Should you buy now? Move up or continue to rent?
For many people, buying a home
is probably the biggest investment they make. If you are using a huge sum of your lifetime savings
to buy a home, don’t you want a well-educated real estate professional to find you a house in the shortest time possible
and at the best price?
In some neighborhoods
today, SOLD prices are sometimes higher than the listing price for entry-level homes (price under $350,000). The
tightening of mortgage loan criteria has led to an increase in the number of properties bought by cash (see graph).
First-time buyers today make up about a-third of the buyers. Investor buyers make up another 25% of the market. Even
though the national price trend shows a decline, pockets of local markets are on the mend. Some homeowners
who want to trade up are still hesitant to make the move when home prices are dropping compared to 2005. Actually,
falling prices provide a rare opportunity to move up. How so? The following example
illustrates my point:
Suppose your old home is valued at $200,000 and prices have fallen 20%
- If you now sell your home for $160,000
- You have lost $40,000
But suppose that the house you like to buy is worth $400,000. That house
also drops 20%.
In reality, high-price
homes drop by a larger amount than low-price homes. Because there are more buyers for low-priced homes than sellers,
the prices of low-prices homes do not drop as much as high-priced homes. In some good quiet neighborhoods in San Diego,
the entry-level condos and homes are now selling above the listed price by as much as $10,000 to $35,000--a sign that prices
are trending upward. If you have been thinking of buying, don't wait too long. Interest rates tend to go up when
home values go up. When the economy is recessionary, interest rates tend to go down. Right now, interest rates are at
a historic low. Historically,
the average annual rate of return on a home lived in for five years or more is nearly 12 percent, based on data C.A.R. has
collected over the last 40 years. One should not treat the home solely as an investment or "cash cow."
Buy only what you need for shelter.
can now buy it at $320,000
- That means
you will actually save $80,000!
Elena Yu, Ph.D., created this website just for you.
She is a multi-lingual and super diligent licensed Broker Associate at Coldwell Banker Residential Brokerage--a full-service
real estate company. The company has a mortgage loan department that can assist with new loans or refinance.
Elena is an ethical, knowledgeable and experienced realtor with
astute business acumen and deep insight into local neighborhoods. Whether you are buying your first home, second home,
or an investment property, Elena can help you find the home that best fits your needs and wants.
Please let Elena Yu know how soon you plan to buy a home. Have you been pre-approved
for a home loan? What price range of homes are you interested in? Do you need to sell a house before you can buy?
Are you a first-time home buyer? Or have you bought and sold many homes already? Are you an investor? Do
you want to to a 1031 Exchange? Or are you looking for a second home or vacation property in San Diego? Elena
Yu is the best person to help you. When you are ready to start viewing and buying homes--however big or small, please