Q: We want to buy a home this year but my husband says he wants to wait until the economy really hits bottom.

That way we will get the best deal. In the meantime, we’re paying rent and I think that’s just wasting money. I want that money to go toward a home of our own. What do you think?

A: First, of course, is the simple fact that no one knows when we’ve hit bottom until we aren’t there anymore. Once prices start to stabilize or even start upward, it’s too late. I’ve always believed that the best time to buy is when you want a home.

We all learned, sadly and dramatically, what trying to outsmart the market will get you. If the stock market crash, the banking melt down, and the real estate disaster have taught us anything, it should be that we can’t really predict the future. We can only try to learn from the past.

The real estate market is actually changing for the better at this very moment. The news out at the end of May indicated that pending sales of homes in the US had risen three months in a row and that in April, sales jumped 6.7% the highest leap in eight years. That report, from the National Association of Realtors, also stated that in several states, bidding wars were becoming common on foreclosures as speculators and first time home buyers flood the market to find bargains.

The $8,000 tax credit for first time home buyers has also helped to turn the real estate market around. Many banks are now allowing these funds to be used as part of the down payment and closing costs. According to investment analysts, looking state by state at many economic indicators, the recession will end in Washington state by the fourth quarter of this year.

Even if these predictions don’t come true, it’s a ray of sunshine to those hoping for better days. With our inventory at an all time high and prices reduced dramatically I would say this is a great time to buy.

Q: I’ve been a renter for the last 10 years because I just don’t see the value in home ownership

when prices can be as volatile as we’ve been seeing in the last year. Plus, I don’t want to be tied down. In my business I could be transferred anytime. I assume you disagree.

A: Well I can’t speak to your fear of being tied down, but I can argue that your thinking is flawed about the value of home ownership. Let me give you an example. This is a real client of mine. I pulled him out of my files at random. Let’s call him Jack.

Jack bought a nice rambler on a large lot with a bit of a view in 1999. He paid $257,000 for it. Like all real estate on Vashon it went up in value every year. By this year, ten years later, King County has his home valued at $557,000. The home has more than doubled in value. Even with the decline of 10% in property values we saw on Vashon last year, he would still make a tidy profit if he were to sell.

Just as valuable is the tax savings he would have had each year he owned it. He was making about $50,000 a year when he bought the property and his wages went up about 3.5% every year since, so he now makes approximately $70,000 a year.

Using a spreadsheet to figure his tax saving--based on deducting his mortgage interest and property taxes every year--he would have saved over $43,000.00 in real money over the ten years! That’s money he could spend in other ways instead of giving it to the IRS. That’s impressive.

I probably haven’t convinced you, but if I have you should know that this is a great time to buy on Vashon. Interest rates are at an all time low, the government is offering an $8,000 buyer bonus this year, and real estate prices are stable. If you had your saving in the stock market, I would guess you didn’t come out half as well as Jack did.

Q: I had my house on the market for a while but decided to wait a year so that I could get my price.

We already moved so the house is empty. Friends are telling us we should rent it out but I don’t want it trashed. What do you think?

A: There are a couple of issues here. The first is the issue of renting out your house. Unless you don’t really worry about money at all, you’re throwing away a lot of it by having your house sit empty. There are mortgage payments, utilities, insurance and taxes to pay, plus the cost in time and/or money to keep up the yard. Renting would get you some money to cover those costs.

If you do a proper job of screening tenants you won’t have your place “trashed”. Trust one of the property management firms on the Island to find good, responsible tenants and that shouldn’t be a worry.

The other issue is holding on to your house to “get your price”. I’ve said many times before that the price is set by what a buyer is willing to pay. You can hold out all you like but if your expectations are too high, you’ll put a lot more money into the house with little hope of recovering it.

The real estate market here on Vashon is really not bad. Sales of homes actually went up 14% in the first quarter of 2009 over the first quarter of 2008. The average price of those homes did drop, but only by about 10%. That’s well below what most markets have experienced.

It almost seems that we have only two kinds of property on the market: homes that sell in a few days or weeks, and those that have been sitting for months or even years. It’s all about price. The well priced properties have been selling quickly, some even with multiple offers.

If you don’t want to price your house to sell now, then getting a renter in there to help offset your negative cash flow would be good.