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We are debating whether to buy a townhome in Mendham or Basking Ridge, vs. renting for three years.
Yes, now is a great time to buy, but with prices still going down, how much increase in value can I expect on a property in 3 years? I see townhome listing prices drop by $30K at a time, I'd love to buy, but this is frightening me
Is it safe to assume that in a town like Mendham, property prices in the lower range won't go any further down in the next few years?? Any thoughts would be appreciated.
You are better off renting. You are not gonna make significant profits off of owning a place in 3 years. It will just be a hassle and not worth it. Potential to lose money also exists
No one can say what the market will do in three years, but most economists believe that we won't see the insane double-digit appreciation that we saw in the past decade for quite some time (if ever). Given that, even if you get a more normal 2-3% appreciation rate, you'll barely break even on the sales commissions and closing costs in 3 years, so it's really not worth the hassle if you're looking at it from a purely financial perspective. Of course, if you're able to have lower monthly payments by buying vs renting, that's a different situation, but you've got to consider that you'll be trying up your downpayment amount, and run the risk of not being able to get it back when you sell in three years.
You also have to factor in the costs to sell which can be anywhere from 6-10%. So just to break even you need the value to go up that much. Add in maintenance costs and other expenses and unless you are going to see some decent rise in value you are almost guaranteed to lose money IMO.
And don't forget there are costs to purchase as well. Inspection, appraisal, loan fees, etc.
if you use the last boom/bust as a guide (which comparison was child's play to this one), prices were booming from about 87-90. 91 the bottom fell out and there was FLAT appreciation until around 2000. 9 YEARS. i'm no economist and certainly don't claim to know the answers, but honestly i don't see prices appreciating (and by appreciating I don't mean the insanity that was going on the first part of this decade - which some people seem to think should be the norm) for at least that long.
prices don't stop dropping because you decide to buy. and no town is immune, even a gorgeous place like mendham!
One more thing to consider. If I was a betting man I would assume interest rates are going to be higher in 3 years. If that is true it means buyers are going to have less buying power.
say the housing market stayed flat - I think you would just about break even with the equity built up - to match the 5-6% in Realtor cost when you go to sell in 3 years. I think I might just rent.
Is it safe to assume that in a town like Mendham, property prices in the lower range won't go any further down in the next few years?? Any thoughts would be appreciated.
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and no town is immune, even a gorgeous place like mendham!
