As a New York State Licensed Salesperson in real estate, I am
often asked by individuals considering purchasing a home, whether or not
this is the right time (or at least a good time) to buy a home. While
there is no simple answer to that question, the answer is to a large
degree dependent upon individual circumstances, including needs,
employment, credit rating, etc.
1. As we all know, the United States (as well as almost all the rest of the world) has been undergoing a prolonged period of economic distress that has not been this widely witnessed for eighty years. In many parts of the country, house values have plummeted, while in others there has merely been a large reduction in market value. While most areas have seen a resurgence in value, some of the country is still in a period of stagnant, inconsistent pricing. With these lower (or stable) prices for houses, combined with record low mortgage interest rates, a home buyer will have a significantly lower month carrying charge than in the recent past. In fact, some areas are seeing the lowest home prices in a decade! However, today's real estate market is also different for buyers in the sense that most lending institutions are being far more strict about down payments (most requiring 20%), and are requiring significantly higher credit scores to qualify for a mortgage. In addition, house appraisers are far more conservative in stating values, which means that the 80% that the bank is willing to loan is based on a lower home price, and thus, could, under certain circumstances, require an even larger down payment by the buyer. However, if all these conditions are met, the buyer is operating in a Buyers Market (more sellers than qualified buyers), and thus is in a fairly good negotiating situation.
2. Does the buyer have a home he is selling at the same time? If he does, it might take longer for his house to sell, and he will receive a lower amount for his house than he would have a few years ago, in some scenarios. However, in most cases, the trade- off of also buying another home for less money combined with the low mortgage interest rates will generally be advantageous to the individual.
3. Many potential buyers today are wary because of the market, and their fear of their own job security, or income consistency. Most potential buyers are acting more cautiously, and some are only making offers that even determined sellers are finding insulting because there is a "want to get it at a steal" mentality. When determined sellers and qualified buyers both look realistically at the market place, and don't take a what was type of attitude, buyers are often doing quite well.
4. Is the potential buyer looking at this purchase from a long- term or near- term basis? While nobody can know for sure how long any downturn will continue, it is always best to look at home ownership from a longer - term, need - oriented perspective, rather than merely instant gratification. Some individuals who purchased homes three to five years ago have seen their houses values drop, but others who have lived in their homes for much longer still have tremendous equity in their homes. Most experts still believe that houses are good long- term assets, because they historically have out- performed the inflation rate. For those looking short term, there is always more risk!
5. When the real estate sales market has slowed, in most areas, the rental market has seen higher occupancy rates. With the lower home prices and mortgage rates, combined with the fact that personal real estate is still one of our few substantial tax deductions (the interest and real estate taxes are deductible), in many circumstances, it is actually more economical to buy than to rent. However, like everything else in real estate and in this economy, this varies dependent on area of country and the individual's circumstances.
Is it time to buy a home? It all depends on your qualifications, credit, personal circumstances, needs, and your objective, but for many qualified people, this is a great buying opportunity!
1. As we all know, the United States (as well as almost all the rest of the world) has been undergoing a prolonged period of economic distress that has not been this widely witnessed for eighty years. In many parts of the country, house values have plummeted, while in others there has merely been a large reduction in market value. While most areas have seen a resurgence in value, some of the country is still in a period of stagnant, inconsistent pricing. With these lower (or stable) prices for houses, combined with record low mortgage interest rates, a home buyer will have a significantly lower month carrying charge than in the recent past. In fact, some areas are seeing the lowest home prices in a decade! However, today's real estate market is also different for buyers in the sense that most lending institutions are being far more strict about down payments (most requiring 20%), and are requiring significantly higher credit scores to qualify for a mortgage. In addition, house appraisers are far more conservative in stating values, which means that the 80% that the bank is willing to loan is based on a lower home price, and thus, could, under certain circumstances, require an even larger down payment by the buyer. However, if all these conditions are met, the buyer is operating in a Buyers Market (more sellers than qualified buyers), and thus is in a fairly good negotiating situation.
2. Does the buyer have a home he is selling at the same time? If he does, it might take longer for his house to sell, and he will receive a lower amount for his house than he would have a few years ago, in some scenarios. However, in most cases, the trade- off of also buying another home for less money combined with the low mortgage interest rates will generally be advantageous to the individual.
3. Many potential buyers today are wary because of the market, and their fear of their own job security, or income consistency. Most potential buyers are acting more cautiously, and some are only making offers that even determined sellers are finding insulting because there is a "want to get it at a steal" mentality. When determined sellers and qualified buyers both look realistically at the market place, and don't take a what was type of attitude, buyers are often doing quite well.
4. Is the potential buyer looking at this purchase from a long- term or near- term basis? While nobody can know for sure how long any downturn will continue, it is always best to look at home ownership from a longer - term, need - oriented perspective, rather than merely instant gratification. Some individuals who purchased homes three to five years ago have seen their houses values drop, but others who have lived in their homes for much longer still have tremendous equity in their homes. Most experts still believe that houses are good long- term assets, because they historically have out- performed the inflation rate. For those looking short term, there is always more risk!
5. When the real estate sales market has slowed, in most areas, the rental market has seen higher occupancy rates. With the lower home prices and mortgage rates, combined with the fact that personal real estate is still one of our few substantial tax deductions (the interest and real estate taxes are deductible), in many circumstances, it is actually more economical to buy than to rent. However, like everything else in real estate and in this economy, this varies dependent on area of country and the individual's circumstances.
Is it time to buy a home? It all depends on your qualifications, credit, personal circumstances, needs, and your objective, but for many qualified people, this is a great buying opportunity!
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