Welcome to my blog where I discuss money, investing, politics, and anything else import in the world. I find it surprising that most people in their 30s have very little knowledge or interest in these areas. Of course everyone is interested in money, but very few take the time or have the discipline to properly save and invest it for the future or short term. For those who at least have the interest, I'll write about my experiences and methods of investing, and hopefully give you a head start in investing.

Thursday, April 3, 2008

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.

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