Best Place Real Estate

Although a lot of people are taking advantage of this buyers’ market, otheres are unsure about buying a house as they are concerned that prices may still be declining.  It almost seems as if some people are waiting for prices to go up before they will feel good about buying.  However, when prices do go up, some people who are qualified to buy now will be priced out of the market. 

If we all had a crystal ball we would know exactly when to buy and when to sell.  But we don’t and it is nearly impossible to perfectly time the market, whether it is the stock market, the real estate market, or really, anything.

Rather, you are probably better off buying when we are some where near the bottom.  Imagine real estate prices as being represented by a “V” or a “U”.  It would be really nice to buy at exactly at the bottom of the “V”.  The only thing is that we usually don’t know exactly when we are there.  There is no bell ringer who rings a bell announcing we have hit the very bottom.  But, buying when we are near the bottom of the “U” puts you in a much better position.  Yes, prices may go down a little, but they will more than likely start going up again soon. 

Also take the interest rates into consideration.  Prices may go down a little more, but if interest rates go up, it may be more difficult to qualify for a loan.  Even though the price of the home may be less, the monthly payment for the loan could be higher because of a higher interest rate.  So again, some people who are qualified to buy now, may be priced out of the market by higher interest rates.

Real estate is a long term investment.  Most people stay in a home for at least 5 to 7 years.  Rather than concentrating only on prices and trying to buy at the bottom of the “V”, I believe it is better to consider all parts of the formula for a successful investment.  That formula not only includes price, but also includes loan rates and terms, tax advantages, length of the investment, and resale value.  For rental property, the formula also includes rental income and the increase in the income over the years.       

Price is important.  But, please, look at the whole picture!  Look at all the factors involved in a real estate purchase. 

Yes, the price is really important, but so are the mortgage rates.  It is possible for prices to go down further and for rates to go up.  In this case, the house payment on a piece of property could be the same or even higher than when the price was higher.  In his article, The Fed and Mortgge Rates, Bill McCord gives a clear and well written explanation of rates.  Real estate mortgage rates are a big part of the real estate buying picture.

Another thing that is so important to remember is that, for most part, real estate is a long term investment.  Consider the location of the property, floor-plan, amenities, etc.  If you are buying income property, will you be able find tenants easily and how much can you expect to receive in rents?

Even though there are many distressed sales currently on the market, there are some properties that have a lower price for a reason.  Is it simply that the seller needs to unload the property now, or is there something less desirable about this property that is making it harder to sell?  When you attempt to sell it in the future, will it also be harder for you to sell for the same reason?  For example, a home on the view side of the street will usually sell for more than the same home across the street without the view.  Even if the non-view house is asking a really low price, you could very well be better off paying more to be on the view side of the street.  When prices start appreciating again (and they will), your view property will be even more valuable.

Like any other investment, when purchasing real estate you need to look the whole picture.