Buying a Home – How to Survive the Next Crash!

Many people buying homes are worried about the future and are scared of that commitment. When I say Crash in the title it can mean different things to different people. It can mean a drop in housing prices, a even worse employment situation, (The old joke is a recession is when your neighbor is out of work a depression is when you are out of work.) a worsening economic situation, a drop in the dollar, inflation, a stock market crash, and what other endless fears keep them awake at night.

First off we all have our fears and nothing is certain. No one knows the future and I can try and make predictions, but often I am wrong. But to ease your fear consider the following when buying a new home:

1. Owning a Home is Better than Renting. If you are going to be in bad shape owning a home you will be in worse shape renting.

2. Most people are more concerned with the coming inflation, not deflation. Buying a Home Locks you into your property at current prices and loan rates.

3. But what if we have another housing crash? Although I do not see it in the near future, yes at some point housing prices will fall. It always happens at some point. But the lending situation is much more regulated that it was before. Most people have equity, they liar loans with nothing down are gone, the Neg Am loans are harder to find than an honest politician. Any crash will be much less sever. And your payment is fixed (if you got a fixed rate mortgage) so you can ride it out.

4. If the country has economic issues your assets (Security) maybe better off in Real Property rather than cash or other investments. If you can afford to by a second home you should consider Why Real Estate is such a great investment.
   
   

5. Buy the Home you Need not the Home you Want. Now we all want nice things and most of us dream about a home that is better than the one we have now, no matter how nice the one we have now it. I also understand some home buyers really do have to stretch to get that home they need (especially the first one) and this is generally wise. But don't buy so much home that you are house rich but lack liquid assets or flexibility. If you should loose a job, become ill, or have reduced income it will be easier to keep things together with that smaller payment.
   Maybe rather than buying the dream home, buy a home you can turn into a dream home and do it yourself with sweat equity and cash out of pocket over time. You will appreciate it more and take better care of it.

6. If you got cash to spare for more home consider investing in real estate. I have never seen rents go down, but the cost of buying is always going up. Over time you will be glad you did.

7. Don't use your home as an ATM Machine. Before the last housing crash people had lots of equity and they took it out of their homes and used it on many foolish things. If you need to use the equity in your home do so carefully and for good well thought out reasons.

Remember the only thing that is certain is death and taxes. But we can look at the signs around us and take steps for our future. I think buying a home is a wise step for most people.

Gene lives and works in Brentwood Ca, where he is the Broker and owner of Home Point Real Estate providing service to the East Contra Costa County Communities of Brentwood, Oakley, Discovery Bay, Antioch, Pittsburg and beyond. Give us call regarding Buying a Home, Selling a Home, or Real Estate Investing. Call 925-260-4321.