IS It Time to Make YOur Move?
March 19, 2008
I recently saw an interesting statement in an op ed piece by Jonathan Clements in the Wall Street Journal. His piece began "Financial Lore says you should buy when there is blood in the street - which suggests that real estate is a bargain, because there is blood all over the neighborhood." Certainly for the stock market the statement may be very fitting. If you had bought Lehman Brothers on Monday and sold it on Tuesday this week, you would have made somewhere around 125% on your one day investment. Real Estate is a different ball game.
But it may be a good time to buy a home. While prices may not yet have bottomed out, they certainly are a bargain compared to two years ago prices. With the new, stricter loan qualification requirements in place, a potential buyer can learn whether the payments on his mortgage will be affordable over the next several years. For most buyers, it is the monthly payment that is the critical factor in determining whether buying is the right option versus remaining a rent payer. Even if the value of the home decreases, if the home is a great place to live and the payments are affordable, buying in a declining market is definitely worth considering.
Jonathan Clements offers this "Home Economics" lesson for buying a home.
"View it as a lifestyle choice, not an investment
Budget for costs such as utilities, property taxes, homeowner's insurance and maintenance.
Don't buy if it means cutting back on retirement savings."
This seems to me to be good advice.
I recently saw an interesting statement in an op ed piece by Jonathan Clements in the Wall Street Journal. His piece began "Financial Lore says you should buy when there is blood in the street - which suggests that real estate is a bargain, because there is blood all over the neighborhood." Certainly for the stock market the statement may be very fitting. If you had bought Lehman Brothers on Monday and sold it on Tuesday this week, you would have made somewhere around 125% on your one day investment. Real Estate is a different ball game.
But it may be a good time to buy a home. While prices may not yet have bottomed out, they certainly are a bargain compared to two years ago prices. With the new, stricter loan qualification requirements in place, a potential buyer can learn whether the payments on his mortgage will be affordable over the next several years. For most buyers, it is the monthly payment that is the critical factor in determining whether buying is the right option versus remaining a rent payer. Even if the value of the home decreases, if the home is a great place to live and the payments are affordable, buying in a declining market is definitely worth considering.
Jonathan Clements offers this "Home Economics" lesson for buying a home.
"View it as a lifestyle choice, not an investment
Budget for costs such as utilities, property taxes, homeowner's insurance and maintenance.
Don't buy if it means cutting back on retirement savings."
This seems to me to be good advice.
posted by shirley harry at 8:59 AM
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