One of my favorite on-line real estate publications is www.marketwatch.com. Quite often I find that the authors provide honest and sober analysis of the marketplace. Today Marketwatch published two interesting articles: Five Reasons to Buy a Home This Year and Five Reasons Not to Buy a Home This Year. I’m going to list the reasons for and against and I’m also going to comment briefly on each. I’m curious if any of you have your own thoughts about this subject.
First, lets summarize the 5 reasons to buy:
All five of these factors are, indeed, the case in our local market. Many homes have dropped to 2005 values. The inventory is still historically high. Builders have been quite willing to work with buyers on both price and concessions. Yes, mortgage rates hovering around 5% are downright wonderful. And, as far as tax credits go, we may see some very generous tax benefits once the new stimulus package passes.
Now, 5 reasons not to buy:
There are fears that there will be a huge number of bank-owned homes entering the market in the next several months. If this is the case, it is likely that property values will drop even lower. And, yes, many economists believe we will not see the end of this decline well into 2010. Because there has been a decline in property values, buyers need to consider how long they will stay in their home. The old rule of thumb was that Americans move every 7 years. Now it appears that home owners will have to stay put for 10 years to realize any financial benefits. Regarding jobs locally: it’s clear that we are not immune to the current recession. It’s really important to watch this trend. Finally, you better have at least six months of cash reserves in the bank because this market may be difficult for a long time.
So, what do you think? Are you ready to take the plunge?
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I am an Associate Broker with Keller Williams North Seattle. I have lived in the Northwest for 22 years, grew up in Utah and was born in Nevada. A real Westerner who prefers a tandem bike to a horse!
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Everything I have read said that people move on average every 5 years. Where did you find the 7 year information? Thanks!
Betina - If you read the Marketwatch article (item #3...link in the post):
"In any market, it's best to buy a home with the intention of staying there five to 10 years, said Flint-Budde. This guideline is even more important today, when you might have to absorb more price drops and weather a couple years of slow price growth.
First-time buyers must be listening to that rule of thumb: According to research from the National Association of Realtors, the typical first-time home buyer in 2008 planned to stay in their new for 10 years, up from seven years in 2007."