A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn’t always apply.
It’s All About The Market
Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values. Ohio has seen its real estate prices go into negative territory in the last year.
Do not buy high and sell low – if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.
The magazine Smart Money has created a Rent or Buy Worksheet to compare the costs of renting vs buying using market appreciation calculations to determine at what point you come out ahead. Plug in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.
For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you’d realize $120,360
It’s All About You
The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don’t have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.
Read the rest of the Yahoo Real Estate article right here: Best Times To Buy
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