Think Before You Buy
October 15, 2009
When Should I Buy A House?
With this year bringing record lows to home prices, many renters out there are wondering if this is the right time for them to buy. Afterall, the appeal is certainly there. The idea of owning something brings a sense of pride that only home ownership can and you have the possibility of earning equity in the future. This can help fund future retirement, pay for college tuitions and much more.
Today, the dream of home ownership is accessible to more people than it typically has been in the past. However, not everyone is ready for home ownership. There are a lot of things to conisder before taking that first stip towards home ownership. Buying a home can be a great experience, but it is always a large responsibility, so you really need to stop and consider whether or not it’s a responsibility that you’re willing to take on right now.
As you contemplate the many decisions ahead, here are some simple and basic questions to ask yourself as you begin to think about being a home owner:
Am I Ready and Able to Settle Down?
The term “settle down” doesn’t need to imply that you’re ready to be married, have kids, buy a puppy and plant petunias in the yard! It’s is perfectly acceptable to buy a home, live there for a couple years and sell. However, you do need to decide if your lifestyle is condusive to home ownership. Do you travel frequently for work? If so, you might not be home enough to a) enjoy your home and b) keep up on the general maintenance it requires. Speaking of maintenance, are you savvy when it comes to fixing things? As a renter, any problems noticed are investigated and resolved by the landlord. As a home owner, you have to know WHAT to fix, before you can make arrangements to GET it fixed.
Can I Afford a Home of My Own?
Let’s be frank, with today’s prices, it is possible to arrange a mortgage payment that is less than what some people are currently paying in rent. BUT the consequences for failing to make a mortgage payment are much greater than being late on your rent check. You’re credit is on the line. You also have to consider that in most rentals – some portion of utilities are being paid. As a home owner, this will fall on you. Water, sewer, trash collection, gas, electric, etc. etc. In addition to these, see above. Don’t forget about the cost of maintaining your home. What would you do if a seemingly perfectly good water heater breaks? Can you afford to fix this?
The recession and the housing crises have been difficult on everyone. If you’re one of the many people struggling to make ends meet – you should probably hold off for a while. Now, I certainly don’t want to scare anyone away from pursuing their dream of home ownership, but rather make it will be an enjoyable and profitable experience.
If you think you are ready to own a home, GREAT! Do some research. Find a great Realtor and a lender that will work for you. Make sure that you educate yourself on the numerous options out there and what will work best for your situation.
Electing for Lower Home Value?
October 6, 2009
Local Elections Affect Home Values
You know it’s election season when the yard signs start to pop up on every street corner, sometimes multiplied two, three, even four times for the same person. Some people pay attention to local elections and campaigns, others do not. But it may be wise to review some of the candidate’s history, especially if you’ve noticed a slight dip in your current home value.
The process of housing development approval falls upon these soon-to-be-elected city officials, but is rarely dependent upon factors such as supply and demand. As the supply of homes rise, it must be met by correlating demand. If not house values fall. It seems like an obvious concept, but judging by the nations current market – many were oblivious to this notion.
During one of the fastest appreciating real estate markets in history, local governments justified their seemingly endless approval of residential development projects by citing the increase in city revenues and the jobs that were created. Unfortunately, these affects didn’t last long and were soon eradicated by the concept of supply and demand. Once buyers’ demand could not keep up with escalating home prices, numerous builders began to reduce the prices of their homes in order to compete with one another. This caused housing prices to begin falling.
Home values began to drop so rapidly that foreclosures became the only viable option for many borrowers as selling or refinancing became impossible since all the equity in their homes had been wiped out by this excessive competition. Soon foreclosures began to flood the market driving supply up even further. Home builders were then forced to reduce their prices even further to now compete with banks that were offering their foreclosed homes for much lower prices. All the while the values of homes caught in the cross-fire were diminished to astonishingly low levels and the fear of continuous declines in housing prices kept buyers on the sidelines and the demand at historical lows.
Much of this could have been prevented by simply assessing the local statistics (population growth, income levels and current supply) before handing out the rubber-stamp approvals. In doing so they might have learned that supply was quickly outpacing demand.
On the brighter side, not all major cities have fully succumbed to the devastating market crash. Those cities that have traditionally regulated housing supply by more intensely scrutinizing proposed developments have managed to lessen the blow.
Still those candidates seeking office are now adopting smarter principals for their campaigns’ when it comes to residential development. It will then be our job to ensure that they maintain their pledge as lead the way to a once again thriving economy.
The 5 Best Housing Markets in the US
October 2, 2009
I know it sounds crazy, but YES! Despite the downward spiral of home values over the past year, there are actually major cities where current market values have been on the rise! Gathering data from Zillow’s second-quarter home value index and comparing it to the same time in 2008, it was discovered that a handful of cities seemed to be immune to the market crash!
Top Five Best Housing Markets for 2008-2009
And the winner is….
1) Boulder, Colorado
Share of Homes with Increased Value: 59.39% Median Home Value: $347,200
This great city is home to successful employers and the University of Colorado. In addition to steady jobs, this area is limited in the number of homes because of the Rocky Mountains which outline the skirts of the city and the vast amount of protected natural areas.
2) Spartanburg, SC
Share of Homes with Increased Value: 56.81% Median Home Value: $106,900
A mere 75 miles west of Charlotte, this bounding city is the first and only city in South Carolina to be named as a Bicycle-Friendly community by the League of American Bicyclists. It is home to three major colleges and universities as well as a few major corporation headquarters including Denny’s and Extended Stay Hotels. Still it maintains the ’small town feel’ featuring historic buildings and bridges that lend great history to this small town.
3) New Orleans, Louisiana
Share of Homes with Increased Value: $53.62% Median Home Value: $148,000
It’s no surprise here that this cities market value is growing. With the impact of hurricane Katrina in 2005, the construction business has been booming. Building houses from the ground up. In addition to more jobs being created daily, this famous parish also receives federal incentives, insurance money and private investments to help restore it to it’s former glory!
4) Binghamton, New York
Share of Homes with Increased Value: 53.61% Median Home Value: $112,300
There’s a reason this city, located in upstate New York, made it to the number three spot in the nation and that is that it remained fairly dormant during the housing bubble where elsewhere prices sky-rocketed. So when bubble finally burst and most other areas saw huge pitfalls in home value, Binghamton stayed pretty level. Another big factor is the town’s University – one of the nations highest ranked public universities.
5) Fayetteville, North Carolina
Share of Homes with Increased Value: 53.23% Median Home Value: $119,800
Fayetteville is right next door to Pope Air Force Base and Fort Bragg and so it heavily relies on military families. But the town also features three colleges and universities, several museums and a historic downtown popular with tourists. Are we starting to notice a trend though with housing markets and universities…? It sounds like if you’re looking for a sure bet in today’s market… you might be best off moving to your nearest college town!
Other honorable mentions go to Pittsburgh, PA with an increased value of 48.80%, median home value of $108,700 and to Little Rock, Arkansas, increased value of 46.96%, median home value of $121,200.