Issue Date: February 4, 2007

News & Views

Smart moves during a housing slowdown

By Gary M. Stern

With all of the publicity about a housing slowdown, prospective buyers may be wondering whether they should buy now or wait for home prices to drop even lower.

"We are still in a slowdown, but I think the market is in the process of stabilizing," says Gopal Ahluwalia, vice president of research economics at the National Association of Home Builders, based in Washington, D.C. "This will continue for several months before it really picks up. It's still definitely a good time to buy."

Here, some tips from experts:

Know it's still a buyer's market. Because houses are taking longer to sell, there are more of them on the market. As a result, sellers are more willing to negotiate, and the buyer is in the driver's seat, Ahluwalia says. "The consumer has a lot more choices than last year," he says.

Borrow smart. In many cities, housing prices are down, which means people who couldn't afford to buy last year may be able to plunge right in, says Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. He advises buyers to borrow less and turn to fixed-rate mortgages, which yield more control over finances, especially at a time when oil and heating prices are volatile.

Become a tough negotiator. If you find a home you're interested in, ask the real estate agent how long it has been on the market, says Ilyce Glink, author of "100 Questions Every First-Time Home Buyer Should Ask." If it's been for sale longer than six months, a buyer should consider undercutting the asking price by 15%.

If you want to buy, go for it. If the house offers good value and the buyers can afford the mortgage payments, this is the time to buy, Fishbein says.