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Buying a home in today's market, part 1 - Is it a good time to buy?

Buying a home in today's market, part 1

Recently, I had the pleasure of doing an adult ed.  home buyers class for the Marietta Community School.  I have decided to take some of my outline notes and form the into a blog series for home buyers.  

The content is geared a little more toward first time buyers but will still be very relevant for move up buyers as well.  Also, this is based on my own knowledge and experience in our local market.  All real estate is local, so if you are reading this in another part of the country then some of the ideas may not apply or at least they may apply differently.

  1. Is it a good time to buy?
    1. The news, credit crunch, mortgage meltdown or whatever else they are calling it..

The general discussion here is should I buy a home today or wait until the market calms down.  In order to answer the question you first need to look at the long term benefits of home ownership.

Here are a few:


Financial
    1.Fixed payments - no more rent increases
    2. tax deductible interest  
    3. Build equity through long term payments. Your house can be sort of a forced savings account.
    4. Build equity through appreciation.  For any 10 year period including the years of the great depression real estate has gone up in value.  We have seen that homes can go down in value but I also believe that they will go back up.
    5. Control a large, valuable asset for the cost of a down payment.  $200,000 dollars of stock costs $200,000 to buy.  A $200,000 house will have a down payment ranging from a few thousand dollars to maybe $40,000.  But you control the entire house and are entitled to 100% of the benefits.

Personal Reasons

  1. Establish family and community roots.
  2. Privacy -Play the stereo without somebody banging on your walls :-) 
  3. Freedom - In my house we have 3 dogs, 1 cat, a lime green painted bedroom, and a bright pink bedroom.  It our house we can paint the rooms with whatever we want.

So the long term investment potential is just 1 reason to buy a home.

If you are are financially stable and willing to get in to home ownership for the long haul,  then I say don't try to time the market.  Real estate is on sale right now. It might go lower or it might not. If you are in it for the long haul it shouldn't matter.

On the other hand, if your job, or even the industry you are in are uncertain then you might want to wait for things to stabilize.  Also, if you think there is a likelihood that you will want to sell the house in the short term (5 years or less) then you might want to consider waiting.

I mentioned earlier that it is important to be financially stable. According to financial adviser Dave Ramsey you should have 3-6 months of living expenses set aside in savings and save up enough to pay at least a 10% down payment.  You certainly need to have cash reserves and be prepared for any unseen bumps in the road. 

A look ahead:  I am anticipating there will be about 8-10 parts to this series.

Part 2 will be "Should you buy if you have a home to sell?" and part 3 will be "Getting credit ready".  

Stay Tuned!

 

 

Read Part 1, Here - Is it a good time to buy and should I buy?

Read Part 2, Here -  Should you buy a home if you currently have a home to sell?

Read part 3, Here  - Getting Credit Ready/ How much house can I afford?

Read Part 4 , Here - Searching for a home and using a buyers agent

Read Part 5, Here - Making the offer

Read Part 6, Here - Appraisal, Inspection, and Due Diligence

Read Part 7, Here - To the closing and beyond

 

******

Bob Southard, e-ProRealtor®, Solid Source Realty, Inc. Buy or sell a home in Powder Springs, Marietta, Kennesaw, Acworth, Dallas, Hiram,and Cobb, Paulding, Douglas, North Fulton, South Cherokee, County, Ga

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*****

 

 


Bob Southard
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Comment balloon 4 commentsBob Southard • October 11 2008 07:21PM

Comments

Good stuff Bob! There are so many personal benefits to homeownership aside from the financial benefits but as Dave says, buyers must weight the costs and make sure they are ready.  It's a wonderful way to build wealth but if not done properly, it can be a burden.

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) almost 10 years ago

Great series, Bob!  You bring home very well the fact that buying a home (as well as selling it) is a process, not an event.  That fact often gets lost in the media.  Nice job!

Posted by Judi Bryan, Your Chicagoland Connection (Executive Realty Group) over 9 years ago

This is really some great advice for buyers. I have book marked this to help me along with my buyers seminar's. Thank you

Posted by Sharon Harris, Realtor (Keller Williams Keystone Realty) over 9 years ago

All really great stuff ad essential to present to any and every buyer. The push backs I'm finding have more to do with job insecurity and general fear of the future. Not sure of the best ways to respond there.

Posted by Janice Roosevelt, OICP ABR, ePRO,Ecobroker ( Keller Williams Brandywine Valley ) over 9 years ago

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