' Now may be the perfect time to buy a home in Reno-Sparks '
This was the main headline of a well respected home magazine I was reading yesterday. Where are they coming from? is it really? Do I agreee with it?
Yes and No. Let's dig in deeper.
Here are two reasons why most people think that now is a good time to buy:
1. Interest rates are still affordable.
What I think:
Comparing it to the past 2 years, it has indeed gone up a couple of points. But history tells us that it is still historically low . I was talking to a friend of mine who had a 12% interest rate on his mortgage even after re-financed his home.
2. House prices are more affordable compared to the past years.
What I think:
This is a tricky question. Sure the prices of homes are significantly lower compared to 2004,2005,2006. But we have to remember that in these 3 years, homes in the Reno-Sparks area were appreciating at record levels.(15-20-30+% Every Year) I even remember that Reno was in the top 5 cities of USA Today's highest appreciation areas in the U.S. (we were # 3)
Which I think was great, But this is not normal for our real estate market in general. I believe 5-7% every year(historically) is the average appreciation of homes in the Reno-Sparks area.
*personal note: It is also safe to conclude that homes in Reno & Sparks would not be appreciating at this pace(10-20-30%) for the next 10 years or more or ever. My guess is it will be more of 5-7% per year after the market reaches its bottom. One of the reasons is the majority of people living in the Reno-Sparks area cannot afford the prices of homes. We are still very much the 'Gift of California'.
So is it a good time to buy???
NO: If you are not planning on staying for at least 4 years and thinks that the market will bottom in less than a year. Why? The market is still in a downward trend. There is a good chance that homes will still continue to dip. But it is worth noting that some of the New Home Builders (reportedly,based on a website I was reading yesterday) are offering a " Price decline guarantee"on the purchase price. Check with your builders if they can do this. If not, negotiate that they do.
YES: I still believe that everyone has to have a home. Especially if you already have a family. It is just part of our lives, the so called 'American Dream'. The feeling of security of having your own home is something we can never put a price tag on.
But buy your home for the long haul ( at least 5 years). Be realistic and know that the market is still going down and try to buy a house that is a few thousand dollars less than its nearest comparable. By doing this you have a 'cushion' of the possible decline in value.
It is not uncommon to see new homes in the Reno-Sparks area (and even existing homes) sell for $10k-$15k less than the nearest home like it.
I mentioned that the buying a home is 'The American Dream' but it can also be a nightmare if you are flying blind. Please be patient in your home buying process. Work with a Realtor who knows and genuinely cares for your needs. If you already have a Realtor don't be shy in asking more questions, really understand what you are getting into. If you need suggestions on who to hire ( for a Realtor) call or shoot me an email.
To be cont...The next article will be related to this one. Joe & ian's 3rd reason why we think now may be a good time to buy.
Notes: Did this article help you?violent reactions? feel free to share your thoughts and comments about this article.
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