JUDY, 50, WENT TO THE UNITED STATES last October to visit her son and was just in time to watch the economy swoon and homes change signs from “For Sale” to “On Sale.” Since the economic tension was gripping households across America, she ended up doing her home-buying spree very quietly.

Judy is not the only one snapping up bargains. In the news are cash-rich Chinese also taking advantage of the drop in home prices in the United States. Locally, those who have the cash either for outright purchase or down payment, have good credit standing, are employed in stable companies and are generally financially healthy may find themselves with a good buying opportunity—global recession or not.

The reasons are: one, financing for houses, condominiums and lots is still at single-digit levels of 9 percent to 9.75 percent. If analysts are right, rates are bound to fall even more as government tries to stimulate lending to boost the economy. With inflation out of the way, analysts say the central bank will inevitably lower its rates, pulling down home loan interest rates with them.

Two, the way chips are falling the real estate industry may soon become a buyer’s market. As the market shrinks, developers will be running after every prospective sale with all they’ve got. When people are scared, they hoard cash and try to postpone big purchases. It will take a lot of coaxing and attractive sales strategies to make them part with their money—and that’s good for any buyer.

There’s one thing fueling hope among developers: In the Philippines is a huge, pent-up demand for houses—not for speculation or flipping—but for people to live in. The housing backlog from Luzon to Mindanao runs to millions.

“We all know that one of the Filipino’s priority, especially those who are working overseas, and this has been borne by many research, is to buy a home,” says David L. Rafael, general manager of Ayala Land International Sales.

In 2007, Filipinos who have migrated to the United States forked over P7 to P8 billion to buy properties inside Ayala Premier’s exclusive communities even if these were some of the most expensive in the market. They accounted for 38 percent of ALI’s international sales. Rafael says the company will likely see that level going down when 2008 draws to a close or see buyers scale down to their lower-end Avida brand.

“This crisis is sort of like a virus that has spread. In terms of consumer confidence, a lot of them are losing jobs. Life in the US is very challenging right now,” he says.

ALI is now looking at Filipino expats in Europe, the Middle East, Canada and nearby Asian markets who are not as badly hit as new markets. “Filipinos in these countries have contracts. They are not migrants and they know that their stint abroad in earning foreign currency is only temporary. At some point, they will come back and their priority will be to buy a home. The desire to buy is there no matter what the economic condition is,” says Rafael.

But since real estate is perhaps the biggest purchase any person can make in his entire lifetime, buying a house needs careful thought and good research, especially when the world is still in the throes of a recession. First-time homebuyers, in particular, need to look at their whole personal financial picture and not be carried away when they “fall in love” with a property.

“Buying a home ranks up there with the decision on who to marry. Your spouse will die but your property will not,” jokes Rafael. So, remember the following tips to make sure you’re not stuck with a mistake:

1. Buy a house you can afford. It sounds almost elementary, but a lot of first-time homebuyers end up being house poor because they fall in love with a property they cannot afford to buy. The rule of thumb is for homebuyers not to spend more than 28 percent of their monthly income on mortgage payments. Go higher than that and you run the risk of neglecting other financial goals like saving up for education and retirement. So even before you go scouting for a home you can call your own, set a realistic budget. Then look around the neighborhood so that you can compare the price of the house you are buying with the going rate.

2. Carefully consider location. Home value is greatly affected by where it is built. Protect the money you plunk in by doing extensive research about the area around it, the ease of transportation and nearby developments (Is the government planning to build a highway nearby? Will there be a mall development soon?). Make it your business to know whether there are squatter communities nearby or ones likely to grow in the years to come. Find out how much it costs to drive and commute to work or school every day, including toll fees.

3. Buy directly from the developer or the owner. If possible, be a direct buyer so you can ask for a bigger discount. However, be prepared to take care of documentary requirements and the process of checking the authenticity of the title, tax payments, among others. The process of buying a home can be quite complicated, but, as always, convenience comes at a high cost.

4. Double-check a developer’s track record. During the 1997 crisis, a lot of people were burned when developers were hit by the double whammy of the sudden peso depreciation and huge dollar-denominated debt. Many homebuyers ended up holding titles to properties worth nothing, especially since most were sold at a discount before the project was completed.

“It is easy to make a promise but the hard part is keeping that promise. The only proof that you have is the track record of that company,” says Francisco Ma. D. Roxas, head of operations and marketing at Ayala Land International Sales.

Rafael says in this crisis, there is a possibility this could happen again. “It can happen again. Let’s just wait and see,” he says.

Roxas says the track record will prove if the developer can deliver on the advertised quality of the property at the date committed, enforce deed restrictions like building only on a certain portion of the lot so that the community doesn’t look cramped and not allowing sari-sari stores to be built in every corner. Quality of infrastructure like sewerage and water systems should also be major considerations when buying a home.

These fall under good property management, and both Roxas and Rafael say that when a developer pulls out all the stops to provide good service long after the last property in a community has been sold, the property appreciates so much faster.

Lots in some communities within Ayala Land’s Nuvali development south of Manila sold for P9,000 per square during the early part of construction, but the last property sold this year for P20,000 per square meter. Ayala Heights in Quezon City is valued these days at P16,000 per square meter when nearby subdivisions are sold at P5,000 to P6,000 per square meter.

“You might pay a premium for all these, but over the long term it will be worth it,” says Rafael. He says the company has even corrected structural flaws discovered by the buyer even after the acceptance form has been signed. “If there are any, we will still correct it,” he says. “It’s important to buy quality,” Roxas adds.

5. Set aside money for remodeling, new furniture and home maintenance. The drain on your savings doesn’t end when you pay down payment and set aside the budget for monthly mortgage payments. Be prepared and create a budget for new furnishings and maintenance, especially if you are not buying a new home. If you plan to keep the expenses at a minimum, take your time to refurnish your dream home so you can stretch out the expenses. Living in a house with a living room set that doesn’t match is less important than keeping your emergency fund at a healthy level.

Many things compete for our attention when it comes to making hard-earned cash grow—franchise business, stock market investments, currencies, among others. Real estate, while hard to liquidate at a moment’s notice, is safer because it “never loses all its value,” say Roxas and Rafael.

“Even blue-chip stocks can be stripped of all their value. Look at Bear Sterns. But land or a home doesn’t. If its price drops, and so far that hasn’t happened here, you and your children can still live in it,” Rafael says.

(For more personal finance articles, visit Inquirer.net’s MoneySmarts at http://blogs.inquirer.net/moneysmarts.)