IS IT BETTER TO WAIT UNTIL THE ECONOMIC PICTURE IS CLEARER SO MY HOUSE WILL APPRECIATE? OR, SHOULD I CONSIDER RENTING INSTEAD OF BUYING?
The answer is NO!
The fact is the economy is still solid. After expanding rapidly over the past couple of years, economic growth is moderating – and this is actually good for housing. Most economists predict that overall GDP growth will average about 2.5 percent for the rest of the year. That means that job growth will continue to move forward at a pace that should not trigger higher inflation rates or higher interest rates. This period of moderate economic growth, job creation and low inflation, coupled with a true buyer’s market where there are plenty of homes to choose from, makes this an ideal time to purchase a new home.
The best way to “play it safe” is to actually buy a home. And here’s why. Studies show that owning a home is the best way to build household wealth. The sooner a person owns a home, the faster they begin to build up equity and wealth. When you buy a home, you are also purchasing price stability, knowing that you will pay the same monthly payment for the life of your 30-year mortgage.
Now consider the current rental market. During the past few years, many rental units have been converted to condos. As a result, there are fewer apartment rentals on the market. While home prices have been moderating, rents have been going up. Each year, your rent can easily go up a minimum of 5 percent to 10 percent. Where is the economic security in knowing that it is possible your rent could surge 30 percent in three years? You don’t receive any tax benefits from paying rent, nor do you accumulate any price appreciation, as you would if you owned a home of your own.
All of the economic fundamentals show that this is a good time to buy a home and that there is upward pressure on rental apartments. The real risk isn’t in buying a home, it’s continuing to rent or to try and judge the market and lose a great opportunity to negotiate for that dream home.
—Brenda Talbert, Executive Vice President Collier Building Industry Association
Slumping real estate markets also go by another name — buyers’ markets. Boom real estate periods, by contrast, tend to be known as sellers’ markets because most of the advantages are with sellers, not buyers. Unlike the boom years of 2003–2005, home sellers and home builders today no longer have the upper hand. They can’t expect double-digit price increases year after year or long lines at sales offi ces or open houses. Serious buyers are fewer in number and a whole lot slower to sign on the dotted line. Builders have to sweeten their packages of concessions in buyers’ markets — offering discounts, free upgrades and other deals that they’d never consider during the boom years. Here are ten good reasons why “It’s a Great Time to Buy!”
1. It’s a Buyer’s Market: You’re in the driver’s seat and can get a great deal on a new or existing home. Yes, dreams do come true.
2. More for Your Money: Builders are offering free upgrades, mortgage interest buy-downs and a host of other incentives.
3. Tax Benefi ts: Your kindly Uncle Sam knows homeownership benefi ts the nation and encourages it through deductions for mortgage interest and state and local property taxes.
4. Great Selection: Ample inventory of new and existing homes means more choices.
5. Interest rates: Currently near historic lows.
6. Equity: College expenses, consumer goods, retirement. Your 401k should be so useful.
7. Leveraging: Make a down payment of 10 percent or less of the value of the house. Earn returns based on the total value of the property. Plus you get to live there! What’s not to like?
8. Amenities: Gourmet kitchen, mini-spa bathroom, home theater. You want it, you got it! It’s all about you.
9. Energy and Resource Effi ciency: Today’s new homes are increasingly energy-effi cient and are constructed with resourceconserving materials and techniques to save you money.
10. More space: Kids, pets, hobbies, in-laws. No explanation necessary.
—Michele Harrison President Collier Building Industry Association