Probably the most common question asked of Realtors® today, is whether it is now a “good time” to buy or sell residential property. In all honesty, since we are paid through commissions from sales, the frequent (somewhat biased) response will usually be “absolutely!” Try asking a stockbroker a similar question about buying and selling stocks. With an amazing bull run in the recent stock market, or perhaps despite it—you will receive the same answer: “absolutely!” So how do we sort out the issues that go in to a responsible decision? And what is the real answer? Is it a good time to buy a home, or should I continue to rent? To analyze your decision, ask yourself four questions:
Where do we want our family to be for the next 5–10 years?
Although the news media has had a lot of real estate-related articles, they often seem to create the impression that we are in a national real estate recovery, much as we were in a national “Great Recession” in real estate. This is misleading, however, on a few fronts. The reality is that residential real estate values are—and always will be—very local. San Francisco prices do not reflect California prices, just as Arlington, Virginia provides no clear representation of what is happening in Hampton Roads or especially in the rural areas of the state. Even the Great Recession had disparate impact across the country. New York and the DC area did not see price declines anything like the Southwest, Northern Florida and New England, where current prices are still significantly less than in 2006.
In Hampton Roads, prices in some neighborhoods are lower than they were 10 years ago. Prices have leveled out, and some uptrends are already in place. If you want to settle in a particular community or neighborhood in this area—and have geographic stability and peace of mind that comes with that decision—you can ensure that with the purchase of a home, when prices are still favorable and interest rates are still low. There is no “mania” driving up real estate prices right now, and there is not a major influx of new jobs to this area (which can have a similar effect).
Do we have pets and do we prefer all-white walls?
Renters will always have fewer options for places to live. Many landlords do not allow pets, and tenants are limited in the amount of “personalizing” they can do when decorating their homes. There is little financial incentive to pay for improvements (like a granite countertop) in someone else’s kitchen. Also, renters in some price ranges will be paying more in rent than they would pay in a monthly PITI payment (principal, interest, taxes and insurance) on an equivalent home. And the rent may go up at the end of the lease, or the owners could decide to sell the property. Either event might result in having to move.
How diversified are our assets now, and what are our retirement plans?
Residential homes are places to live and should not be seen primarily as an investment, but it can represent a way to diversify your savings and family wealth. Buyers (except VA) will usually need to make a down payment when they purchase. After buying, the idea of using “rent money” to purchase a home can provide a source of financial security to retirees. A house that is largely debt free provides an additional source of funds—and options—for retirement living. It can provide the means to make a “no cost” move to a retirement home, if desired.
Do we like to mow grass and shovel snow?
Shoveling snow (in this area) was largely a theoretical task until this winter! And, of course, there are homeownership options that don’t involve lawn maintenance and similar chores. But the philosophical idea of being responsible for maintenance and upkeep of a home is one of the joys of homeownership. It also happens to be a requirement of all home loans and home insurance policies. Some folks shy away from these responsibilities and prefer renting, while others embrace them as part of life.
Buying a home is an intensely personal decision, and no one should ever feel pressured to buy. In my opinion, however, 2018 represents one of the best buying opportunities I have seen in more than 30 years. I am looking forward to working with clients this year WHO want to take advantage of this great opportunity to make their homeownership dreams a reality.