Buying a Home in Today’s Market rather than rent?
How long do you intend to live there?
It rarely makes common sense to buy if you are expecting to move within the next two years. That’s because when you sell, there are costs involved with selling your home. We do not talk about sales commissions to the buying and selling real estate brokers. Most owners rely on home appreciation to reimburse those costs and provide the down payment and closing costs when they buy their next home. Buying a home when you expect to move before too long is a risk, especially in an uncertain market like this one.
However, it almost always makes sense to buy rather than rent if you live in your new home an average of seven years or more. That applies in basically any market.
Why? - If you are thinking about holding up a purchase because you feel like “Timing the market” to get the best deal, that is almost impossible to do with accuracy. The most knowledgeable experts cannot reliably predict the “bottom” of a real estate market. Before the turn, though, no one knows. Also if you aren’t an owner, you’re a renter. Renting is just throwing money away. You cannot reduce your income taxes by itemizing deductions like property taxes and mortgage interest.
As a renter, you are restricted on what changes you can make to your living residence. As an owner, you can paint your living room, change light fixtures, garden and landscape if you want. You can do whatever you want that makes your home a comfortable place. It’s your home, not a provisional place to sleep until you do buy a home.
No one can assure your property will appreciate, but over time it usually does. Over the long term, you can normally count on it. There are some areas that had faster appreciation than others. Those markets may suffer from lower price-growth than the rest over the next couple of years.
You can minimize the possibility of lower appreciation for your home - Determine your price range. Then choose a neighborhood where your target price is in the lower tier of prices in that neighborhood. That way, your home has less exposure on the down side and the higher-priced homes will help pull you up during hot markets.
Also, try to be away from homes on busy streets or homes that back to busy streets. Don’t buy houses across the street from a school. Try to buy in a harmonized area, where all the homes are similar (not exact) to one another. For example, if you are buying a single family home, you do not want to buy next to an apartment or condominium complex.
Best of all, there are LOTS of sellers out there right now. Inventory is high. If you make an offer, ask for incentives to buy that particular home.
Notify me of New Articles via e-mail