayne is in passiac county. you have to go through northern nj (bergen county) to get to wayne. unless the district is a horseshoe that goes through rockland county (ny) and dips down to passiac.

@Pickled_Herring: I'm smackdab between two of the larger metro areas - the Triangle and the Triad. The Triangle has more tech stuff than the Triad does, but both have decent opportunities.

@LadySiren: Uh, duh - I guess I should explain those two geographic areas, eh? Sorry, just got done with lunch, full and drowsy. Triangle: Raleigh, Durham, Chapel Hill. Triad: Greensboro, High Point, Winston-Salem.

It's hard to believe no city in Rhode Island is on this list.

@LadySiren: We visited Raleigh/Durham a few times and we really like it there. Loved a little town nearby, Cary. Slightly south, if I remember.