Here's a simple example: If you sell a home for $200,000 for 10% less that's $20,000 "off". If you buy a home listed for $300,000 for 10% less that's $30,000 less. You get a bigger bargain than you give. The percentages are for demonstration purposes--not meant as an indicator of how much prices might be "down"--if you ask your Realtor to show you some statistics I think you'll see that Wayne is a good place to invest or to have invested.
It is always advantageous to purchase when most other cannot. The misconception is that it could be done with little or no money. Unless you are prepared to step up to the plate and use hard cash all you are doing is creating debt. In todays economy one cannot take chances where there is little or no job security.
One must have at least 12 months of reserves just in case they loose their jobs. With the-growing cost of food, gas and possible super inflation it is a risky proposal to purchase in the next three years.
There is no shame in rentals. There is little or no out of pocket expenses. No real estate tax to pay.
No costly repairs. No mortgage payments. Huge savings on insurance. Most important if you have a job this is a time to save. Get rid of all the frill and costly expenses like leasing that sport car. Enjoy the freedom and a good night sleep. Ownership is always good. Work for yourself not for some bank mortgage or the crazy rates credit cards charge. Simple humility built this country stupid greed can destroy it.
Also, if you calculate the price-to-rent ratios, most neighborhoods indicate the costs of homeownership are more favorable than renting. Simply divide the average price of the properties that you are considering buying by the annual rent for a comparable home. If the factor is less than 20, it reflects that the costs of owning a home will be less than renting a home. Good Hunting!
Are you moving anyway? If you are moving anyway I would consider selling now. The market could go up or down. But you will sell before you are stuck not able to sell. Will it make or save you money? I am not sure. It could work either way. If you do sell do it immediately before the $8,000 reasons for someone to buy go away. If you wait, that is fine. It is a gamble either way. I gave you some basic ideas that may help. The final decision is yours along with any costs involved with the decision you make.
From a real estate prediction side below expect 1.6% to 2.8% price (for the states big cities) increase this year. Maybe right, maybe not.
Does it make more sense to rent of buy? Plug in your numbers and see.
Reasons I can think of to wait to buy.
Do low interest rates help of hurt? A very different way to look at things below. I say they really hurt.
What could happen when the $8k bribe goes away.
Sounds like you've got two situaitons to deal with - the sale of your current home and the purchase of or rental of another. I'm sure there are things in your life which are creating the need to move. You indicate that you own your current home - would you need to sell that first? Is your home currently on the market? With the Spring market starting (enough with the snow...), I think you'll find a good deal of demand for properties in Wayne. Most people want to sell their home before they purchase another, but should that not be the case, the answer to whether you should rent or buy is: it depends.
Would you expect to live in a new home for more than a few years or can you see yourself moving again after a year or two? Do you know where you'd want to live? Are there homes that meet your criteria currently available? Andrew and Maureen bring up good points - with interest rates at the lowest level we'll probably see in our lifetime, as long as you think you'll be staying put for a while, depending on your price range, I think for a lot of folks it makes more sense to buy.
Pete Simonetti, MBA
REALTOR, ABR, SRES
While this is definitely a concern as interest rates are very likely to trend upwards as the Fed ends their purchase of mortgage backed securities. Currently we are hovering around 5% interest rates with many economists thinking we could see 7% rates down the road. So in your example you are thinking of waiting a year to purchase you could be looking at a 7% rate, hypothetically. If property values were to plummet because of this, as you suggest, the property you are interested in will therefore be selling for less in a year. For numbers sake, letâ€™s say you are considering buying a $300,000 home today at 5% interest (for example sake this is a 100% loan) you would be paying $1610 in principal and interest. Say a year from now that same house is selling for $250,000 (doubtful, but we'll use this as an example) because of the decline in the market, but interest rates are now 7%. This monthly payment would now be $1663. You are paying $53 more than you would if you purchased in today's market. So on a monthly payment basis this is a better time to purchase. That being said, if you bought today and for some reason needed to sell in a year you would be in a tough spot (this though is one of the reasons that there is not 100% financing). If you plan on being in the home for an extended period of time then the short term decline in prices won't be as much of an issue. It really all comes down to what you are more comfortable with, less of a payment now and owning a home that decreases in value a little over the short term (real estate is meant to be a long term investment anyway) or paying more monthly for a home that is selling for less a year from now.
Andrew Himes, CRS, ABR, e-PRO
Prudential Fox & Roach Realtors