My Home: A series about the home buying process through the eyes of a first time home buyer.
Being undisciplined at times with regards to my finances, I’ve thought about it. I’m lucky to have a decent income and live with fairly low expenses. So grudgingly, I admit, I can be a little “spoiled” at times, so the thought has come up in my head, “there’s a housing bubble? Screw it, I’ll buy anyway!” So I decided to put the arguments for buying “out there. “Why buy now?
- I’ve heard that if you are going to be living there for the long term, it doesn’t matter when you get in. Your home is not an “investment” because it’s a place to live. You shouldn’t look at the home value.
- There’s only so much real estate, so if you don’t buy something soon, there will be nothing left to buy–mind you, I live on an island so this statement is even more true. Prices must continue to go up!
- Interest rates are going up. Buy now since you can afford more house.
- You can’t time the market.
- Real estate investments have returned around 11% annually. That’s the only percentage I could find. It could be innaccurate.
- It’ll be my own place! Isn’t that the American dream? And have it now…now now now.
I’ll let you know as I think of more…I’ll also post up a counter argument in the near future. I already have some notes jotted down…
1. Pretty true. I just have a hard time overpaying for something right at the time when it appears that prices are coming down.
2. That’s nonsense. Especially “Prices must continue to go up!” It’s the “if you don’t buy now, you’ll be priced out forever” argument. My question is, “once everyone is priced out, then what?”
3. You can always refinance if rates later come down. You can’t get back the money you overpaid. Besides, worrying more about rates than price fall into the “monthly mentality.” I try to avoid that.
4. Yes you can. But if you get it wrong, it’ll cost you. But if you get it right, it saves you bundles. So, you most certainly can.
5. No, even housing bull David Bach uses 6.8% as a historical growth rate.
6. Absolutely. And that is worth a lot.
Just my two cents.
You know I got a comment - big mouth and all.
I say buy now. With this imaginary bubble, we have created a buyers market. Sellers have a smaller pool of buyers to bid on their properties and are now more likely to negotiate peacefully. You should be able, as a buyer, to get more bang for your buck.
I also agree that buying your home is different than looking for a house to flip or rent or whatever investment you are looking for. As long as you can afford it and are happy with it, the mortgage and your circumstance, then you are there. Go for it.
PS - You are thinking too much about this - it is your home. LOL
D, you’re screwing up “my plan.” LOL…I’m trying to hold off until next year…build up the downpayment fund. I do hear you though…out of all the statements in my post, I probably agree with the 1st one the most…If you’re going to live there, it’s a house…you really shouldn’t have to worry about the ups and downs…after all, I’m not selling it! But, being a pf minded…I have to consider it.
LMG, actually, on my counterpost, I am referencing a lot from your post. Being the split-personality I am, I try to avoid looking at the Sunday newspaper solely because I just don’t want to get my hopes up too soon. One day, I’m all about waiting, the next I figure what the heck.
OMG…..
1. wow what happened to my equity? it just vanished, /rolls eyes. Whee more inventory, more shopping opportunities, but not for the next 3 yrs from this yr 2007.
2. OMG that person that stated that is so true, now if that person could only predict when the dollar will be stronger then Euro, Canada, Japan, we could all make billions! /sign me up!
3. Yes buy into higher interest rates, so we can have you house faster, and put up on REO, and try to break even or at a 12% markup from original price bought from last owner.
4. I cant tell the correct time right now…
5. Still overrated.
6. Yes, having your own home can be fruitful, and rewarding… Still Renting till 2009