Should First Time Homebuyers Buy Now?

first-home-christmas70Is This The Right Time To Buy Your First Home?

 

The old saying “Buy Low, Sell High” sure sounds like obvious advice.  But haven’t you heard Wall Street commentators talk about how hard it is to “time” the market?  The same is true for buying a home.  By the time you know when the market was at a “bottom”, it isn’t any more.   All of the signs indicate that once this market hits bottom, everyone is going to jump in, so that the bidding by buyers will make the prices go up rapidly.   And mortgage loan rates fluctuate, sometimes rapidly.  So how can a first time homebuyer tell when to buy real estate?  

 

There are two fundamental considerations, for all buyers:

-         Can you afford the home now?

-         Will you stay in it long enough to justify the initial costs?

The first point includes consideration of mortgage rates, which in the Triangle have been great for some time now and look like they will continue to be very good in the short run.  But they’ve been really high before and could get there again – we can’t predict them far out. 

This point also means you need to consider your income, assets, and other debt – can you make the commitment to buy and maintain a home now?  The second point recognizes that there are some significant one-time costs when you buy, and when you sell, so doing both quickly is a bad idea.  I typically recommend that a buyer feel sure they will stay in the home 2-3 years, minimum, but situations do vary.  For example, if you will be able to sell with relocation benefits that cover many of your selling costs, it may be easier to buy a home and stay in it a short time.  Both points suggest that you should have a high degree of confidence in your income security.

 

First time homebuyers have two huge advantages right now:

-         You don’t have to sell another home first!

-          You can get up to $8,000 from the government!  Not a loan, but free money!

We are in a slower market than we are used to, meaning there are more homes for sale now than usual, and fewer qualified buyers.  That, combined with the low interest rates available, defines this as a Buyers Market.  As a non-homeowner, that means you get the benefit of buying in a Buyers Market without the penalty of selling in one too.  And, it gives you some clout in negotiations as the sellers don’t have to worry about you being able to sell first.  The second point strongly suggests that now, right now, is the time to buy real estate.  The program requires that you close by Dec. 1, 2009.  Still, the two fundamental considerations apply.  For example, the rules require that you live in the home as your primary residence for three years, or you have to return the $8,000. 

 

So, if you can buy now, should you?

-         Larger than usual inventory of homes for sale means more to choose between

-         Low interest rates mean you can get more home for the same money

-         A Buyers Market means you have more clout than in a Sellers Market

-         The government’s $8,000 gift expires Dec. 1

That adds up to making this an unusually good time to buy a home anywhere from Cary to Wake Forest or any other part of the Triangle in North Carolina.

 

 

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