Is It a Good Time to Buy a House?
Blah blah blah.....Are you inundated with information from many sources like me? Real estate in the last couple of years turned from a place to live to an investment vehicle. I personally know a few people that tried to jump in to the market in a frenzy and were less than successful. I also know people that have an amazing amount of equity in their homes that should invest in real estate. I'm not talking about flippers or contractors, but folks building up a small nest egg to retire and have a small income stream. Property values keep going up and so do rents.
Back to the question about timing and house buying. I was reading an investment column written by Chris Mayer (an investment analyst). He had attended an annual meeting of Wesco. Charlie Munger was the speaker and is Vice President of Berkshire Hathaway. At the meeting a person from the audience asked Charlie Munger when the best time to buy a house was. Charlie answered "when you need one". Seems simple enough, doesn't it? Is it the right time to buy a house? I've heard that some buyers are waiting to buy until the "market" has reached the bottom.
Let me ask you this: Would you rather buy a house when you want or wait until the market is on the way up again? If you wait until the market is on the way up again, you may end up paying more. Interest rates are below 6%, there are many first time buyer programs, many motivated sellers, and the very best part of all there are real choices in just about any neighborhood or price range that you are looking.
What if you are someone that has a house to sell and you are wating for the prices to go up again? If you wait for the market to go up again to get more money for your house you will pay more to buy another house. Think about this for a minute. You presently have a house that would sell for $225000. It's a smaller house and you want something bigger, maybe more bedrooms and another bathroom. Most people buy a house that is worth 50% more than what they presently have which would be in the range of $337,500. So you're one of those that's going to wait. Maybe in the near future your house is worth $250,000. This is an increase of 11%. That house that you want to buy has now gone up 11% also and is now $374,600 a difference of $37,100.. What this means is the time you spent waiting for the value of your present home to increase $25,000, the replacement home increased and cost you an extra $12,100. OK there's math involved here....$37,100 - $25,000 = $12,500. This translates to approximately an extra $73 per month mortgage payment (amortized over 30 years). This is at 5.75% interest rate. This is the price you pay for waiting.
Today, there are real choices on the market. Homes that are priced well and presented in tip top condition, are selling well in front of the average market time of 60 days.
It's just my opinion!