subject: You Must Analyze Real Estate Market Conditions On Your Own [print this page] You Must Analyze Real Estate Market Conditions On Your Own
Why Real Estate Is Not Same Anymore
Spring is on the horizon. It is a season to rejoice for those who look forward to warm temperatures. It is also a season when real estate professionals are happy. They are expecting housing market will pick up from Spring 2011.
If you are intending to buy a home it is highly recommended for you to do research on your own. Depending on your real estate agent may not be such a good idea. We all know real estate agents were not savvy enough to predict the last real estate collapse. Some will argue that perhaps the real estate industry shares some responsibility for the last housing market collapse.
Simply put, the real estate is emerging in a totally new territory and most real estate professionals have no clue. It is also possible that most real estate professionals will be operating under their pre-2008 concepts. Before you jump in to the housing market with both feet, you should know that lot has changed since the last time you may have bought or sold a house. Mind you well, even the real estate professional have not undergone such drastic changes and as such they may not be totally prepared. So be aware.
It is essential that you approach to buying a home reflects the realities of current situations in your specific areas. The approach during the housing boom era may not be the way anymore. By the way, even the real estate professionals who have been in business over the years will not be able to guide you properly as they have not experienced the new trend in their professional life before. Here are few pointers to guide you:
Home values may drop more.
That may be true in some areas. Real estate happens to be very local. You will need to check your areas and trend within those areas for last 2 to 3 years. You must not be tempted to look at just 30-90 days scenarios any more. Even economists don't agree on when the bottom will occur. Perhaps, it may be true that value may fall even further in many areas. However, you may have to account for expected rise in interest rates.
It is better to rent.
Could you possibly imagine your real estate professional telling you that? It is not going to happen. But you do need to look into that. It is uncertain when house values will appreciate. Old rule of thumb was that if you are going to live in your home at least 5-7 years, then buying makes sense in most places. As economy is not likely surge, it is anticipated that home values will stay flat. If you are planning to live in your home long term, you can ride out the years and come out ahead at the end.
There is also possibility that perhaps the housing related tax deductions- mortgage interest, mortgage insurance- will disappear.
Being House Poor is not worth it.
During the yesteryears, common belief was that you should stretch to buy a house. Many did stretch only to become "House poor". The old axiom was to spend no more that 30% of your pretax monthly income on your mortgage. Now some experts recommend housing spending limited to 25%. Realistically, only you can truly figure out what you can, or want to afford based on your various goals. My suggestion is simply to do your math and decide for yourself.
Location, Location, Location.
The magic words for the real estate professionals. The location of many houses were desirable but those houses did not escape from the recent housing debacle. The suburbs are often thought of as the more desirable place to live, compared to the city. Ironically, the homes in the suburbs did not weather too well during the recent housing downturn. According to analysis from Zillow, in most major metros (with some exceptions) home values closer to city center held up better.
Though there is plenty of blame to go around for the economy downturn, this time real estate and mortgage industry were also partly responsible for the downturn. That's not all. The impact will be felt for a long time and real estate and mortgage industry (has and) will be radically changed. Thus for a while, you will need to be totally aware of the changes yourself as real estate professionals take time in grasping the situations theselves.
