2013 Buyer Considerations – Slim Pickings Part 3
Unfortunately for home buyers, the days of buying at the bottom of the market for a great price are gone. Anyone considering purchasing a home should do so without hesitation. Consider the following key indicators:
- Emotional Considerations– The single most important question that everyone considering a home purchase should ask is: “If I were to buy today, what would mean to me?” Serious consideration should be given to this question as the answer always has a direct impact on the quality of a person’s life.
- Increasing Rental Costs– The cost of purchasing a home isn’t the only cost that buyers should consider. Every buyer should take into consideration the increased cost of renting a home in the future. With rental rates increasing 3% or more every year, it usually makes more sense for homeowners to fix their monthly costs with a fixed-rate mortgage.
- Tax Considerations– It’s also easy to overlook the tax benefits of homeownership. With income tax rates increasing, the mortgage interest deduction should be an even greater benefit in the coming years. For investors, there are also tax benefits associated with depreciating a home.
- Chasing the Market Down– During the past 5 years, most people selling their homes chose to chase the market down by waiting to sell in the hopes of selling at a higher price. This was a foolish approach that led to many sellers taking huge losses because they chose to ignore the obvious signs that pointed to a declining market. Buyers should be careful not to chase the market up by waiting for prices to go even higher.
- Left Over Strategy– When market activity increases, the first properties to sell are either the most appealing or the best priced properties. Buyers who wait are likely to find slim pickings and end up paying more for less desirable properties. Selection should be given careful consideration.
- Paper Gains/Losses– If a buyer isn’t planning on selling a home for 5 to 10 years, or even longer, the potential risk of buying high is far outweighed by the risk of losing the opportunity to buy low. The truth is that it doesn’t matter what happens to prices short-term if you’re not selling for years into the future.