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I will be graduating from college and moving to central NJ in May. I had originally planned to rent an apartment, but after doing some research on rent and reviews from apartmentratings.com, it seems that buying may be better. I have read many articles about whether it is a good time to buy a house. The sources suggest that the house costs are projected to decrease when the mortgage rates increase and that this may happen after the housing tax credit expires (mid-2010). What are your thoughts on this? I have some money saved up and will need a mortgage of ~$100k.
Also, what areas are good places to live in? I am looking for something on the low end in terms of cost, so a townhouse/condo would be perfect. I will be working in Skillman and my primary desires are a short commute to work, safe neighborhood, and a relatively new house (less than 25 years) with high resale value. What are the best areas around Skillman for these? I found a perfect place in Montgomery Woods, but that was swept away before we could look into it further! Should I wait for another townhome in the neighborhood to pop up, or should I look elsewhere? I have also considered other townhomes in Montgomery, Franklin (Society Hill), and Hillsborough. The realtor I am working with says that Franklin is a developing town and a great place to live. Are there parts of Franklin that are better than others? What do you think its future will be for resale?
I will be graduating from college and moving to central NJ in May. I had originally planned to rent an apartment, but after doing some research on rent and reviews from apartmentratings.com, it seems that buying may be better. I have read many articles about whether it is a good time to buy a house. The sources suggest that the house costs are projected to decrease when the mortgage rates increase and that this may happen after the housing tax credit expires (mid-2010). What are your thoughts on this? I have some money saved up and will need a mortgage of ~$100k.
The fed and the treasury are resistant to any policy that will cause prices to fall, but they want to unwind quickly. The likely outcome of this is that housing prices will stay flat (to put it another way, if you buy today you will be giving up the price appreciation you'd otherwise enjoy)
A couple of other thoughts:
If you're a relatively high-downpayment buyer, you are at an advantage in a high-rate low-price environment (where "cash is king"), and at a disadvantage in a low rate high price environment (where promises to pay lots of money later rule)
In the usual rent vs buy calculation, you come off better buying if you stay put for about 7 years or so. Even if now isn't the best time, it could be the case that it makes sense. Then again, given you just finished college, you could find your life circumstances change very quickly -- a career opportunity in some other part of the country, getting married, going back to school for a graduate degree -- these are all things that could result in a relocation or change in housing requirements sooner than you might anticipate.
Yes renting is always better because helping to pay your landlords mortgage is always better than building up equity in your own home.
Yes, that's a terrific idea given that more than one economist is saying the NY/NJ market still has 18-20% left to go down before it hits bottom. Nothing like being stuck in a house you overpaid for just to get back to even in say.... 10 more years.
Anyone thinking about buying a house in NJ in 2010 should REALLY, REALLY think about a few things that are going to happen this year before plunking down their money to "build equity".
Yes renting is always better because helping to pay your landlords mortgage is always better than building up equity in your own home.
No-one is suggesting that "renting is always better".
Whether or not it's better to buy or rent is a question that is best solved by some well considered financial analysis and planning as opposed to simplistic chanting of slogans.
The idea that you're "helping to pay your landlords mortgage" wrongly suggests that rental property is win-lose with the landlord profiteering at the tenants expense. This is fallacious -- the tenant compensates the landlord for what they gain (the option to move without incuring high transaction costs, and ability to put their capital into something besides housing). The landlord takes on some risk and some responsibility in buying the property, and needs to be compensated for that. It's not a free ride -- if it was, everyone would pile into rental investment property until the risks were in line with the returns.
Yes, that's a terrific idea given that more than one economist is saying the NY/NJ market still has 18-20% left to go down before it hits bottom. Nothing like being stuck in a house you overpaid for just to get back to even in say.... 10 more years.
Anyone thinking about buying a house in NJ in 2010 should REALLY, REALLY think about a few things that are going to happen this year before plunking down their money to "build equity".
Who are these economists that are saying NY & NJ still have 18 -20% to fall? That's not what I've been hearing at all, and I'd like to research that point of view. Names & links will be appreciated.
Last edited by Bill Keegan; 01-23-2010 at 11:59 AM..
Reason: typos
No-one is suggesting that "renting is always better".
Whether or not it's better to buy or rent is a question that is best solved by some well considered financial analysis and planning as opposed to simplistic chanting of slogans.
The idea that you're "helping to pay your landlords mortgage" wrongly suggests that rental property is win-lose with the landlord profiteering at the tenants expense. This is fallacious -- the tenant compensates the landlord for what they gain (the option to move without incuring high transaction costs, and ability to put their capital into something besides housing). The landlord takes on some risk and some responsibility in buying the property, and needs to be compensated for that. It's not a free ride -- if it was, everyone would pile into rental investment property until the risks were in line with the returns.
That's exactly right. Renting also offers the renter a flexibility in moving that homeowners don't enjoy. Furthermore, homeowners face costs such as property tax (the biggest), maintenance, and repairs/upkeep which often match or exceed a renter's rent payment each month.
It can be more cost effective to rent, enjoying the flexibility of moving when convenient (more or less), no maintenance or repairs to worry about, and even some utilities paid for most of the time, than to pay a mortgage with all its interest and then all the other costs associated with home ownership. For a single person, finding a 1200/month apartment will most likely be less than the costs of home ownership. Granted there are tax benefits to homeowners but they aren't enough to offset the costs that much.
If I were just starting out I'd rent and see where life leads at least for the next year or so. Once you're certain of where you will want to be settled for 5 or more years, and once you're more confident in the prices not dropping further, then buy.
Yes, that's a terrific idea given that more than one economist is saying the NY/NJ market still has 18-20% left to go down before it hits bottom. Nothing like being stuck in a house you overpaid for just to get back to even in say.... 10 more years.
Anyone thinking about buying a house in NJ in 2010 should REALLY, REALLY think about a few things that are going to happen this year before plunking down their money to "build equity".
You know you are absolutely right. . I have no doubt that in 3-4-5 years you will be able to have your pick of what's left over at bargain prices.
Those folks who are buying now are getting good deals on quality properties in good locations.
Who are these economists that are saying NY & NJ still have 18 -20% to fall? That's not what I've been hearing at all, and I'd like to research that point of view. Names & links will be appreciated.
No offense Bill. I love and respect your profession. But any positive information on the economy coming from the NAR or NJAR is just hogwash. It's almost as useless information as the govt puts out.
It's always nice to think positive and search and read positive articles but look who authors that information and what agenda they side with.
Sure homes will fall further. Ever play momentum stocks? If I were betting on homes and betting with momentum I'd say it's a good bet we all will continue to lose home value. That said, it's not a smart move to buy a home now.
No offense Bill. I love and respect your profession. But any positive information on the economy coming from the NAR or NJAR is just hogwash. It's almost as useless information as the govt puts out.
It's always nice to think positive and search and read positive articles but look who authors that information and what agenda they side with.
Sure homes will fall further. Ever play momentum stocks? If I were betting on homes and betting with momentum I'd say it's a good bet we all will continue to lose home value. That said, it's not a smart move to buy a home now.
But I didn't offer any hogwash at all. Someone said that economists predicted additional declines of 18-20% more in real estate values. I asked for the names of & links to the expert economists making such predictione so that I might read them, resdearch them, see how valid I feel they are. I still haven't gotten those names, that link, or any validation of the claim.
Additionally, most of the people I help to buy real estate are looking at more than the financial prospects of the property. Most buyers I deal with are looking for a HOME for their family. They aren't looking for momentum stocks. While they certainly would prefer that those homes increase in value, at the end of the day, it's about the home and their famuly's needs more than the home's increase in value that they are concerned with.
Last edited by Bill Keegan; 01-23-2010 at 01:12 PM..
Reason: Added last paragraph
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