Why You Should Own Now, Not Later

Announced today by the NAR: Homes sales are up 5.5% nationally in September. The highest one month increase in five years. We've seen some of these buyers. They know the deals are out there, and they're aggressively looking and obtaining the perfect home. Rates are still amazing right now and the selection is enormous. Foreclosures are being purchased at low prices which is causing a national property values to decrease. Prices are down 9% nationally and interest rates are lower than previous months, dropping to 6.04% There may never be a better time to buy a home.

Someone recently sent me an article from Time Magazine called, "Waiting To Purchase Real Estate?" Sure, housing's in a hole. But there's a potent case for buying now, whether it's real estate or stocks! This article stood out because it pertains to what I do and it's been my podium speech for years now. New buyers hear a side and opinion from everyone; parents, co-workers, hair dressers, etc. But ya know, I'm just "The Realtor". Why would anyone believe me when it comes to housing and the market? Preposterous I tell you. I have to often clear up misconceptions when new clients come to me. I'm used to the questions and the, "Well, so and so said this..." discussions.

When I read this article, I wanted to send it to everyone I've had a conversation with about the Cleveland, Ohio market in the last two years. That includes, parents, co-workers, hair dressers, etc. The media tells us the market is awful. We're seeing many signs... in yards. People are letting their home foreclose for different reasons and their stories are being told. Recently the bail out was for the most part blamed on subprime lenders and banks. While there are many sides to each story, individually and as a whole, there's more behind the situation than we hear. I could blab about this for pages, but let's focus on the Time Magazine article and why now is an amazing and smart time to buy a home.

We've all been watching the market and listening to the reports. We've seen the economy become the leading topic for the presidential candidates (or candidate), and many have pulled out of the stock market and housing market. Many are scared and waiting for things to get better. It's understandable. But according to some of the richest and most highly respected investors of all time, they have a different view. Take these quotes for example:

• John D. Rockefeller: "The way to make money is to buy when "blood is running in the streets,"
• Donald Trump: "It's an unbelievable time to buy a house and especially if a bank happens to own it because they've put the money in so it's not a question of getting financing. The money is already there. Go out and make a deal. The banks want to unload their stock." - On Larry King Live, 9/22/08.
• Peter Lynch:"If you don't already own a home-in which case that should be your first investment, since an owner-occupied home is nearly always profitable." - Time Magazine 2/08.
• Jim Svinth: (Chief economist for Lending Tree) - "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher."
• Suze Orman: "Owning a home is a keystone of wealth... both financial affluence and emotional security."

What the article basically states is that while many are backing off and waiting for the market to either sink lower or finally settle, there are also those who are seeking out deals and taking advantage right now. They are the long-term, diversified investors who reap the benefits down the road. Let me show you what buying a home now vs. buying a home later can mean.

• Let's take a home worth $400,000. You buy this home now and lock in a 30-year fixed-rate mortgage loan at 6.375% Your total payment per month is $1996.
• Hypothetically, let's just say you wait one year and in that time the same home drops in value (if) by 10% and you purchase it for $360,000. Buy this time, the Fed has jacked up rates which is likely to happen, and you lock in this loan at the new rate of 7.125% (assuming you have great credit and a 20% down payment.) Your total monthly mortgage payment is $1940.

So you've waited a year, possibly living somewhere you didn't want to be, and have saved almost nothing on the difference. During this time, home prices may have also steadied and home sellers might not be as willing to negotiate with you as they were previously, so that 10% decrease may lean on the side of generous or lucky. You may have also missed out on a year's worth of tax benefits and credits.

People don't often think of the real estate market like this. It's hard to see down the road for some, but if your credit is good, you have savings for a down payment, which avoids PMI, and you're wanting to purchase your own home, now is the time. Let's not fail to mention that there are plenty of properties to choose from. Being selective and shopping around is advised. With more homes on the market, you can get close to or exactly what you want. This isn't always the case in other markets where pickings are slim and other buyers are negotiating against you.

Buying investment property is also a great idea right now. Multi-Family homes right now in Ohio are being reduced like crazy and it's an ideal time to cash in. Remember, the buyers who chose to wait for a better market or the home sellers who have foreclosed, need to rent. Owning rental property is always a good move and being a landlord in today's market may be easier than you think. Rental applications are pouring in like never before in many cities in Northeast Ohio.

My advice? Consider staying in your new home for at least five years. I tell this to everyone in any market, but especially this one. If you need to sell right now, it's not the prime time, unless your equity and home value calls for it. If you must sell, consider refinancing until values balance or increase. Talk with your mortgage specialist about FHA. It's probably the best loan product out here. Many will want you to fit into a conventional loan depending on where you go. Get a comparison! Also, work with an agent who is experienced. Don't let any real estate agent push you or rush you into a decision. If your gut senses something, follow it. The same applies to your mortgage specialist. There's nothing smoother or better than working with people you like and trust.

You Should Own is the name of this site for a reason. The benefits always outweigh. The freedom and security can't be beat. Real estate throughout history has had the best return and has been the best long term investment. Housing will always be a necessity. If you chose to rent someone's property, that's always fine, but if you want to own your own home, consider where you are, where the market is, and the long term goals on each side.