The subprime mortgage still fresh in our minds, does buying a house this year make sense? The economy is far from out of the recession that set off by the subprime market. American manufacturing jobs are still being shipped out, stocks are reluctant at best, government spending cuts are about to start and the European crisis is yet to hit bottom. Yet some economic indicators say buying a house is a good bet when the market is saturated with multiple choices, bringing down the price, while unemployment rate is steadily going down. Check the pros and cons to help you to decide if 2013is your year to own a house.
THE PROS
Real estate market on upswing this year
When you have a surplus of listed properties to choose from, naturally, you gain bargaining power from sellers. But the picture may soon reverse this year or early next year, says the author. Buying this year makes sense, considering that short-term mortgage is less tight, unemployment is down and, overall, the real estate industry is gaining grounds again. Why wait when buyers outnumber sellers again?
Rents are up more
The most glaring reason, perhaps, is that rent is going up. It’s an indication that business is booming, more employees and companies looking for places to stay, more exchanges of goods and services happening, so that landlords are gaining that confidence traction once more. And when real estate is up, it pays to own that property you’re living in.
If you plan to stay put really long
Rent is nice for short-term especially if your career uproots you every five years, for example. But if you plan to see your kids grow up and your knees grow old in the same place, you have to buy now when sellers outnumber buyers. The rates are still below market price. The economy may still be shaky, but between buying now and next year or in 2015 when real estate is in better shape, 2013 is a bargain year.
THE CONS
Consider your credit backlog
Buying a house this year makes sense if you have the 3Cs going for you: cash, credit and career. But if, like many middle- and lower-class Americans, you have been hit hard by the subprime crash and still recuperating or paying off some debts, buying a house now will disrupt your journey to recovery, advises the author. Consider where you stand now, and add a mortgage to see if buying a house makes sense this year or if it can be delayed for a couple of years more.
An Expensive house’ pitfalls
The author warns against buying an expensive house when incomes and rents are much lower. Besides, house prices are still going down in some areas, which drives up interest rates on mortgage. A no-win situation when you intend to stay over a short-term only and resell the property at a loss. A safe bet to buy is when you can cover the mortgage and make a profit when you rent the house out, which is not happening this year, says the author.
Consider your career
It’s not only how much money you have now, but where your career will take you. And high-profile careers can be as mobile as a freelance or self-employed path. Take the husband’s advertising job, a career that is likely to take him to offices across the country and even out of it. Buying a house at a stage when your career is yet to get an established hold may work during pre-subprime crash, when reselling a house over a short-term period can give you a nice margin. But those times are gone and you need to keep your house for a longer time while waiting out for property prices to shoot up.
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