Housing Market Future!??!

[Horse of Course]

Just a little background info to get started. We included our house when we filed for Chapter 7. Bankruptcy was discharged in June 2009. We rented a home in November 2008. We signed a 3 year lease. Our rental home is now in foreclosure. We first thought we would try to stay in our rental home due to the Protecting Tenants at Foreclosure Act of 2009, but we soon learned it would be like pulling teeth to get anything repaired in the house. The house needs a new a/c-heat unit and they are quite expensive and with summer approaching we thought we better find another place to live.

My husband is a disabled veteran and we haven't used his VA loan eligibility. We contacted the VA and they told us we should qualify for a VA loan 2 years after the bankruptcy discharge which would put us at June 2011.

We found a house that is for rent with option to buy. This house is perfect for our family. It's nice, roomy, modern and has 6 acres. The house was offered at $335,000. Our Realtor soon told us that the house was off the market for sale and only for rent because the house was in Probate due to the owners wife had previously passed away 3 months prior. The Realtor assured us the house would be for sale after Probate.

We have now signed all the necessary documents to rent this home for 1 year. We spoke with the owner yesterday and he said the house appraised for $325,000 and that he owed $360,000. He said he won't sell the house until it appraises for what he owes be it in a year or 3 years, etc... He will be moving into a rental closer to his work.

We want to buy this home next year in June 2011. We want to put down some roots. We have children and it's hard to keep moving and changing school districts.

Have we made a mistake?

[nc73]

I think the market is still bottoming. No need to buy unless it stabilizes. If you never intend to move it would be ok to buy.

[justbroke]

No need to buy unless it's at bargain basement pricing. I'm not sure we've reached the bottom of the market yet, based on the "shadow inventory" of homes still out there. I understand people wanting to lay some roots, but this is probably not the best of times.

I don't think you made a "per se" mistake. You are asking the right questions now. I'm not sure anyone really knows where the bottom is, but it will be different based on the area. California make take longer to recover than Florida, but Washington D.C. may recover quicker than Florida.

[dakota112]

Buying a house with a mortage is really not much different than buying stocks on margin. You lose both when their value goes south.