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Buy or Wait?Should You Buy a Home if Prices are Likely to Decline?
(8/13/10)

Should you buy a home if prices are likely to decline? While it’s easy to provide a quick answer to that question, providing the best answer takes some consideration. Some who choose to purchase a home in today’s market will reap little more than disappointment, while others may reap huge rewards. There is no “one size fits all” answer. If you need shelter; if you like the advantages of home ownership; and if you’re willing to do your homework prior to purchasing, it could be a great time to buy. Part of that homework begins by considering the following:

Should not purchase a home now:

  • If you think your work may require a transfer within the next 3 to 5 years, buying a home could be a risky proposition. Values in some locations may indeed fall, while others will see limited growth at best. A home purchase could leave you with few options if you need to relocate.
  • If your employment is unstable—and your spouse’s, if both incomes are required to make a mortgage payment—you should probably wait to purchase. The economy still has some bumps to come, and the extra risk probably isn’t worth it.
  • If you will have no disposable income after your home purchase, you should wait. Stretching your budget may have been a good idea in the past, but an unstable economy makes it a very bad idea. When you are not financially comfortable, the additional stress of each month’s bills could damage family relationships as well as your health. Save your money and purchase later.
  • If the area you’re considering is so unstable that home prices might still experience significant declines, it’s probably best to wait or to choose a more stable area.
  • If you’re purchasing a “bargain” for investment purposes only, unless you’re knowledgeable in real estate investing, the potential rewards don’t justify the risks.

Should CONSIDER purchasing a home:

  • If you are financially stable, are secure in a good job, have some savings for emergencies, and would like to own your own home, now could be a great time. However, a good deal today could still turn out to be overpriced if prices continue to decline. The advice of a good agent can help you understand the relative stability and future potential of YOUR market.
  • If you wish to buy a home as a place to raise a family, a place to grow roots and create memories, and if you meet all the qualifications above, a home purchase could be a great idea.
  • If you have done ALL your homework, researched the area, recruited the experts, and truly want to be a homeowner, you just may find the deal of a lifetime—in more ways than just the financial aspects.

The following blog posts provide specific information that may help with your decision to purchase:

Research The Neighborhood Before Buying a Home

Is Housing Still a Great Investment?

Home Values Have Remained Unchanged

Home Prices Are Not Expected to Appreciate For Three-to-Five Years

Fundamental Changes Coming to the Housing Market

Buying a home is a complex process; and, as the recession has demonstrated, there can be significant risks and pitfalls for those who approach it too casually. However, the satisfaction of owning your own home can also be rewarding beyond measure; the key is in developing a plan and executing it to perfection. Happy hunting!

 

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