Answer to an excellent consumer question.....

We received this question from an out of town consumer via our web site www.energizedrealtygroup.com. We felt that the question was both relevant enough and appropriate enough to make the answer into a blog. So here it is:

I have a question. According to many experts NY is lagging the nation in the housing downturn and still has another 20 - 30 percent downside potential. If I put down 20 percent won't I loose that equity?

You mention that you see the market adjusting another 20 to 30 percent here. While I really do respect your opinion, I really do not see that happening, and here is why...even in the two worst months of 2008 and today, we have not seen more than a 7 to 10 percent drop from last year. If you look at Flushing North, according to a very reliable real estate statistics analyzer, www.AccuriZ.com , the downturn overall of one family dwellings has been 6%, in Bayside it's 7%. And this was after the worst downturn in over 22 years. Now, with the new Stimulus Package, buying and holding real estate should be even more attractive, with the $8000 tax credit being offered to anyone buying between Jan. 1 2009 and Dec. 31, 2009. And remember the full tax credit exists for those buyers who hold their property for over 5 years, so even the government wants to induce you to buy and HOLD. No one has ever lost money buying real estate and holding it for more than 10 years, unless they have borrowed more money against their house than they originally mortgaged. So even IF the market continues to drop, and I think any drop would be incremental in comparison to the 7 to 10 pct, we have seen in the past 6 months, buying keeps your money invested, and longterm, it's hard to lose when you are not renting a/k/a paying someone else's mortgage. It's clichéd, but true, 'Don't wait to buy real estate, buy real estate and wait'! One more thing, if you have the down payment, ask yourself,"Where else (legally) can my investment make 10 to 30 percent over the course of the next 5years?" And that is considering overall, only a 2 to 6% increase annually for only 5 years. Even people who bought homes here in 2003, would see much better profits than that, from what they bought for in 2003 to what the values are now. Prices are only lower than they were in 2008, 2007 max. They are still higher than they were at any time in 2006. What's the bank giving in a non-risky investment now, 3% max? And most people aren't even bothering saving enough money to buy unless they really do buy, so isn't buying a home better than just spending the money on "stuff"? You betcha!