Writer Says Home Market Normalizing

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Mar. 26, 2006
Writer says home market normalizing BY DONNA GEHRKE-WHITE dgehrke@MiamiHerald.com Good news for home buyers: You can take your time buying a home now that the bidding frenzy -- and yearly double-digit jumps in prices -- are over. That would allow you to make the right decision without feeling pressured into buying a potential mistake. So says Elizabeth Razzi, a national real estate writer who just wrote The Fearless Home Buyer: Razzi's Rules for Staying in Control of the Deal ($16.95, Stewart, Tabori & Chang). She'll be giving more tips at 8 p.m. Tuesday at Books & Books in Coral Gables as she tries to help buyers through the often confusing process of buying a home. She knows how first-time buyers especially can feel pressured and afraid of picking the wrong property. ''The last couple of years really have been insane'' with some homes selling within hours of being listed, says Razzi, who has written for Kiplinger's Personal Finance magazine. ``There was a lot of panic-buying with prices soaring. Thank goodness it is slowing down.'' Now buyers have the time to reflect on what they really want and can afford. After all, Razzi says, people don't want to end up with a condo or house they detest -- or for which they paid too much. Indeed, home price increases in South Florida should be slowing to a yearly 4 to 10 percent instead the double-digit jump of the last few years, says Ronald Shuffield, president of the Coral Gables-based Esslinger Wooten Maxwell. Buyers are likely to find more bargains in condos since there are more on the market, he says. Both developers and owners of existing condos may be willing to pay closing costs or give more incentives, including cutting the asking price. Single-family homes, though, are still in demand. ''You just have no land left,'' Shuffield says. Still, there are more than double the number of single-family homes on the market in South Florida than there were last year, according to EWM statistics. That gives buyers more choice as well as more of a chance to negotiate a lower price. DO HOMEWORK Razzi recommends that buyers research the neighborhoods they are interested in: Is there some softening? Can prices be bargained down? People also realize they will have to compromise in a popular metropolitan area like South Florida. She warns that buyers have to settle for two of three ''wants'': a low price, a big ''wonderful'' house or a short commute. ''Remember, it's two of the three, and only two,'' she adds in her book. Buyers should take a hard look at their finances and know how much they can afford before they make an offer, she says. Most lenders, she adds, don't want to see your home costs, including mortgage payment, taxes, insurance and any homeowners or condo fees, extend beyond 28 percent of your gross income. However, EWM agent Donna Gaines says many buyers in South Florida, especially first-timers, are having to stretch that to as much as half of their income going for their homes. You can lower your financial risk by buying in a well-regarded neighborhood, author Razzi says. The home should also be big enough for you to live there for at least five years. Don't buy, for example, a one-bedroom condo if you plan to have children in the next couple of years. Instead, save more and buy a larger condo, town home or even a small house with a yard big enough to enlarge the house later when you are earning more money. She recommends condos or town homes for first-time buyers as an affordable option. Town homes may be a better buy than a single-family home because a buyer will get more living space and less yard maintenance. But before buying any home, check to see if you will be in a community association. If so, the association should be well run and responsive to owners. It should have reserves to cover emergencies. You also want to live in an association that fits your philosophy. You don't want to move into a community that strictly enforces rules when you are more of a free spirit, Razzi adds. Buyers also need to investigate whether they will like living in a neighborhood. Walk around at night. ''Do not buy in a neighborhood where you do not feel safe,'' she advises. CHECK THE COMMUTE Also, get up early and find out what the commute is like from your potential home to work. Don't trust the weekend flow. That will invariably be lighter, she says. ''I'm convinced there are only two things honest people routinely lie about: their weight and their commute,'' she adds. Even if you don't have kids, check on the schools. Good schools still influence home value and can be an important selling point, she says. Concludes Razzi: ``Buy a good home in a great neighborhood, without overpaying for the privilege, and you will lower your risk (of making a bad investment).''