Given real estate values are low complemented with low interest rates; would this provide an optimal time to purchase one’s first home? Real estate is a weak knowledge base but it appears to be a better time to purchase simply with the lower mortgate rates. Please Advise.
It’s not a terrible time to buy, but I think prices will continue to drop in a lot of metro areas. I think the bottom could hit in late 2008 or even early 2009 (it will depend greatly upon the metro area). Nobody knows for sure, of course, but the momentum appears downward at this time, at least in the majority of markets in the U.S. Of course, if you’re in one of the markets where prices are on the rise, you’d think differently. I don’t think rates are rising anytime soon. But remember that you can’t change the price at which you buy your home, but you can refinance. If you go for a no-cost/no-point mortgage (I get mine and pay 1/8 of a point higher than I would if I were paying closing costs), you won’t be disincented from refinancing when rates drop. Most importantly, are you at a point in your life where you should be buying? Are you prepared to stay in the same place for 4+ years? Do you have a good credit score and downpayment?
I am looking right now. I don’t know my credit score, but I have never had a late credit card payment, missed payment, collection calls, etc. My car/school loans are paid in full. I do plan on remaining in the area for 4+ years. I’m close to a 20% of a down payment for the price range and I continue to add to that sum. So timing of all of this is rather convienient. Just wanted to gain more insight as real estate is my weak area.
Well, sounds like you’re in a good position. I would spend a lot of time looking and keeping tabs on what prices are doing. If you’re in a really weak area (say, Florida or Central Valley, CA), I’m hold off for awhile as things should continue to get dramatically worse in those areas. Keep in mind that you’ll need to budget for real estate taxes and homeowners insurance (and maybe flood/storm/earthquake insurance, depending on your location), as well as condo fees if you go that route.
Where are you looking?
West Minneapolis Area and Suburbs. I will not be moving until after Level 1 is over. Just casually looking in more detail after these rate drops. And I will have to read a “Homebuying for Dummies” book shortly too since I’m such an amature.
I have no knowledge of your local mkt, but personally, I’m on the sidelines 'til prices come down at least 30% (I’m in the NYC metro area). I’d recommend that you read the “It’s A Terrible Time To Buy” portion of this website: http://patrick.net/housing/crash.html and follow the daily news links to get a flavor of out bad it is out there.
KJH, See if this link is of any help : http://www.the-allengroup.com/fkc/member.asp -Rick
I doubt it’s going to come down 30% in NYC. But keep dreaming.
cfa2grunt Wrote: ------------------------------------------------------- > I doubt it’s going to come down 30% in NYC. But > keep dreaming. That’s fine if it doesn’t - I’ll keep renting. All I know is that I rent a nice one BR on the top floor with great views. There are other units for sale in the building with worse views and on lower floors that would cost me 1/3 more just comparing rent vs mortgage. Throw in taxes, maintenance and common charges and it gets rediculous, not to mention the popping bubble. I think my choice is pretty easy to make.
Hi Slogan, I too am looking in the NYC metro area - surrounding areas like LIC, Williamsburg, Hoboken, JC, etc. Think it will go down even more huh? Perhaps I can email you offline -
Hi Slogan, I too am looking in the NYC metro area - surrounding areas like LIC, Williamsburg, Hoboken, JC, etc. Think it will go down even more huh? Perhaps I can email you offline - get some info from what each other has seen
NYC MSA is already down 4.8% from the peak according to Shiller. On a real basis it’s not hard to imagine the MSA going down 30%.
recentcornellgrad Wrote: ------------------------------------------------------- > Hi Slogan, > > I too am looking in the NYC metro area - > surrounding areas like LIC, Williamsburg, Hoboken, > JC, etc. Think it will go down even more huh? > Perhaps I can email you offline - Dude, there are apartments in manhattan that are cheaper than what those “luxury” high-rises are going for in LIC… Surrounding areas like NJ, LIC and Williamsburg have a lot of room to drop…
Lastly, are there any mortgage scenarios to run from or jump onto? I know there are a ton of variations along side the fixed 30 year mortgate.
KJH Wrote: ------------------------------------------------------- > Lastly, are there any mortgage scenarios to run > from or jump onto? I know there are a ton of > variations along side the fixed 30 year mortgate. Just make sure you understand the terms perfectly, so you know exactly what your payment is and how reset’s, rate adjustments, etc… work. To an extent, think about it as selling a bond, so consider the investment characteristics. Finally, as I stated in another thread, an advantage of Real Estate is that you can get more leverage on it than you can for pretty much anything else, so if you think buying your place is a good investment, you want to lever up as much as possible (without negatively effecting your rate) and try to maximize your cash flow with your payment. I’m not telling you to take risk that you’re not comfortable rwith, but remember, to an extent, leverage is your friend…
no_slogan, I’ve seen similar discounts to renting vs. owning here in Boston too. That doesn’t mean that it will ever cost the same to own as rent. But I agree the gap should narrow.
you want a deal on real esate? come on down to detroit! http://www.detnews.com/apps/pbcs.dll/article?AID=/20080130/BIZ/801300350