It's true what they. When buying a house, location is everything.
Shutterstock/ShutterstockReal Estate:By Tony Wong - Business Reporter | Wed Mar 9 2011
- Recommend (19)
Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. A home is the biggest investment you’ll ever make and while exciting, the potential for things to go wrong is pretty big.
Here are 10 things to consider when buying a home.
1. The housing market isn’t really a market
At least not in the way you might think. While housing analysts like to compare real estate returns to stock market returns, it is a misleading comparison.
The first big difference is that a stock market is a place where you can by and sell immediately. In the real estate market you can wait months for the home you want to come on the market and just as long to find someone who wants to buy yours. The price you expect may not bear any resemblance to the one you get.
The long run return on stocks is also a lot better. The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 6.3 per cent a year after inflation in each of the last 25 years. The average increase in the value of a Canadian home over the same period petty much tracks the rate of inflation which during the same period was 2.5 per cent.
A home is also more than an investment. It has all kinds of intangible qualities, including a neighbourhood you want to live in, a spot with a particular view or landscape, a type of architecture that you enjoy. So, while it’s tempting to think of your primary home as a profit centre ripe for a flip, that shouldn’t be the main purpose.
Besides, your Microsoft stock can’t keep you warm at night. (Unless you bought it when Bill Gates was still working out of his garage. In which case, you probably have your own heating company.)
2. It’s always a good time to buy
No it isn’t. People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until prices bounced back in 2002. That’s 13 years. And even then they didn’t make their money back. Factoring in inflation, they actually lost money. House prices don’t go up forever. Buy when your circumstances dictate, not because your neighbor the agent says it’s a good time to.
3. Location, Location, Location.
Yah, they’re right. You’ll pay more initially, but investing in a property in the good neighborhood close to transit will pay dividends down the road when it comes time to sell
4. Buy the cheapest house on the street
Some people argue you shouldn’t, because the home will compare poorly to the other homes when you sell.
I say go for it. It may already be discounted because it looks like a shack compared with other properties and provides far more upside if you spruce it up in the future. A rising tide can also help to lift all boats. As the street gentrifies, infill housing will continue to keep property values high. Getting your foot in the right address is half the battle. Hello Park Place!
5. Do I need an agent?
No, you don’t. While a good realtor can be a huge asset, not everyone needs professional advice. If you have time, selling your own home can save you a ton of money on commissions. With the advent of the internet, and the opening up of the Multiple Listing Service there are many more services for the aaaRSS Feed
1. The housing market isn't really a market.
2. It's always a good time to buy
3. Location Location Location
No comments:
Post a Comment