Jeff Adams Real Estate tips 5 myths about buying a home, from housing bubble to foreclosure crisis to wherever in between, the real estate housing market has changed dramatically over the past decade – and so have many of the rules of home buying.
1: Buying a home is a big investment
If the housing bust taught us anything, it’s that the housing market can be just as dangerous as the stock market if not, worse. Homes lost a third of their value worldwide and some markets took an even bigger hit. Over the past 10 years, home prices have risen just 0.4% yearly, while the S&P 500 has returned an average of 8.28%.
2: Buying is for all time better than rent
Now that the housing recovery has taken hold, some markets have become way too expensive for homebuyers. One fast way to shape out whether to buy or not: If the home costs more than 15 times the yearly cost of rent a similar home, you are better off renting.
For example, the average cost of buying a house is about 24 times the average cost of renting one. Some other factors to consider: What would that 21% down payment have fetch if it was invest in stocks or bonds And beyond preservation and repairs, what will the extra costs of owning the house include?
3: The most important factors are locations.
Searching the best matched home used to mean that it had to be in a well-established community with low crime, good schools and far from annoyance like airports used roads. But these days some of the good deals are found in neighborhoods that have yet to reach their peak.
There should be more stress on the future outlook for a place, on what is the upside, said Jonathan Miller, president of Miller Samuel, a real estate appraisal company. He said it’s better to keep an eye on a location’s possible for growth and value.
4: the worst home in the best neighborhood buying.
You can fix up a bad home but you cannot clean up a whole neighborhood. Those bad homes, though, can come with some beautiful huge flaws.
All homes you buy should have an engineer’s report because it could become a money pit, said Michael Morris of Coldwell Banker M&D in Moriches, NY. Few Americans have the skills to do the work themselves money to hire someone to do it for them, he said. In the end, you may finish up paying more on that fixer-upper than if you had bought a house in better condition in an up and coming neighborhood.
5: All real estate is local.
It was not too long ago that the way to make profits in real estate was to study the local market in and out. Local conditions, such as wages, unemployment and people growth, would dictate the way of local home prices.
Real estate is much more of a global fact today, said Dottie Herman, CEO of Prudential Douglas Elliman, one of New York main brokers. The Internet and social media age has drastically altered business.
International buyers accounted for about 8% of all U.S. home purchases during the 1 year ended March 31, while investors accounted for 20% of sales. And many of these buyers are paying in all-cash, driving prices sky-high.
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