There was an interesting post today on the Inman Blog titled, “Who’s spinning whom?” that was digesting a recently written article by Dian Hymer, “Is buying a home today a good investment?” Hymer is a veteran agent in the San Francisco East Bay and has been writing a syndicated column for Inman News for many years. This article was also reproduced in several other News outlets around the country and received quite the buzz.
In the article Hymer deliberates this question she gets from today’s buyers and advises:
“Buying a home is still a good investment if you can afford it, if you are ready to put down roots in a community, and if you want to invest in your personal happiness. Profit potential shouldn’t be your only reason for buying a home, even though in most cases your home will appreciate in value if you maintain it and if you own it long enough.
“The housing market, like any economic market, is cyclical. There are periods of robust activity followed by periods of sluggishness. Prices can go down as well as up. Now that the market has softened in most areas, it’s time to look at owning your home as a way to gain control over your personal domain — not as a source of quick cash.”
This article received a lot of comments more pros than cons. There are some interesting comments, as one reader an associate political professor at the University of California in San Diego muses –
“By any reasonable measure (expected trends in prices, the ratio of rents to mortgage payments, the ratio of incomes to mortgage payments), now is a phenomenally and historically BAD time to buy. Smart buyers will wait until smart sellers lower prices to conform to reasonable income multiples.
He continues: “This is just wrong. All of the reasons to buy are made better by waiting a year or two (or more) for prices to fall. By definition, an “investment” is something that will appreciate in price or pay a dividend. Neither is expected to be true in the next few years for housing.”
You can argue this both ways all day long but the end result is, when you are ready to buy a home, buy it.
It’ s kind of like the proverbial question – “When is the best time to buy a new computer?” The answer is, “when you need it”. Due to advances in technology, what you buy today is outdated tomorrow.
This same rationale should be applied to a major decision like buying a home as well. Yes, you need to be capable of handing the financial obligations without overreaching your self to pay your mortgage and perform regular maintenance and upkeep.
Well what about my investment some inquire ?
While we all want to ensure that an investment like a home purchase is going to net us some equity in the future right ?
True, however you should not go into it with this solely as the purpose to purchase your home.
When we bought our first home I can tell you that the investment thought was secondary to our desire to have our own place to raise our family. We stayed in that first house for just a little over 10 years.
A lot of changes happened in the marketplace and when we sold, we did receive some equity but nowhere near the insane amounts that overvalued property owners were getting here in Florida. But then again a vast majority of the homes that were purchased over the last few years in Florida and elsewhere were bough for investment as the first priority.
We bought our second home this time last year in New Port Richey. A great new development and we paid pretty close to the market rate at the time. The same model is now selling for less than what we paid for.
Are we upset about it ? Yes and No. The difference now is that we have all been engaged by the media hysteria and thinking that we are loosing out because the next person got the better deal. Sellers here in the Tampa Florida Market are still holding on with a death grip on their homes price evaluations because they think they are loosing something and buyers are holding back because they of course want the rock bottom best deal they can get.
Right now the Real Estate Market in Florida is in a Stalemate. Some one has to move to keep the process momentum going forward, despite the mortgage and lending woes.
Heres a humble suggestion:
Buy your home now. Live in it and don’t worry about the Real Estate Market. It is cyclical, it will come around when you are ready to sell. After your kids have gone off to college and your now ready to move into a smaller home or you want to buy that Vacation Home at the Beach.
If your retired now and want that Home on the Beach. You may not live to enjoy it tomorrow if you are still waiting on the market recovery next month or next year.
So back to the question of topic again.
When is the best time to buy a home ?
The answer is: * When you need it. *
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