When is the Right Time to Buy?
The Los Angeles Times ran an article on Sunday titled “Should You Buy a Home Now?” The article offers pros and cons regarding the purchase of a home in today’s market. The central pro argument involves a position that this blog has frequently stated - real estate investment is one of the safest ways to build one’s equity. The article contends that if a person can afford a mortgage payment, why would they throw that money away by paying rent? Also, as stated in yesterday’s blog regarding interest rates, waiting for the market to “bottom out” may cost you thousands of dollars over the life of your loan if interest rates increase.
The main con argument centers on the notion that prices will continue to fall and that buyers will regret their purchase in a year when prices are even lower. The article goes on to state that current economic factors are another reason to wait in case a household suffers an income hit due to an untimely layoff. While I do agree with some of the con statements, especially with regards to consumer confidence in the face of economic uncertainties, one area where I feel the article missteps relates to paying a mortgage versus paying rent. Mortgage payments will typically be higher than rent payments, but investing in YOUR home begins to build equity for your future; rent does nothing but pad the landlord’s pockets. The article argues that the money one saves by paying rent instead of a mortgage can be invested in stocks, mutual funds, etc. What confuses me is how these investments can be considered more sound than investing in something tangible like real estate, especially in a tough economy like our current one. Investing in real estate can hardly be considered a gamble like throwing money into the stock market - through the years, real estate has consistently been one of the most risk-free investments one can make.
An underlining point I find to the article is the fact that investing in real estate involves several factors, not only economic but also emotional. Buying a home is one of the most difficult decisions one faces in life, and doing so in uncertain times only adds frustration to the process. This is why San Clemente Coastal Living exists - we are here to help make the decision a bit easier. To find out more information about the current real estate market in San Clemente, please do not hesitate to contact us or visit our website.
