4 Signals It Might be Time toBuy (vs. Rent) Your Home
To rent or to buy: what used to be a given that youwould buy a home as soon as you could afford tohas become an agonizing conundrum for many awould-be homebuyer, in the face of the housingmarket’s big bust and slow recovery. Low pricesseem to create a wide-open window ofopportunity, but they also create the concern thatprices will keep falling after closing. And that Catch-22 has hundreds of thousands of buyers-to-be stuckon the fence.
Mortgage rates are going up. Home prices havebeen low for the last several years. During thissame time frame, interest rates have also beenlow – this one-two punch has created record-high affordability for the last four yearsrunning, causing buyers to believethis window of opportunitywon’t be closing anytimesoon.
Rents are going up. Rental rates in many areasare also on the rise super-tight lendingguidelines have stopped even some who wouldlike to buy homes from doing so. As aresult, rental homes are in high demand andrents are rising.
Your income and career are stable for theforeseeable future. The smartest homebuyers lookto their lives, not just the market, for signals aboutwhen the time is right to buy. Home - buying is along, long-term endeavor these days. The goal is tobe able to commit to staying in the sameplace, geographically-speaking, for 7 to 10 yearsbefore you buy. Most lenders will require thatyou’ve been at your job – or in the same generalfield of work – for at least two years before you buy.But that’s the bare minimum – beyond that, youdon’t want to be barely beginning a career in whichyou think you may need to move sooner thanthat, nor do you want to buy when you’re advancedin your career, but in an industry which is dying ordownsizing the workforce in your region.
You can reasonably predict the home you’ll need in theyears to come. Since successful homeownership requiresthat you be ready to be in the place for a good number ofyears, best practice is not just to buy a home with thespace and number of rooms you need right now –rather, you should aim to buy the home you’ll need 5, 7or even 10 years down the. You might be a newlywedwith no kids now, but you plan to have them in a fewyears. Or maybe you’re a newly minted empty nesterright now, but can project that you’ll want to retire - andmight not want to climb two flights of stairs to get to andfrom your bedroom - 10 years down the road. Before youbuy, you should be in a position to buy the home thatmeets your future needs – not just your current ones; andthat requires that you have a reasonable idea of your lifevision and plan for the future.
With that said. . . buying a home is a massivedecision and includes multiple, long-term financialand lifestyle obligations, so if one or more of thesesignals are present for you, that doesn’t mean youhave the green light to run out and buy a hometomorrow – rather, it’s a good sign you should begindown that path, if you’re so inclined. You’ll stillneed to do the work to make sure your personalfinances and holistic life picture are also inalignment before you buy, as well of the work ittakes to ensure that your real estate and mortgagedecisions are sustainable and smart, over the long-term.
Are you ready to buy your first home, move uphome or downsize home? Let us know.
Randy BettInvestment Realtor/Author/InvestorReal Estate Professionals Inc.Better Group Real Estate202-5403 Crowchild Trail NWCalgary, AB T3B 4Z1Phone:403-774-7464 Ext:1Fax:403-208-0082Toll Free fax:888-711-6801