| It's a constant question now in the real estate | | | | your lifetime (no matter how old you are). Our own |
| market: Is it a good time to buy a house? Of course | | | | rate is 4.5%. That's not a variable or "teaser rate." It |
| it is difficult to answer in an article since you may be | | | | is fixed for the thirty years of the loan. |
| reading this years after it is written, when conditions | | | | Let's look at why this matters so much - as long as |
| have changed. But whenever you find this article, the | | | | you plan to stay in the house for a while, as we do. |
| following three crucial factors are what you'll want to | | | | Suppose you pass on a house that is selling for |
| look at to answer the question for yourself. | | | | $200,000 and waited a couple years while prices fall |
| Home Values | | | | another 10%. But suppose that at that time interest |
| At the moment, the first thing most people are | | | | rates were up around 7.5%. You buy the house for |
| wondering when they ask if it's a good time to buy a | | | | $180,000. The payment (assuming you have a 10% |
| house, is whether prices have finally stopped falling. | | | | down payment and borrow $162,000) is $1,132 each |
| Since a home is seen as an investment of sorts, we | | | | month for principal and interest. |
| all like the idea of buying when values are rising. I am | | | | But what if you had bought at $200,000 and put |
| writing this in early 2009, and no, home values not | | | | 10% down? Then your payment on the $180,000 |
| only are not rising in most areas, but they don't seem | | | | loan would have been $912. That's right, you would |
| to have stopped falling. | | | | be paying $220 more each month if you waited and |
| We just bought a home anyhow, and there are | | | | bought at the lower price. That amounts to $77,200 |
| several reasons why we felt comfortable doing so. | | | | more that you would pay over the thirty years if |
| The first is that prices don't seem to be falling much | | | | you stayed in the house that long ($79,200 more in |
| in our area (Canon City, Colorado). Apart from the | | | | payments, but you saved $2,000 on the down |
| various foreclosures that are dragging prices down a | | | | payment). This demonstrates the importance of the |
| bit, the market here is much more stable than in | | | | interest rate in determining your true cost. |
| other parts of the country. A stable job base and | | | | Personal Situation |
| the fact that prices never rose too far too fast | | | | Is it a good time to buy a house, then? That |
| during the "boom times" helps. | | | | depends not only on prices and their direction, and |
| The real estate market does not act the same | | | | not just on interest rates, but on where you are |
| everywhere in the country. So to see if a bottom is | | | | financially. How secure is your income? If you lost |
| near or if prices are rising, pay close attention to | | | | your job, could you make the house payments for |
| what is happening where you are. On the other hand, | | | | six months while you looked for another? Can you |
| we did not buy counting on rising prices, because | | | | count on finding another job that will provide enough |
| that is not the only determining factor. In fact, it is | | | | income to pay for the house? Are you going to be |
| possible that the problems in the country will get | | | | staying in the area long enough to justify buying |
| worse and drive prices down 10% or 15% even here. | | | | (renting can often make more sense if you will be |
| So what else made us decide that for us it was a | | | | moving within a few years)? These are the more |
| good time to buy a house? | | | | difficult questions to answer, but perhaps the most |
| Interest Rates | | | | important in determining if it is a good time for YOU |
| At the moment you can get fixed rate 30-year | | | | to buy a house. |
| mortgage loans at about the lowest interest rate in | | | | |