Truckee Real Estate Simple Facts
Truckee Real EstateSimple Facts to Consider When Contemplating a Home Purchase
Historically Home Ownership Builds EquitySome folks might not have the self discipline to set aside money each month to save and invest. In this case, a home is more than a shelter; it acts as an automatic savings account. Savings can occur in two ways thru home ownership – Primary and Secondary: First, each month a portion of your payment goes toward the principal to build equity in your home. In the early years of the mortgage, most of your payment goes toward interest. Over time, however, that turns around and your equity growth begins to accelerate. Second,
U.S. home prices have always appreciated over the long term. Average appreciation on a home is, 5-6 percent annually, according to the National Association of Home Builders. Over time, history has shown that owning a home is a solid financial investment despite periodic market downturns.
Market Timing is Never PerfectNo one wants to purchase a home only to see its value decline. But should you wait to buy a home until prices bottom out? A quick web search will yield a number of articles and opinions for and against timing the real estate market, but beware of those in favor of market timing who also want to sell you how-to books – they don’t work! Many people who have tried to time the market miss out on the chance to build equity by waiting to buy until prices rise again. Market cycles only become clear in retrospect. In the midst of a market slowdown, it’s very difficult to predict when housing prices hit their low points. In addition, this trend line represents home prices at the national level, which may be very different than housing prices in the area in which you are searching. Extensive national indicators may be behind the market by weeks or month, meaning the actual price floor would not show up in reports until weeks or months later. The longer you own your home, the better chance you have of building wealth and protecting yourself from the market traditional ups and downs. What does the Media Mean when they say THE REAL ESTATE MARKET?Most media reports about the housing market focus on national statistics such as sales volume and median home prices. The statement that all real estate is local is often repeated because of the fact it is true. I find it interesting to hear about the changes of the
U.S. real estate market, but those reports really are only useful in the context of local real estate markets.
Financing is Favorable at the MomentBuyers are rightfully concerned about buying a home that will drop in value in the coming months. But buying a home is a long-term investment, and there is more to consider than the just the purchase price. Depending on the rate and the amount financed, the price of financing can easily exceed the price of the home. What’s more, the total cost of buying a home raises more than $70,000 when interest rates rise a single percentage point. When you’re looking for a bargain, don’t lose sight of the big picture. If you try to time the market to save a few thousand on the price of a home, you could end up with a higher monthly payment and total overall cost of home ownership. At the end of the day, your personal and family circumstances will determine when it’s the right time to buy a home.
At the same time, your local real estate professional can help you research and understand your local market and the types of homes available.
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