SPRINGFIELD, Ill. – Illinois home sales in the second quarter improved from the first quarter of 2008 yet were lower compared to the same period a year ago. According to the Illinois Association of REALTORS® (IAR) second quarter report, total home sales (which include single-family homes and condominiums) were 32,414 in the second quarter, down 25.4 percent from a year ago when 43,438 home sales were reported in the second quarter. The second quarter median home sale price was $192,500, down 6.8 percent from $206,500 in 2007.My strategy is very simple for buying a home. You can't time out the bottom, but you can definitely time out when it has passed. I'm willing to wait until the median home prices have increased by 3% or more over two quarters before I buy. Below you can see that the you can't guess the future, but you can view the past. Maybe prices will go down a lot more, maybe they'll just creep a bit. The key is that you shouldn't target to time the bottom, you should target to acknowledge the recovery is legitimate.
The only way a home makes a good 'investment' is if its value is growing. Owning is not a better option merely because you can deduct interest from you income tax alone. It's only a good investment because of the leverage that you can get. For instance a 1% down payment and the house increases 10% implies a profit not of 9%, but of 900%!
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2 comments:
Interesting Matt.
Couple of thoughts. I am no expert with this but you ought to take a look at couple of things you might be overlooking.
While you can't timeout the bottom of the market you also have to figre out interest rates. While we may or may not be at the bottom of value we might be for interest rates. If interest rates are 2 points higher in two years when you are ready you might be paying A LOT more for your house.
While it might not seem like a good investment to buy now since prices are dropping, it probably is a better investment than an apartment. At least with a house you are putting equity into it. Sure it is possible you are upside down for awhile, if you are planning on buying and living in the same house for 5+ years you are most likely to one, have a house worth more, and two, recoup your realtor fees (if any). It might be better to put $1200 on a house with falling value, than paying $1200 on an apartment and getting no value at all. (Again only if you are planning on staying in a house for awhile. Because the values will go up.)
It really depends on what you buy, neigborhood, price range etc... For intstance my house has gone down in value in the last 6 months but it is almost back to its peak. According to Zillow... I doubt I could sell it right now for what Zillow says it is worth. And overall it is still a much better value than my 403(b). Plus I am pretty sure I will be here for at least another 5 years (or who knows!) even if the value stays the same, I will own more of the house thus making some return on my money which is better than none.
I think there are a lot of good reasons to not own a house. Simpler living, no maintence etc... That is all pretty appealing at times. Especially when the grass has to be mowed or something breaks!
If I was planning on buying and staying in a house for 7-10 years I would be looking to buy right now. At least get some of that rent money back. 8>) Anyway, just my two cents. I know some real experts who can help you when you are ready!
i just decided i'm marrying rich.
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