Wednesday, June 8, 2011

Now Might Be A Good Time to Buy A Home

While this story on home ownership at the Wall Street Journal reads a little like an advertisement, it is certainly worth your time to give it a once over.  The story breaks down the reasons why now might be a good time to purchase a home if you are currently renting and have a stable employment history.

Even during the tough times experienced by the housing market and prices over the last few years, there still remain some key benefits to owning a home over renting.

…long term benefits of homeownership remain very much intact.  For now, at least, you can deduct the mortgage interest on your taxes – a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord.  And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free.  Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with. (Source: Wall Street Journal Online)

Home ownership has been a dream of most folks and while that may have soften somewhat, it still remains a goal for many.

The article covers five reason why now might be the best time to buy rather than rent.

Demographics: During the recent downturn, people were just not getting started with their lives on their own, choosing to stay at home or renting a place with friends. There are signs this is beginning to change. As more people enter the housing market, price fall will slow and eventually begin to turn around.

Affordability: When times were flush, renting was cheaper for a lot of folks. But now that home values have fallen renting may actually be more than purchasing a home, especially if you have a down payment.  When you buy a home, it is yours to do as you please.  If you want to have a purple bathroom, you can do so without having to get the landlords approval.

Employment: With employment stagnant, home values will continue to slide south or show very little growth. But eventually, the economy will recover and employment will rise once again. Once employment starts to rise, people will begin to purchase their own home in greater numbers, driving home prices upwards.

Credit: There is money out there to lend for purchasing a home.  All the bad news that you hear about has been over blown (in PACNW Right’s opinion). Yes, the credit market has been tightened and for a very good reason. This whole economic collapse can be attributed to money being lent to people who should have never purchased a home. In some cases, people over-purchased, buying more home than they could, or should have, afforded. Those times are gone for the time being and the mortgage lenders are being selective with whom they lend to. If you have a stable work history and the down payment, you can get the loan you need to buy the house. Plus, with prices being what they are, you can actually get into that house that was out of reach five years ago without over-extending yourself.  In other words, less money buys more house.

Psychology:  Bottom line is that people are scared to buy right now and that makes it a great time to buy. Back in the old days, when the market was booming, there might be five buyers for every house. That would mean that you could make a bid on a house only to have someone else overbid you by a couple of thousand. Today the reverse is true. Because folks are scared to get into the housing market, it is truly a buyer’s market. You will not be completing against other buyers for the same slice of heaven. This means getting the house you want at a price you can afford.

The above fives reason given in the Wall Street Journal were crib-noted by your truly and my own take was melded in. I am not a real estate expert by any means and don’t profess to have any great insight other than my own research so please make sure to do your own homework if you are planning on entering the housing market.

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