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Old 04-08-2009, 01:55 AM
 
18 posts, read 67,221 times
Reputation: 13

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Hello Everyone
I have a question that I've been kind of fighting with for a while. I'm looking to purchase a home but not for certain I should at the moment. The problem I'm fighting with is that I'm possibly looking to move from Michigan in 5-6years. I was very much thinking of renting a house but due to what has happened to my friend, I've been nervous about renting. The situation that happened to my friendis she was evicted from her house due to Landlord/owner having trouble with keeping up with the mortgage. This really did hurt her because she made payments on time and in full every month ...now she just all of a sudden have to move within 30days having to find elsewhere to go. Well anyway I started thinking of buying for awhile since the prices are pretty good right now. Tell me what you think on this.

Thanks,

MV310
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Old 04-08-2009, 07:14 AM
 
Location: Taylors
40 posts, read 143,337 times
Reputation: 35
It's definitely a buyer's market, that's for sure. The question is, will West Michigan real estate be on the rebound by then? I hope so, since we want to sell in two years!

I think it depends to some extent on the area - how much does it depend on the industry to bounce back, how much was it overbuilt in the last 5/10 years, etc.

Where are you thinking of buying?
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Old 04-08-2009, 07:35 AM
 
Location: East Grand Rapids, MI
845 posts, read 3,018,901 times
Reputation: 236
Look at it this way.

If you bought a $100,000 house today and got lucky (perhaps today is the bottom of the housing market!), if housing values rebounded 5% annually for 5 years your house would be worth about $130,000 when you sold it. If you used a real estate agent (paying them 5.5%) you'd clear $123,000 on your house. There will be closing fees of at least $1,000 so in the end, you'll have profited about $22,000 on your house. Of course, as a buyer you're also paying to fix things that a landlord might otherwise cover for you, so that $22k profit isn't "real" in the sense that you've probably spent some of it fixing gutters, doors, etc.

Still, that's pretty good... but it's an absolute best-case scenario.

In this market, if it was me and I knew I was leaving in 5 years, I'd probably rent. There are enough benefits to home ownership (aside from the potential investment gains) that it's a tough call though.

To be honest, I'm not sure the housing market has bottomed out yet. If Chrysler or GM goes bankrupt (one of which seems pretty certain at this point) I think you'll see another massive wave of layoffs in Detroit. We like to sit on our high horse over here in G.R. and pretend we're not affected, but we are (just not as much). That bankruptcy would likely force more suppliers out of business in West Michigan which in turn would affect the housing market negatively and you might be looking at a house that is worth the same as today 5 years from now. If that is the case, buying is a money-losing proposition (because you're paying a cut to a real estate agent, closing fees and upkeep on the property while you live in it).
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Old 05-14-2009, 12:41 PM
 
16 posts, read 71,060 times
Reputation: 12
I agree with suydam, if you are moving in a few years you may want to rent. I am sorry to hear about your friend's rental problems, but I think you will be okay if you read the lease and make sure you are protected. This is the time to buy a house, and I am in the same boat, my husband and I, along with our two children have discussed moving south due to the snowy winters here in Mi, but right now is a buying market, we have talked about buying a home and fixing it up to sell in a few years, but with the market how it is, we are not sure if we will be able to sell when we are ready to move in a few years. We have decided to continue renting until we decide to stay or move away. I hope that the housing market gets better, but we dont want to be stuck with a home that we cant sell if we move.
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Old 05-16-2009, 10:52 AM
 
Location: Santa Maria, CA
766 posts, read 1,446,804 times
Reputation: 651
Don't do it!

I owned for about that time frame -- which unfortunately was right in the middle of the seller's market when I purchased. I then tried selling last year and just closed a week ago and lost about 40K. Probably more if you look at what went into the house during that time and the carrying costs while trying to sell it. I had not planned on moving but MI's economy had other plans for me.

I don't even think it's a close call unless you really want to speculate on the housing market. But if housing really starts climbing -- the general economy is probably doing well too and you could have invested in the stock market with the money you would have used for the house. Factor in interest, property taxes, maintenance, and realtor costs and I believe renting comes out ahead. A house also becomes a giant anchor tying you to MI if the economy worsens and you get laid off or if things are going well and a better career opportunity presents itself beyond commuting distance.

If you have to have a house -- find one to rent. A lot of the people trying to sell now would probably gladly rent their place to help with carrying costs and hope that during your lease time that property values begin to go up again.
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