The New Big Money Question - To Buy Or Not Buy A House?
I'm planning on moving soon and looking at what I would have to pay for rent, I am strongly considering buying a house. Yet, the economy is so bad and the housing market is worse. I'm just not sure what to do. There are tons of houses on the market where I live and I just can't measure if buying a home is a good investment at this time. I really hate renting and I really hate paying someone a bunch of money for a place I don't own. I am also tired of moving and I am ready to be settled for a while. I just don't know. What do you think?
6 comments:
hey prof,
while i am not a 'numbers person' i do own 2 homes, and i think i know a 'little bit' (some wisdom) about this topic.
one thing i do know about buying a house is this....you are really buying the land that the house sits on--that is the real investment-this is more important than the house itself. think of it as an investment of land that has a house on it. if anything happens to the house--you can use the land as collateral to rebuild--being that ins. usually does not fully cover something like that.
it's something my grandfather taught me. storms, may come and tear your house down-war can come and bombs can create craters--no matter what happens to the house or the land--you own the land! also, if you go this route--ask about the water and mineral rights in the land--you own those also if no one has claim to them--very important!!
if someone has laid claim to the water and mineral right under the house you are looking at--keep looking and make sure that when you find the house you want that you have them put in the contract that you own those also. very important!!
if you can secure a fix rate loan, and the house is in better than good condition(few repairs needed)- then i say invest in a house. not a townhouse--which to me is an over priced apt.- i really do not like those things as you are not owning nothing by investing in one of those-(esp. the fact that you do not own the land that it sits on).
if i were you--i would look for a house to make a home in. if you decide to move from it--you can rent it out and let the rent pay the mortgage off.
and you can buy a small house that sits on a large lot so that you have room to add on to the house in the future if you need more room.
and if it is a corner lot, remember that you will be paying taxes on 2 streets--which for me i would do as i like to limit the number of houses on either side of me. i like land and space more than anything else.
OH, and look for brick houses--a much better investment than a wood or alum. siding house.
an alumn. sidiing house is the last one on my list that i would look at--the way they build them is jackedup!
keep us posted on your progress.
i shall say a prayer for you concerning this.
Buying is always better than renting. However you must evaluate where and why you are moving. If you are moving to detroit - No do not buy - if you are moving to a place with a "semi" stable economy and your job is one in demand...then buy. These days I would choose a good, older established community and not a new upstart community. yes they are giving great incentives, but a lot of builders are going into bankruptcy. These communities my never be finished.
From a person that's in the same dilemma as Professor Tracey, thank you both for the great advice. I go back and forth about buying vs. renting when I start looking to move again in October. Just not sure...I do plan to get educated on the pros and cons of both, so that I can make the best (hopefully) long-term decision.
It's a buyers market right now. If all the other factors are favorable and the property taxes and maintenance aren't too far over what you're paying then why not buy? That is something I think about on a weekly basis but I live in CA where even Suze Orman says is too expensive to live! Thinking positive thoughts.....
@ page & faith,
those are good points that you brought up. location, location, location....
as i read your comment about upstart neighborhoods, the image came to mind of al the ones i pass while driving about a 50 mile radius from where i live. there are so many that appear like ghost towns.
the way they build those houses is also what bother me about the newer neighborhoods. they will tell you, well everything cost more--but what i am speaking about is the quality of the work put into building these houses-not realy the cost. you don't have to do shoddy work because the materials are not top of the line. they do not have to be--if you are good at what you do.
All the advice so far is good. Prices are low now and I'd buy a second house instantly if I had any wiggle room financially. Just don't take out any crazy variable rate or interest only mortgage, and buy in an established neighborhood. Get a really good inspection, or two. Older houses tend to be built with better materials - wood that you just can't get nowadays, for instance - and the solidity of the original workmanship may make the house really worth having even if it needs (minor) repairs. Also, if you have never bought before check out FHA loans for first time home buyers. You may make too much money to qualify but as an assistant professor I was well within the income limits.
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