Moving on up!: Great time for a new house

Despite the subprime problems and real estate recession, or actually because of it, this is a great time to be looking at real estate - whether you want to upgrade or downgrade your house or invest in REITs. I've been dollar cost averaging into real estate mutual funds for a while now and, while it certainly lost money last year, this is a great time to buy at a dip. It may continue to be very volatile and even lose more money this year, but since stocks are forward looking, REITs may be poised to start recovering. However, it is even a better time to make a move with your personal residence.

This is something that I assumed I would be saving for a couple more years. But I recently came to the realization that I might as well look at purchasing now. I do have considerable equity in my current townhouse and I do have a decent amount saved for a downpayment. Moreover, it's a great time to buy or upgrade because it's a buyer's market and interest rates are low for those with really good credit. Usually low interest rates do not coincide with low house pirces and instead push prices higher. I could continue to save a few thousand each month and then in a couple of years I would have an even bigger downpayment, as my equity would also have grown. However, the other alternative is to buy cheap now and instead of saving that $1000 each month, put that directly into the house in the form of a higher mortgage payment. To put it in perspective, I am looking to go from approximately $350k to $450 - $550k house. At the same time I am looking at some slightly cheaper neighborhoods that get me more for my money. Since there is such a good choice of homes on the market, I am excited about what bargains can be found. You can really afford to make many low ball bids and get a good value in this market.

On the flips side, most homeowners are just looking at how much less their home is now worth. That doesn't bother me, as I have been in my current home almost 7 years and still have made considerable gains. I would much rather be trying to sell now at a discount and pickup a new house at an even better discount. It bothered me more when we had outrageous home prices the last couple of years.

So this may be a great time to upgrade if you

• live in a desirable area
• are willing to price your house at a discount that reflects current market conditions
• have great credit to qualify for a low rate
• have 20% of the purchase price for a downpayment

Having found some great properties in my area that would double my living space, I am very motivated to list my house. All I have to do is some minor repairs and touchups to get started. I'll keep you updated.