If you are thinking of purchasing a home right now you are surely getting a lot of advice. And most of that advice is probably negative. Why buy now when the prices are falling? Is Real Estate still a good investment? Lets look at whether or not now is actually the perfect time to buy a home.
There are three questions you should ask yourself before purchasing in today’s market:
1. Why should I buy if the house prices are still depreciating?
In most parts on the country prices will in fact soften in 2011. Price is the major concern for anyone selling a home. When you are buying, COST should be a primary concern. Your monthly payment (cost) is definitely impacted by the price of the home your purchase. The other major component is the interest rate. Waiting for prices to bottom out while rates are increasing can end up costing you more over the life of the mortgage.
Over the last seven weeks, rates have increased over 1/2 a point going from 4.17 to 4.86. Waiting for prices to bottom out seems to make perfect sense. Yet, at a time when rates are increasing it might NOT make sense. Make sure you have a mortgage professional do the math before making a decision.
In an article on CNN Money reported:
“You can kiss those record lows goodbye,” said Greg McBride, chief economist at Bankrate.com.
2. When will I begin to see appreciation if I buy now?
This is a great question. Macros Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing through 2015. The most current survey shows that the experts are predicting prices to soften until 2012.
The experts then predict prices to rise reaching a cumulative appreciation of over 10% by 2015. Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom, “Buy low and sell high.” We just may be at the low point regarding the COST of a home. But this decision should not be only a financial one.
3. Why am I buying a home in the first place?This truly is the most important question to answer. Forget the financials for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National National Housing Survey shows that the four major reasons for buying a home has nothing to do with the money:
A good place to raise children and for them to get a good education
A place you can you and your family feel safe
More space for you and your family
Control of the space
What non-financial benefits will you and your family derive form owning a home? The answer to that question should be the reason you decide whether to purchase or not.
The COST of a home will probably remain relatively unchanged even if prices continue to depreciate. Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway.