The prices are lower than ever, but you have to be cautious.
After four years of economic crisis, there have already begun to be signs that the housing sector is stabilizing. Many experts say that it is the right time to invest in a property, but you should be careful austin house buyers.
“According to our national data, the market bottomed out in the second quarter of this year,” says Stan Humphries, chief economist at Zillow, a firm specializing in real estate analysis. “We do not expect a large increase in housing prices in the coming months.”
Other analysts believe that prices may continue to fall. According to the economist and professor at Yale University, Robert Shiller, famous for predicting the real estate crisis, the sector still has not recovered.
In an article published by The Wall Street Journal, Shiller mentions the high level of mortgage foreclosures and high unemployment as factors that impede the recovery of prices.
If you are thinking of buying a home, these 10 recommendations can help you make the best decision:
- Make a financial self-assessment. Before buying, it is important to analyze your financial situation. The most important thing is to determine our income and the capital that we have available as downpayment. Although loan interest rates are currently low, getting a mortgage is difficult. Banks are increasingly demanding in the verification of their income and credit history.
- Set realistic expectations. If you are buying your first home it is important that your expectations are realistic regarding the increase in the value of the property. The average valuation of a house in the United States is 3.6% per year, according to data from the Case-Shiller index, one of the main indicators of housing prices of Standard & Poor’s. This indicates that it is no longer feasible to buy and try to sell after a few months or a year.
- Think like an investor. Think about the expected return on your investment, the risk and the term. The profitability if you buy to lease the property will be what you get from the rental income, minus the maintenance and taxes. Together with the annual valuation of the property, this becomes its profitability.
If you buy a property to live in, one of your goals will also be to make the best possible investment. The best way to achieve this is by looking for the areas with the best schools because those areas tend to be poles of attraction for families.
- Consider continuing to pay rent. Compare the costs of buying and maintaining a house with the cost of renting it. Zillow has just done this buy versus rent analysis for nearly 200 metropolitan areas and 7,500 cities in the United States. The study concludes that in 75% of the areas analyzed, buying is better than renting.
However, each buyer must do his own analysis. You can use the AARP calculator.
- Location, Location, Location. A house gains in value if it is located in an area with high quality schools and with good communication and transportation routes to the main urban centers.
- Become an expert. Gather the information of the area you chose and the properties that interest you. It is important to know at what price homes similar to the ones you want were recently sold. You can obtain this information through sites such as Zillow.com or RealEstate.com (in English). You just need to enter the address to know what properties are for sale and rent, as well as those recently sold.
- Look for pre approval of a credit. When seeking approval from a bank, the buyer will know your credit rating and the interest rate at which you would get a mortgage. “It is very important that you look for many options from different banks to make a better decision,” says Ilyce Glink, an expert in personal finance and author of books on home purchases.
- The house can be a retirement plan. Changing houses can pay dividends. “It is an increasingly common strategy among people who are approaching retirement age or are retired. They move to a smaller house or sell and use capital as a source of income, “says Armand Cristopher, owner of the Dallas-based real estate firm, Senior Living Realty, which specializes in seniors.
- Consider the improvements. Calculate the cost of the additional investment required by the home. No property is perfect and evens the newest ones require changes and modifications. It is key that the changes made are aimed at increasing their value.
- Think long term. The purchase of a home is a long-term investment. It is recommended to buy with the prospect of keeping it for five years or more. This time allows you to obtain greater benefits from having a property if you live in it or if it was purchased as an investment to rent.