Monday, June 07, 2010

Is it the Right Time to Buy a New Home?

Evaluate both the Federal and your own Personal Financial Prospects Before Buying a New Home

By Mark J. Donovan

The housing market has been in a tail spin for about 3 years now. On average, selling home prices are down nearly 30% from their peak. Mortgage rates are still at their lowest levels in nearly 50 years. So is now the right time to buy a new home? Is now the time to take the plunge and scale up to the bigger or more luxurious home? In some cases the answer is a definite, absolutely! On the other hand, it also depends upon your particular situation, e.g. your employment status? It also depends on your timeline on how long you plan on holding onto the new home.

So the answer on buying a new home is still somewhat grey in many peoples’ minds today, and that is why the housing market has continued to languish. Very few people have confidence in the staying power of their employment, if they even have employment. With 10% unemployment officially, and more like 17-18% unofficially, there are many people either out of work or know of a friend or neighbor that is.

So to determine if this is the right time to buy a new home for you, there are a few questions you should ask yourself first.

First, are you ultimately long term optimistic about the country’s future? If you are, then it may make sense to buy that new home now. If you’re not, then you might want to hunker down to a European austerity program lifestyle.

My personal view is that though our federal, state, and local governments have been spending with unwanted abandoned for the past 18 to 24 months, the American public is finally sobering up to the fact that they were sold a utopian fantasy by the latest group of progressive charlatans. I suspect center America will not put up with this much longer and through the power of the voting booth begin to rectify this problem in November. So being an optimist, I suspect our current financial and unemployment crisis will not stand, and thus the housing market will significantly improve in the next couple of years.

Second, are you optimistic about your own future employment? If you’re comfortable with your present employment situation for the next couple of years, then now may be a good time to buy the new home. Again, with a change in federal political leadership, we should expect to see a re-investment in corporations and entrepreneurs by 2011/2012. By offering tax incentives and investments into emerging business opportunities the U.S. should begin to see sustainable growth in the next 3 to 5 years, thus ensuring your employability out to and beyond 2015. If, on the other hand, you’re current employment is tenuous then now may not be a good time to buy the new home. It may make more sense to hold off a couple of years until the employment picture becomes a bit more clearer.

Third, is your family growing? If it is, then now is probably a very good time to buy a new home. Unless we go into a depression, which could happen if things don’t change at the federal level this fall – but I’m optimistic they will, this is the time to buy the new home. If you have steady employment and a growing family, the chances of finding home prices and borrowing rates this cheap may not happen again in your lifetime.

So evaluate your own financial situation and ask yourself if you believe the country will change its course to a more financially prudent one. If you are bullish on both of these accounts, then buy the new home and hold on for the ride. It could be a little choppy in the next year or two, but 5 years from now I think the picture will be much brighter. Let’s hope so for all our sakes!!

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