Thursday, April 23, 2009

Now is a Good Time to Buy a House (Ha Ha)

Yet another story about the deals people can get right now. Especially those wanting to move up tot bigger houses. And while the property you are selling may take a hit a bigger property will take a bigger hit - see that is how you are saving money. The illusion of bubble equity is what people are saving. Never mind that we may not be anywhere near the bottom yet - you are saving money from the peak prices so it HAS to be a good deal. This info comes from an MSNBC article titled Math smiles on move up buyers. Let's take a look -

After two years of married life in a 680-square-foot, one-bedroom Seattle condo, Lori and Chris Kirsten were ready to spread out in a real house with room for a home theater and a yard where the Labrador retriever they had always wanted could roam.

The Kirstens prepared to list their condo for sale and go house-hunting, banking on equity in the unit, which Lori had brought in 2003 for $130,000, to help with the transition to a larger place. Seattle’s hot real estate market had pushed the condo’s value to $215,000 or more at its peak in 2007.

But their home search lost some steam when their agent told them Western Washington real estate prices, although not in the freefall experienced elsewhere, had still declined to the point that their unit might now fetch $25,000 or $30,000 less than two years ago. When they saw condos comparable to theirs selling for as little as $170,000, “I thought, ‘I just can’t do it,’” Lori recalled.

Their mood brightened when they began shopping in the spacious neighborhoods of this suburb northeast of Seattle and found a 3,000-square-foot, four-bedroom split-level on a half-acre of towering fir trees that they wound up buying for $425,000. That’s $86,000 less than the $511,000 peak value placed on the home by real estate Web site, $64,000 below the original asking price of $489,000 and even well below the final asking price of $438,000.


“Do the math,” said agent Mark Zawideh, who has been selling homes in the suburbs west of Detroit, where prices have declined 18 percent in the last year alone. “If you’re in a $200,000 house (the median price in the area) and you lost 18 percent, that means you lost $36,000,” Zawideh said. “But if you’re moving up and buying a $500,000 house, that person just took a $90,000 loss, so you can see you’re making 54,000.”

See its a good time to buy a house if you do the math by peak price reductions. If you do the math accordingly, you are not taking on more debt rather you are making money. Since peak prices are the real prices if we do everything from peak (other than refinance and take our HELOCs) we see we are shrewd investors.

Remember only to use real estate math when buying a home - look at the money you are saving and only calculate your monthly payments - and it is a good time to buy. If you do any other type of financial planning you may find that you may not be saving money, those monthly payments are not fixed, you may not be able to afford the property.

Guess it's all just how one looks at the situation...

No comments: