By Kevin Chiu
How many times have you heard there isn’t a better time to buy real estate than now? Drummed up by the real estate industry, it’s as old and trite a saying as we get over decades of propaganda. But with prices at lows that haven’t been seen in more than a decade and longer in some places, and mortgage rates at near record lows this could just be the best of times to steal real estate.
You may have heard that 2011 is a good time to buy, and you are probably wondering why with all the problems in today’s housing market with foreclosures at all-time highs why now is such a good time?
Where You Buy Matters
Your first consideration needs to be where you buy. Some places are simply much better than others. Experts advise not buying property in expensive high-end neighborhoods where the price of renting a home annually is less than 9% of the cost of the home. Instead look for homes in less expensive neighborhoods where the annual rent runs 9% or higher than the cost of the home.
You may also want to make sure that even if the home you are buying is a foreclosure there are few other foreclosed properties in the neighborhood since homes that are foreclosed bring down the value of homes in the same neighborhood. With foreclosures at record levels that may not be an easy find since so many neighborhoods are heavily impacted by the crisis.
You also want to look for places where the price of purchasing a home is still at rock bottom, and the area shows some positive signs of economic recovery. Such signs may include an increase in employment or the opening of two or three new businesses nearby. A rise in commercial leasing also distinguishes an area that is moving in the right direction since it’s usually the first indication of employers hiring more workers in the near future.
Be Prepared For A Long Term Investment
Don’t even think about buying a home unless you are prepared for it to be a long term investment. Right now there are far more houses available than there is demand for homes with more than 18 million vacant homes in the country, according to the U.S. Census Bureau. This means that although the housing market is expected to improve, it’s going to be a slow improvement and painful for many more homeowners than you might imagine.
If you are hoping to get a return on your investment, then you need to consider the turn around for your home may take years – as long as 15 to 20 years in some of the hardest hit markets.
You can get a real steal on a home right now in the right location, but you also want to make sure that any purchase is as safe and economically wise for you and your family.
Get your cash down payment together, saving at least 20% and then either find a veteran real estate agent to work with or be prepared to go it alone and work hard to find the right deal.
Then after you find the right home, negotiate, negotiate and negotiate for the lowest possible price and the best terms you can get. Don’t make the emotional mistake of falling “in love with a home.”
Being able to offer cash upfront will often result in the seller lowering the price, and if you are taking out a mortgage consider all the options before signing the dotted line. A fixed rate loan will give you the peace of mind that your interest rate won’t climb and find you and your family out on the street.