Saturday, May 14, 2011

Is it a great time to buy a house?

If all the noise you're hearing about housing has you totally confused, join the crowd. One day you'll read that owning a home has never been more affordable. The next day you'll see news that housing starts have plunged to nearly their lowest level in half a century, as headlines announced in March . After four years of falling prices and surging foreclosures, do you guys think that the housing market is recovering now ?Is is it a great time to buy a house, since prices are low and rental prices continue to rise? Or should one be wary before taking a plunge into home ownership, since housing prices can still plummet further ? Here is an excerpt from an article I found

To see why, let's examine the remarkable shift in home affordability. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, the analysis finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That's down from 17.2% at the bubble's peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999. The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it's now cheaper to pay a mortgage and other major costs than to rent the same house. What's most compelling is that in all of the distressed markets, owning now wins by a wide margin -- a stunning reversal from four years ago. It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month, vs. the $856 it costs to carry a ranch house or stucco cottage as an owner.
Here is the link to the article
http://finance.fortune.cnn.com/2011/03/28/real-estate-its-time-to-buy-again/
So do you guys think it is time to buy again?

8 comments:

  1. It is a great time to buy a house if you're making enough money to pay a decent down payment. I would say it's especially a good time for first time house owners to buy, because they won't be stuck trying to sell their house in an area where it may not sell for a long time. I disagree with what Castleman says in the article, with the amount of houses I've seen have a for sale in front of their house for over a year, it is not time to build more houses. But definitely, in some areas, the market is ready for new owners.

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  3. Liz you make a great point. If you have enough money than this is the best possible time to buy a house. I think that everyone's case is different and that it all depends on each person's life. I do not know however if the market is recovering yet though. I think it is not falling at the rate it once was by any means however it should be a lot better than it is right now.

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  4. I agree with Mark and Liz. The article annoyed me-- mostly because it's aimed at a certain population -- middle/upperclass, white -- urging them, "QUICK, buy now while the market's down!" When they take advantage of the market, many people will still be left very disadvantaged.

    Also, clicked on a link to the "10 best cities for homebuyers"... some of which we've talked about in-depth (Cleveland) and all of which we know were hit hard by foreclosurers...

    http://money.cnn.com/galleries/2011/news/1103/gallery.best_cities_for_buyers.fortune/index.html

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  5. I have a friend who is graduating and just bought a condo. He could not get a mortgage and his mom could not either so they just paid cash and bought it. The problem with buying a home today is that it is very difficult to get a mortgage so even if you can afford it a bank probably will not be willing to lend. I guess this is a better situation then a bank making NINJA loans to everyone.

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  6. I agree with chris in that if you have the ability to buy a house without a mortgage then it is an extremely good time to buy a house. In order to secure a mortgage in today's marketplace very good credit history is required.

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  7. Buyers should always be wary when taking out a mortgage. I think that people should be nervous if the process sounds too good to be true. As we move toward a more stable housing market, mortgages will be easier to come by, but they should never be too easy to obtain. just wanting a house should never be enough justification for getting a mortgage. i do think that all the commercials that we are seeing encouraging homeownership are a little scary. i feel like the banks and realtors are trying to steer people back into the market so thet they can start turning a profit again.

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  8. Agreed, this is a great time to buy if you have the money to do it and to see it as an investment, much less so if you're going to have to be taking out loans and trying to get a mortgage...

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