Saturday, February 20, 2010

Is it dumb to buy house during our current depression/economy?

I want to buy a place for cash with my savings(no bank). Since we are in or going into a depression is this a dumb time to buy a home 9/25/08?Is it dumb to buy house during our current depression/economy?






Don't buy a home until prices start going back up.





Prices are still falling and you don't want to buy a home for $400k, only to find out that next week its worth $390k because the home 5 doors down just went into foreclosure.





So my suggestion, sit on your cash, wait until the local area reports indicate that the housing market appears to be back and prices are increasing. At that moment, (BUY)!!!!





Is it dumb to buy house during our current depression/economy?
It depends on how long you plan to live in the house, and how important the price of the house is to your happiness. It is possible that house prices may fall further, before they rise. It's also possible that they are at their lowest point today.





Remember that the marketplace assigns prices based on all available information, including the prevailing wisdom on the direction of prices and interest rates. for every person that thinks prices are going higher there is a person that thinks they are going lower, or the price wouldn't be what it is. This information is of course not as granular in the price of a house as it is in a commodity or stock. It's hard to know what a house is worth within 10% of its value. So if you can look at the house as a home to live in, and conclude that you would still want it if the price were 10% higher, then its probably a good time to buy it.
It's actually a good time to buy (given you've got good credit). It's a buyers market because prices of homes are dropping and interest rates are also lower. If you have cash, you may want to also look into buying a house from those who are selling their homes by themselves rather than using an agency to do the selling for them.
No, this is a good time to buy a home, as long as you plan to stay there for awhile. You will get an AWESOME deal on a house right now. You'll get it way below it's actual value. You could offer up to twenty percent lower than asking price. Then, when the economy recovers in a few years and you go to sell it, you'll be making mad bank on it. Again, plan on staying there for a few years though while the economy begins to recover.
It depends where you buy and for how much.





If you buy in a neighborhood with many foreclosed homes. Then you might end up living in a bad neighborhood.





Or if you buy in a municipality where the local government is short of money and is reluctant to fairly assess property taxes. Then you might end up paying huge tax bills on property valued by the government a lot higher than the price you've paid for it.





The problem is that a lot of houses went down in price. But local governments are short of money. And they often keep taxing as if property values haven't changed. Which is a big disincentive for people to buy those properties.
If you have the cash buying a home now at dirt cheap prices is a brilliant idea.
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