Should I buy a home in the Princeton area now or wait?
This is a question several Princeton Real Estate blog readers asked this week. I had to finally bite the bullet and answer, even if the answer is "I don't know", because I don't know you.
Quite honestly, this post has been in a draft mode for a while for this reason. The goal of my blog is to answer important real estate questions for the Princeton home buyers and sellers. "I don't know" or "it depends" (in the words of my Phoenix colleague Jay Thompson) somehow didn't seem satisfactory. I am an expert, shouldn't I have a definitive answer. I do have an opinion. I am happy happy to share it with a buyer, after I understand more about him/her, because there is no "one answer fits all". It depends on the buyer's views, finances and where and why they are considering buying.
For my Internet readers whom I don't know, I will try to answer the question the best I could. I limit my points to the greater Princeton area market, although some concepts could apply elsewhere as well.
The first priority is to look at some of the reasons you shouldn't buy now.
You should not buy if you....
- Believe that home prices always go up;
- Don't have emotional tolerance for market declines;
- Know that the prices will drop further and when;
- Know that the interest rates will continue to significantly decline;
- View the house primarily as an investment, rather then a place to live.
- Don't have a substantial (20%) down payment;
- Can't afford all monthly costs, associated with home ownership;
- Don't have enough savings, in case you loose all or part of your income;
- Are not certain if you can stay in the house for at least 5 years;
- Do not like chores associated with homeownership.
- Don't mind switching homes when the landlord doesn't renew your lease;
- Don't mind moving, when the landlord increases the rent;
- Don't mind less choices of homes available for rent;
- Have the space and location your family needs;
- Don't have the space and/or location you need, but are willing to sacrifice.
If some or all of the above applies to you, I don't think you should buy now. "Yes" answers to some of the above, could mean you should not buy at all. Some "yes" answers could mean you should wait. For example, if I knew exactly when the home prices would be at their lowest (which I don't), I would for sure wait till then.
Here are some reasons you should buy now...
- You want a large choice of houses, which the Princeton rental market does not have;
- You know that long term house leases are rare in Princeton, and you don't want to move often;
- Stability is important to you because of schools, commute or other reasons;
- You know that home prices have declined in many neighborhoods, and you could pay less now for the same house, then several years ago;
- The interest rates are relatively low, but could increase.
The national media and the press would make you believe that somehow, there is a formula or a specific piece of information that could give you the magic answer. I don't think so. The answer depends on your finances, and your system of beliefs. If you are still undecided, you can learn more about Princeton real estate market in these articles.
How is the Princeton Market? - real estate statistics and analysis for January 2008
Princeton real estate -local or global ? - review of the differences and similarities in the local and national real estate markets
Princeton area real estate housing prices - review of prices for the period of 2004-2007 for Princeton, Hopewell, Pennington, West Windsor, and Montgomery Township.
If you are moving out of the greater Princeton area, please inquire about the countrywide relocation program.
Copyright 2007 Faina Sechzer All rights reserved. This information cannot be copied, reproduced, transmitted, distributed, displayed or published.