It seems that housing is again affordable and the bad news is, well, not so bad anymore. According to Simon Constable in the WSJ, the S&P/Case-Shiller home-price index, which tracks 20 markets, dropped 1% in December … and that is the fifth consecutive decline.
The drum is beating loudly and the tune is “houses are a good deal”. In fact, experts at Mood’s Analytic’s, where income and housing prices are studied, claim houses are more affordable than in decades.
The WSJ reports that, for the first time in 35 years, nationally for the average family, the price of a house basically adds up to the equivalent of 19 months total pay.
Experts are pointing out that housing has dropped so much that the great debate of renting versus owning is clearly leaning toward homeownership.
Timing the real estate market or, for that matter, any market is iffy at best. But when you take a good look at the signs you can see that homebuying is becoming more attractive. Home prices have dropped about 31% from their high in 2006 (based on the S&PCase-Shiller national composite home-price index).
So if you put off buying a home because you were waiting for the best deal, now may be the time to re-launch your search. However, keeping in mind a few homebuying tips will help you navigate through the housing process.
Check your resources. No matter how affordable prices are, remember that buying a home is still likely your largest financial investment. With that in mind, you’ll want to make sure that you’re not just barely economically squeezing into a home.
It’s best to save up and have a solid, healthy downpayment. The new tightened credit rules may insist on a larger cash payment and insulate you from a possible dip in housing prices.
Call your agent. Even if you’ve been tracking the real estate market and watching the drops in your neighbor’s house that’s been on the market for a seemingly endless period of time, call your real estate agent. Why? Because he or she will have the inside scoop on your neighbor’s house and other deals in the community where you’re looking for a home.
I don’t need to spend a lot of time on this one because I’ve written about the importance of using agents in previous columns. It’s simply a good idea to consult with and use an expert when you’re investing a lot of money, time, effort, and–let’s face it–your heart–into something.
Stick around a while. I’m not talking about hanging at the open houses. Nor should buying a home with the intention of flipping it be a high priority right now. If you’re buying a home, plan to stick around a while. The cost of buying a home, moving, and paying for repairs/renovations adds up. However, experts say keeping a goal of owning the house you buy for a while (maybe 10 years) is the better route to take.
Weigh your options. I don’t like wasting time and one thing I could never understand as an agent was people who simply wanted to “window shop” for houses they really couldn’t buy. They would get agents to drive them around all over town looking at homes in price ranges they couldn’t afford. Not my idea of fun–for the agent or the buyers–it’s more like a lesson in frustration. Of course, comparison shopping in your price range is important.
The better option is to weigh your options, meaning know what’s important in housing. Know how much you can really afford to buy. Know your likes and dislikes. Know your needs in housing. Like choosing a mate, you’ll make some compromises. Keep track of what’s important to you by writing down what you hope to find in your next home. Keep the list handy, review it, adjust it during your house-hunting excursions, and then be sure to share your detailed list with your agent to ensure you’re all on the same journey.
by Phoebe Chongchua | Realty Times