Buying Real Estate is a Smart Move in a Bad Economy
I've recently read a ton of news articles and heard a number of folks on news shows talking about why it may not be a good idea for you to buy a home right now. I say FALSE, and so do many who understand not just the financial gain found in home ownership but the quality of life and pride that can be gained as well. A recent article written by Ron Lieber in the NY Times (http://www.nytimes.com/2010/08/28/your-money/mortgages/28money.html) mentions a few reasons why buying is still a great idea. I'll touch on his thoughts and then share a few of my own. Its worth noting that I bought my first home in March, 2010 at the age of 26.
Record Low prices combined with Record Low Interest Rates
Have you heard that is a buyers market? If you have a stable financial situation, there will NOT be a better time in your lifetime to buy a home. Its as simple as that. Try the NY times "Rent Versus Buy Calculator (http://www.nytimes.com/interactive/business/buy-rent-calculator.html) to help decide if your financial situation is in the right place.
Ron understands that buying a home is still, in a sense, "forced savings." The money you put towards principal can be seen as a way of putting that money back. No, you may not make a huge profit on your home when you resell, but unless the market hits another bust (which is highly unlikely in even the far off future), you will at least be able to gain back the principal payments on a "break even" sale. He does point out that many say you will be more successful saving that money and investing it…but hey, who among us are that great of savers. Investing takes a lot of discipline - paying a mortgage takes only simple discipline.
When you buy, YOU own the home. You can do whatever you want to it, in it and around it. Who among us have not dealt with the bad or negligent landlord? Buy a home and make that annoyance a thing of the past.
The Right Neighborhood
Its common knowledge that in the very best of neighborhoods and school systems that there are not many "family sized" rentals. If you need to be in the safest or most prestigious neighborhood, that dream neighborhood, then you will likely find what you're looking for in a purchase rather than a rental. Many of the best schools are in areas that do not have many rentals, which might force you to buy. And, anyone who owns a home that came from a rental, and has kids, will likely agree that they are happier and have more space for their family in the home they purchased, just ask them.
Are you a young, possible first time home buyer? Yes, one of the attractive reasons for buying your first home may be to get away from the roommate situation. But consider buying your first home and sticking with a roommate or two for a while. You can practically live for free. My fiance and I recently bought our first home in this down market. We were able to get a home for almost half of what it would have sold for just 4 years ago. After living on our own for the first 6 months, we had a friend that had her apartment lease ending. We all decided to be roommates and she moved into our home. Now imagine, on top of our record low interest rate- which provided us with a mortgage for a 5 bedroom house for just under what we rented a 1 bedroom apartment at - we now have a roommate supplementing our mortgage and utility cost. We now pay less for the two of us then most folks would pay for a single person's rent. And, we're considering another roommate - we'll live practically free.
Not a young, first time home buyer? Consider this idea anyway and call it an adventure in living. Take on a roommate or two and supplement your living expenses greatly.
Help your local economy and home prices
"Its a people driven economy, stupid." - Erik Qualman
There will not be a recovery in home prices until folks get out there and start buying again. And guess what, you're the first step. Get out there and buy…tell your friends and coworkers to buy. The faster the available inventory is reduced, the faster home prices will start to recover.
Now I've read articles that compare the financial situation of a current home owner to that of current renters and use that as a base to say its not a good time to buy. The logic here is incorrect. Of course, if you bought in the past during the peak of home prices, and need to sell now, you are not in a good position. That is not the same as buying now, at or near the bottom of your market, and selling in the future. Home prices will rebound. That is a fact. Maybe not to the levels they were before the recession, but they will rebound from current bottom to near bottom prices. This means that your home will gain in value from what you paid for it if you bought in 2009 or after. And after is NOW.
Want some expert advice on buying in this market? Contact The Keen Team at 404-270-9374 and tell us you're thinking about purchasing a home. Ask for our exclusive "Buyer's Worksheet" to help work out the details and put your thoughts around purchasing on paper.
Logic Check: Are you waiting for your market to "bottom out?" DON'T. How can you? Not even the most expert of experts can exactly determine when a specific market will bottom out. Only when prices start to rebound do you realize just where the bottom lies, and then it may be too late. Check out mint.com's (http://www.mint.com/blog/finance-core/should-you-buy-a-home-now/) factors that should not be considered when purchasing a home.