To buy or not to buy in 2009

darenb — Fri, 06 Feb 2009 16:37:00 GMT

An interesting couplet of articles on MarketWatch (both written by the same reporter) argue opposite sides of the "Is 2009 a good time to buy" debate.

Five reasons to buy a home this year

Five reasons not to buy a home this year

There are good arguments on both sides, but the bottom line is it depends on your financial position and goals as a buyer -- the same as in any market. Many of the wrong people bought for the wrong reasons earlier this decade, pushing the real estate market out over the edge of a cliff with a long way to fall, a la Wile E. Coyote. Just like Wile E. Coyote, it took the market some time to realize it was standing midair with a 1,000-foot drop and nothing to grab onto.

The mistake of overaggressive buying isn't as likely to happen in an abysmal market like the one we're in now; the more common mistake will be the mistake that one of the servants made in Jesus' parable of the talents in Matthew 25: 14-30 (sorry I couldn't think of a cartoon example for this one).

In the parable, a master goes away on a journey and gives three servants differing amounts of money: five talents, two talents and one talent (in today's money each talent might be worth as much as $800,000). The servants who receive the five talents and the two talents both double their money (by going out and putting their money "to work"). The servant who received the one talent dug a hole in the ground and hid the money there to ensure he didn't lose it. When the master returns, he rewards the first two servants and condems the third servant for being "evil and lazy" and says the servant should have at least put the money in a bank to gain interest. The one talent is taken away from this third servant and given to the first, who already has 10 talents thanks to his wise investing.

The reason the third servant gives for his actions is fear: "I was afraid, and I went and hid your talent in the ground." That is the same mistake some buyers and investors who have money may make in the current market. Out of fear they will not put their money to work. This will hurt the real estate market and the economy in the short term, but the real loser in this scenario is the buyer and investor, who misses out on an opportunity to build wealth.

Foreclosure community blog resource powered by RealtyTrac : 2009 market

To buy or not to buy in 2009