Is Now A Good Time to Buy a Home? Depends on Whos Advice You Follow

Yesterday, I was sitting in my Keller Williams office, working on two negotiations and waiting for a potential new client to arrive. The headline on my Yahoo! email was “Why I Am Never Going to Own a Home Again”, by James Altucher. Obviously, based on how busy I have been lately, there are plenty of people in Park City who do not share the author’s opinion. [Here is the link to the Yahoo! article] To be fair, the author made some good points, like a home is an illiquid investment, there are costs of ownership like property taxes, closing costs and maintenance, and it may limit ones mobility to take another job.

Naturally, I believe that the disadvantages he mentions in the article are outweighted by the advantages of home ownership. I am joined in my opinion by some pretty good company. For example, both Suze Orman and Warren Buffet advocate home ownership. They temper this advice by recommending people buy what they can afford and plan to “hold” their home investment for 10 years. Buffet has been quoted saying his home was “his third best investment”. FYI, Mr. Buffet has lived in the same house in Omaha for over 50 years. In fact, Warren Buffet believes that now is the best time to buy a home because homes have never been more affordable. He knows what he is talking about. The median mortgage payment as a percentage of the median income is at an historical low! This is due to a combination of the government’s gift to you of keeping interest rates low and affordable home prices.

Here are some other great reasons why it makes sense to buy a home now:

-Mortage payments are at rock bottom. A 1% increase in mortgage rates is like the price of a home increasing 10%. What do you think is more likely to happen this year, rising rates or home prices going up 10%. Buyers who dawdled last fall missed out on the rock bottom interest rates.

-Once the distressed properties are gone, they represent a lost opportunity. I could have bought GE stock at $6.00/share but that opportunity came and went. Will you be saying the same thing about real estate opportunities?

-A 30-year mortgage is a hedge against inflation. A landlord can and will raise your rent over time. A fixed mortgage rate means your cost of housing will always remain the same.

Over 100 single family homes were sold in Park City during the first two months of 2011. What do these people know that you don’t?

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