As a professional Realtor in Portland, Oregon people ask me whether or not they should buy a house this year quite often. My answer is that there are many factors to consider and ultimately YOU are the one who has to live with the outcome, not your real estate agent, not your friends or relatives.
Is it time to buy real estate? Nobody can make this decision for you.
This article is written by an Oregon Real Estate Licensee IS NOT legal counsel and IS NOT tax or financial advice. Realtors cannot predict or promise future profits or losses and this article is solely the opinion of Richard Lockwood as of the date of publication (I reserve the right to change my mind and at some point in the future you may well see an article from me that contradicts my opinions as of this publication). Anyone (even me) could turn out to be wrong in the future. This article and video are food for thought, questions to ask, and just my opinion as a Realtor. Anyone who promises profits or a way to get rich is may be trying to get rich off you, so take what you read/hear with a grain of salt. This is not dogma, but rather talking points that you may want to consider with your attorney or financial planner or simply research and verify on your own.
Do you plan to live in the home for the next 5-10 years?
Does this house make sense for the next 5-10 years? Do you have a decent down payment and savings set aside to keep up with house repairs & maintenance? If you answered yes to these questions then perhaps owning your own home does make financial sense for you. Long term, the tax savings of owning a home, today’s low interest rate mortgages and increased equity over time are all very good things. A hypothetical home owner who saved $,000 per year on their taxes would have put $40,000 back in their pocket over the course of a decade that someone who only rented would have paid in taxes (consult your accountant for your exact tax situation). Additionally, every payment you make chips away at the amount you owe and over the course of many years your mortgage amount will become lower. These factors have swayed many responsible citizens toward buying a home.
Fear of Future Market Crashes
Prices have gone up in the last few years and low interest rates may keep those prices moving along for the next year or two. However, there is weakness in the economic recovery in the form of stagnant wages combined with a rising cost of living. If real estate prices keep increasing at today’s rate then in a year or two average people won’t be able to afford to buy a house. As such, either prices will level out near their current values or we may see settling values or even another housing market crash. Real estate prices are increasing while wages are stagnant: if this keeps happening then we may hit a bewitching hour where a new bubble pops. With these issues on the horizon people still need to live somewhere and the positive factors above may outweigh the risks. Before you decide answer these questions for yourself: do you have a stable income? Do you have savings set aside for unexpected hardships? Also, in my experience as a short sale specialist many people who ended up in foreclosure situations would have been just fine if they had avoid cash-out refinances, HELOCs (Home Equity Lines Of Credit) and consumer debt. Many financial planners say to save 6-12 months of wages but anything is better than nothing so start saving now.
In closing, if you can easily afford the payments, have money set aside for when life gives you lemons and you can safely say that you can live in the home for 5-10 years then it may make sense for you to buy now.
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