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Hi all. I just had a conversation with a friend. He and his family is in a bit of a dilema & was asking for advice. Here it is...."Harry", wife and 2 kids need/want to buy a home. The problem is with the mortgage companies demanding 20% down the only place he can afford is a "less desirable place". He was looking in Shirley. He asked me and I really didnt really know what to tell him.
So what would you people recommend? Buy a home in a less desireable town & own a home or keep paying rent in good town?
Hi all. I just had a conversation with a friend. He and his family is in a bit of a dilema & was asking for advice. Here it is...."Harry", wife and 2 kids need/want to buy a home. The problem is with the mortgage companies demanding 20% down the only place he can afford is a "less desirable place". He was looking in Shirley. He asked me and I really didnt really know what to tell him.
So what would you people recommend? Buy a home in a less desireable town & own a home or keep paying rent in good town?
Areas like Shirley historically take a huge beating in value in a downward market. If he buys now, hates it next year & can't sell because he's upside down that would be terrible.
I agree with trying other lower prices areas that don't get beat quite as hard-Patchogue/Medford, Ridge/Yaphank, Selden/Centereach, Port Jeff Station, Rocky Point/Sound Beach. All of these towns are starting to have some good buys now & IMO are a bit more stable with values..
Just as an example, I live in Ridge(Lake Panamoka) we just had a house across the street from me sell for the highest price EVER in this neighborhood. There are a few houses that are super tiny bungelows that are selling really cheap but most of the homes here are selling at just about what they sold for in 2005-forget about listing price.
And the home prices here are low, often around the same as a house in Shirley.
If he's stretching himself to buy ITS NOT A GOOD TIME!!!
Tell him to save as much as he can and buy in a good area. Location, location, location. Prices will bottom up late this summer or early fall.........IMO, thats when i would buy. Forclosures have'nt really hit the LI market yet. Tell him good luck!
Maybe I should add to this. He is thinking of Shirley b/c he knows he will be able to live there comfortably b/c of the price. So he wont be in any risk of forclosure.
Also, leaving Long Island is not an option, they love it here. Who knows??
Maybe I should add to this. He is thinking of Shirley b/c he knows he will be able to live there comfortably b/c of the price. So he wont be in any risk of forclosure.
Also, leaving Long Island is not an option, they love it here. Who knows??
The long history of a family putting down 20%, while although hefty in an up market, has its roots in sound finances. It assures the buyer that they will hopefully hold onto a certain level of equity as real estate trends up and down. It is a sound foundation. If the friend is aware that Shirley (in his opinion) is not desireable then I do not see the logic in buying in. Comfortable living obviously has a lot to do with finances, but also whether or not you feel positive about the community you are raising your family in. This is not an opinion either way on Shirley, it just appears that they are not fans.
I differ with KBinspections. I feel the market will continue trending down well into '09 and stay flat for a while. Real estate has lengthy historical norms in the neighborhood of 5%+ annual increase in value over time (I think that is the neighborhood, although I am sure somebody like Tom Moser can clarify and/or correct). We have been in a period of 6+ years of irrational increases, I do not feel it is crazy to believe it might take half of that time for the market to decline and/or stagnate while the norms catch up. Nobody in the real estate market thought it was crazy when homes were jumping off the charts while increasing...why would it be crazy to assume a correction will take the same amount of time? I recommend they rent and target a few areas they desire. The market should come back to them. Renting right now could actuallly add more value given they would not be contributing to a mortgage that is a declining asset.
Keep renting until he can come up with enough to live in a better area. Get a second part time job or do whatever to get the $$ needed for the better area.
Also, you say he is thinking of living in Shirley because he can live there comfortably and won't be in risk of foreclosure. IMHO that statement says a lot. Are they really in a position to buy a house? I know renting stinks -believe me we did it for many many years before we finally could afford a home. As much as I hated renting and wanted a home I would have stayed renting in a good area as opposed to owning in a bad area.
IMO I would probably find a house to rent in Shirley for a year, to see if they can live with the area. I doubt the market will go up in a year. If anything it probably go down and he might be in a position to buy in a better area or get a house in Shirley for a better price.
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Save the 20%
