In the last several years, with an uncertain economy, real estate prices in decline for the first time in most people’s lives, mortgage financing much more difficult to secure, and a general sense of fear pervading nearly every important decision, many people have opted to become renters rather than homeowners. The reasons for this are obvious and often relatively simple. If a buyer cannot save enough money for a downpayment… or he or she has credit or employment issues that disable him or her from obtaining a mortgage… renting a home becomes one of only a very few remaining options (lease-purchase agreement being another option I discuss in earlier editions of this blog– scroll back for more). Other people have the legitimate concern that housing prices will continue to decline and they will be paying more for a home than it will be worth in a year or two.
The general rule has always been, “If you can afford to buy, you are always better off buying than renting.” That rule was seriously challenged when the housing bubble burst in 2007-2008. Certainly, many people who bought a home at the height of that bubble took a serious financial beating. And now there are a myriad of online calculators for those who would like “run the numbers” and see where their particular scenario takes them. There is a popular free online buy vs. rent calculator available at Realtor.com:
http://www.realtor.com/home-finance/financial-calculators/rent-vs-buy-calculator.aspx
Of course, the overriding consideration in the buy vs. rent decision is whether a purchase will appreciate, and if so, how much and over what period of time. No online calculator can help you reach a conclusion on that issue. For that, you will need to do your homework. “Solid analysis identifies great opportunities,” and identifying the right property to purchase by analyzing comparables in the area and other important considerations can enable the buyer to enhance his or her chances of future appreciation– and even lock in “instant equity” on the day they close the purchase.
There are many other factors that weigh into the decision of whether to buy or rent a home. Are you ready now to stay in one place? (If you plan to stay in one place 5-6 years, buying is a “no-brainer.”) Do you want to stop making monthly housing payments one day? (Monthly payments will stop when the mortgage is paid, of course. Rent is ongoing.) Do you prefer control over your home life (e.g. would you like to be the one who chooses paint colors… or what light fixtures to hang next to the front entrance?)
There is also the issue of financial leverage. With an FHA loan, you can still buy a home with only 3.5% down; but you keep 100% of the appreciation. With renting becoming more common in recent years, rental prices have been heading upward. If the cost of renting a home is at or near the cost of servicing a mortgage on the same home– often including escrows for taxes and insurance– renting seems particularly unattractive. There are tax benefits to home ownership; mortgage interest is tax deductible. Owning a home has long been a means of essentially accumulating “forced” savings. And there are all the emotional aspects of owning your own home.
But the bottom line remains the issue of future appreciation. Much of that relates to timing the purchase. Buying at the peak of the housing bubble was sure to cost you. But the inverse is also true– failing to buy at a market bottom can also cost you. Has the housing bubble burst? Certainly. But if you did not buy a home during that bubble, it is likely you will buy now at much deflated prices. Particular homes, neighborhoods and regions vary widely, and there is no substitute for thoroughly doing your homework. The general rule remains that if you can afford to buy a home, you are almost always better off buying than renting. So do your research, figure out what you can afford, get pre-qualified for your financing (some people think their credit issues are far worse than they really are), and lean toward ownership over renting whenever possible.
Now let’s take a look at a few of this edition’s Charlotte Area real estate Best Buys:
(1)Large 4 Bedroom + Bonus Room 2.5 Bath Home in Great Waxhaw School District:
Listing Price Reduced to: $200,000.00. Here is a large 4 bedroom + bonus room 2.5 bath home in the highly desirable Cuthbertson School District in Waxhaw. The home features nearly 3,000 square feet of heated living area, a side-loaded 2-car garage, granite countertops, hardwood floors, fireplace in the great room, fenced yard, and much more. The home is clean, freshly painted and move-in ready; and it has been sitting vacant, waiting for an offer for a significant period of time.
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(2)Huge, Unfinished Renovation in Highly Desirable South Charlotte Community -- 5 Bedrooms/5.5 Baths-- Listed $300,000 Below Tax Value:
Reduced to Listing Price of $495,000.00. Here is a great potential opportunity for the right buyer. The home is unfinished, but there are rough-ins for plumbing, electrical and HVAC. The exterior has been completely re-designed and requires only finishing touches. The home has a new slate roof, Jeld-Wen windows, and much more. It is configured as a 5 bedroom 5 full baths and one half-bath on a .62 acre lot in one of Charlotte's most desirable communities. It has a tax value of $795,100. It is neither a short sale nor a foreclosure, but it is being sold "as is."
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(3)Four Bedroom 2.5 Bath Matthews Home in Great School District for Under $200,000:
Listing Price: $197,000.00. This is a nice, traditional 4/2.5 in a great Matthews community that features 3 swimming pools, tennis courts, club house, fishing pond, walking and horse trails. The home is located on over 1/2 acre, with mature trees and landscaping. It features many upgrades, including granite countertops, tile backsplash and floor, work island with storage, new paint and carpet and a wired workshop.
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Of course, one of the main reasons I take the time to publish this blog is to offer to go to work finding you a great deal on your next home or investment. It’s what I do best, and I love what I do. I would be more than happy to answer any questions or read any comments you might have. Take advantage of all the tools and resources available on my website, including the ability to SEARCH THOUSANDS OF HOMES FREE: www.the-realty-web.com. Take advantage of the resources available to research on your own at: www.charlottepropertystore.net. Or please feel free to contact me.
The next edition of CHARLOTTE AREA REAL ESTATE BEST BUYS, with new information, observations and “best buys” should be published on or before September 15, 2011. Thanks for your interest.
Eric J. Dorer, BS, JD
NC / SC Realtor/ Broker
NAR Certified Short Sales and Foreclosures Resource
Wilkinson & Associates Real Estate
8604 Cliff Cameron Drive, Suite 110
Charlotte, NC 28269
(980)875-0950
Fax: (877)541-9774
e-mail: ejdorer@gmail.com
website:http://edorer.wilkinsonandassociates.com
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