Is Now A Good Time To Buy Real Estate?

We get email at The Gardyn. We get questions from buyers. Questions from sellers. Questions that buyers and sellers should be asking the Realtor they are working with but don’t for what ever reason. Maybe the buyer or seller is scared to ask, maybe their Realtor won’t return their phone call or email.

Edyn Real Estate always directs the buyer or seller back to their Realtor that they are currently working with. We don’t want to step on any toes. This is apart of our Mission, Vision, Values and Beliefs. But we do want to innovate, inform and educate, so we have ourselves a bit of a conundrum.

What made sense to us is, if the question had value to the masses then we should answer it for everyone. So we are going to start a new category-Real Estate FAQs. We will answer the questions that are probably on more than just the one person’s mind that decided to email us.

With that said, a question came into our email inbox over the weekend after the Wall St. drop and mortgage mess.

Q. Is now a good time to buy real estate?

A. That depends. That question would be equivalent to walking into a doctor’s office and asking “Is now a good time to have a surgery?” The doctor  would want to know if you are sick, injured, or ill. She would want to do tests, exams, and scans. She would not do a surgery if you are healthy. Your health and body are unique to you. So is your position for buying real estate. Like the doctor, I would have lots of questions. I would do a needs analysis with you. I would refer you to talk with a mortgage lender. I would find out about your situation. The truth is, now is a great time to buy for some people and an awful time to buy for some people.

Suze Orman, famous financial expert author and talk show host, gives a great exercise in her book, Suze Orman – For the Young, Fabulous & Broke. She calls it “Play House Before You Buy A House”.

Given all the extra costs of owning, you need to be plenty sure you can handle the bills before you take the housing plunge. Put yourself through my six month “play house” test.

• Figure out the cost of homes. Use a mortgage calculator to estimate your basic mortgage costs.
• Add 40% to that sum. That is your home ownership cost.
• Subtract your current monthly rent from your home ownership cost.
• Set up a new bank account and deposit that difference in the account on the first day of every month for six months.

If you pay $1000 in rent but your home ownership cost (including all the extras, taxes, maintenance, etc.) is $1,271, you need to deposit $271 a month into your test account. If you miss one payment, or if you are consistently late in making the payments, you are not ready to buy a home. If you can handle the extra payments, then you’ve got the thumbs-up to start looking for a home to buy. By the way, in playing house, you’ve also beefed up your down-payment fund. In the previous example, you would have saved up $1,626. in six months.

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