Buying Phobia

Many potential home buyers today are afraid to risk buying now. They fear what they’ve been hearing about - which is that many owners are losing their homes. Many of the hesitant buyers worry that if they were to buy today, then maybe at some future time, when they want or need to sell, they might be caught “upside down” in their homes, meaning they would owe more than they could sell the home for, because the housing market has declined severely.

Let’s take a sober look at why this has happened.

One reason is that the housing market, like the stock market, does have its ups and downs. The real estate housing market traditionally goes up slowly over many, many years and homeowners gradually gain more and more equity in their homes as their mortgages are paid down. However, not only are they gaining wealth with the accumulating equity, but housing tends to go up in value over many years, until finally it becomes an accepted “norm” - the house you buy today will likely be worth more when you sell. Unfortunately, towards the end of these years of rising values, a period will set in when the home prices begin to soar unreasonably (called a “bubble” in the market). Speculation sets in and it will not take long to burst that bubble, as more and more people put their homes on the market hoping to make a tidy sum to put away. A glut in the market occurs, and then the problems set in.

Other reasons have also contributed to the housing crisis. People borrowed against the equity in their homes to buy cars, pay college tuitions, and many other things. At the time, it didn’t seem a risky thing to do, but in reality, it is increasing your debt while at the same time reducing your net worth. For other folks, they just took on too much credit car debt until payment on all debt became impossible. For others, it was job loss or unexpected medical expenses. For still others, they were just into bad mortgages, which also flourished during the heady years of rising prices.

Look at it this way. As Tom Lundstedt, a speaker and an expert in the R.E. tax and investment area, says “ you are always buying a house – the only question is - who are you buying it for?” If you’re renting, you are helping to buy the building for your landlord. Is this really what you want to do with your hard-earned money?

This is a fantastic time to buy! Prices are lower than they’ve been in years & interest rates are still wonderful – it’s like the “perfect storm” of converging opportunities. If you’re able to buy and have a stable job, don’t let this great opportunity slip away from you. It may not return for a very long time.
Read my newletter for October at:

http://ping.fm/poa0J