Why would you...or why wouldn't you...buy a house right now?

Why would you… or why wouldn’t you… buy a house right now?

Yes, you read that right! – Lisa Giller, a real estate agent, telling you not to buy a home. It’s quite a concept isn’t it?! Buying a home can be a great idea – since we are in a buyer's market. Many sellers are desperate to sell, and most buyers are getting everything they need along with most of their wants.  But there are some very valid reasons to not purchase a home in the next few months, and I wanted to point them out.

So, Why Wouldn’t I Buy?

1. If you’re worried about prices dropping, don’t buy a home. A home is a place to live. If you plan on purchasing real estate for an investment, now is probably not a great time to buy unless you get a really great deal and you plan on renting it out for cash flow. The data out there says more mortgagee sales are headed our way, and in many markets prices are still dropping.
2. This situation will be here for a while longer. Many people believe we are looking at an “L” recovery. Which means, once we hit bottom, prices are expected to flat line for a while. When will we hit bottom? No one knows, and you can only tell once prices start to go back up. If you can wait it out, you shouldn’t buy.
3. You have no money for a deposit. Buying a home with little to no money is very risky. If you lose your job and have to move within the next couple of years, you could end up having to bring a lot of extra money to the table. There are many fees associated with selling a home, even if you don’t use a real estate agent. If you can’t find that “extra” money, you face a forced sale, which no one wants.
4. You’re not thinking long term. The stats say, the average home owner moves every 7 years. I just don’t think that’s justifiable these days. Don’t buy a home if you plan on sticking around for only a couple of years. If you have long term plans, like 10 years plus, then you might be okay to buy (but don’t quote me on that one).
5. The market is too unstable for many people’s taste. Even if you have the money, right now may not be the right time for you. If you’re unsure, stay conservative. If you don’t feel it’s the right time to buy for you, then so be it. Many people are sitting on the fence, and that’s okay.

Now let’s look at why it makes sense to purchase a home now.

So, Why Would I Buy?

1. Interest rates are still very low. If you wait out the market, you will miss out on thousands of saved dollars in interest paid. Once inflation hits, which it will with all the money the Reserve Bank and the Government is pumping into the economy, interest rates will get higher as in the past.
2. Some markets are actually recovering already. Depending on where you live, you may be in a strong market, and if you can find a decent deal, purchasing could make sense.
3. High listing levels make for lots of choices. Many areas around the country have high numbers of listings giving you a lot of choice. If you’ve been waiting for just the right home, it’s possible you can find it in today’s market.
4. All in all, homes are becoming more affordable. Low prices and interest rates at all time lows make buying a home more affordable than it has been in many years. If you can find a home such as a mortgagee sale or forced sale to buy below market value, it could be a great time to buy.
5. The cost of renting is increasing. With many people unable to afford their own homes, they are forced to rent. The increase in rental demand is causing rents to go up, and it might make more sense for you to purchase a home. Besides, if you are paying rent to someone, when you could buy, you could start building up your own equity rather than paying a landlords mortgage.

Whether you buy or not, the best advice I can give is to be patient. Make sure you have a decent deposit, try to get a good deal, and know your limits. Don’t purchase a home you can’t afford, and don’t buy a home if you don’t plan on sticking around for at least five years.

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