To buy, or not to buy, a home?

Potential buyers are hesitant to jump into a housing market that many feel will fall even further than it has

Home prices soared, but paychecks didn't keep pace.
In Albany County, median household income grew by 19 percent from 1999 to 2006, according to the census. But the county's median sales price for a single-family home jumped 76 percent.
In Saratoga County, household income rose 16 percent -- and the median home priced spiked 98 percent, according to Realtors' statistics.
Hindsight being what it is, then, why should it have surprised anyone that the housing market -- and its rapidly inflating bubble -- ultimately faltered? Given that prices so rapidly outpaced income, shouldn't it have been obvious the center wouldn't hold?
Apparently not.
"Everybody got caught up in the excitement," said Paul Semanek, president of the Greater Capital Association of Realtors, a trade group.
Now, four years after the bubble began losing air, the challenge is to determine where the market is headed. Is the worst behind us? Or is the bubble continuing to deflate?
Many potential buyers, locally and nationally, seem convinced of the latter. The Capital Region's number of closed home sales in April was 38 percent below last year's pace and even below the level of 2009, at the depth of the recession.
Brokers say attitudes among potential buyers have changed. Once the desire to own a home burned red-hot at any price, in part because housing was seen as a way to quickly build a nest egg.

Now, the mood toward housing seems almost indifferent, agents say, despite low interest rates and dramatically improved conditions for buyers. "They're having a hard time getting worked up about it," said Eric Dahl, managing broker at nonprofit Community Realty in Albany.
In 2005, buyers overlooked a home's flaws, perhaps because rising values made it easy to cash out on equity and make upgrades. Now they demand a nearly impossible level of perfection, said Semanek.
Oh, how things have changed.
Prices, of course, also have changed. In much of the country, including the many areas where the rise greatly outpaced that of the Capital Region, pre-recession values are all but erased. The Standard & Poor's/Case-Shiller index of 20 large cities estimates a 33 percent value decline to levels not seen since 2002 or 2003.
By all accounts, the fall hasn't been nearly as steep in the Capital Region.
Realtors here estimate that prices are down by as much as 20 percent for homes at the high end of the market -- priced above $500,000. They say values for more moderately priced houses are probably down by five to ten percent, depending on location.
The Brookings Institution, meanwhile, recently found that the Capital Region's median sales price -- $184,000 in the first quarter of 2011, according to the National Association of Realtors -- is down by about eight percent from its peak.
Median household income in the region, meanwhile, is rising slightly as home values slide, increasing from $53,202 in 2006 to $57,677 in 2009, according to federal estimates.
Some renters are taking advantage of their increased purchasing power.
"I'm putting a lot of money into rent right now, almost $1,000 per month," said Maureen Bracken, who is looking to buy with her boyfriend. "I can get a house for about that payment."
Focusing on lower-tax suburbs, the pair from Albany is eyeing homes priced at about $150,000. Before the real estate downturn, they probably would have struggled to find a livable home at that price.
Then, many home buyers found themselves priced out of the market. Others, determined to buy, turned to subprime mortgages that ultimately proved dangerous -- to their own wallets and the overall economy.
Bracken, 26, concedes the possibility of further price drops is worrisome. "But how much lower could they go?" she asked. "What goes down always comes up again, right?"
Many economists agree. Many buyers aren't so sure.
"People are concerned that home prices may fall further," said Greg McBride, a senior analyst with Bankrate, the personal finance website.

Source http://www.timesunion.com/