Updated: Nov 20, 2022
Exploring Home Ownership
Let’s talk about it, let’s talk about the Real Estate market as it is today and to be frank, how it will most likely be for the next 100 years. I'll start with the easy questions and make my way down the list.
Will the home prices go down is the number one question for most buyers seeking out their first home, and the answer is yes, the market value of a home will bounce up and down for the entire life of the home. Some years will be better than others and the yang to that is that some years be less than others. The beauty in this scenario is that some day the loan will continue to get smaller until there is no payment at all -If you follow the amortization schedule that will be in 30 years.
Rents will increase, offering no benefits other than the basic living arrangements.
Inflation will happen, the cost of living continue to rise, but your living expense will get smaller, because the cost of your home will be what it was 30 years ago, but you live in that home today.
Why would I buy a house with no equity?
Equity in your home occurs in three ways, one of which is how much of the loan you-THE Buyer have paid on the principal and interest. At some point you’ll have paid off the home, the equity will be the market value of the home.
The second way that your home will gain equity is by building or updating the property, but of course there is no promise that your upgrades will enhance the value. That customized turtle skin wall paper may not be attractive to the next buyer. Typically kitchens, and bathrooms are the bread winners when updated /equity is concerned.
Lastly, equity is established through market supply and demand. The lesser the amount of homes vs the higher amount of buyers will drive the prices higher than normal selling seasons.
It is not very typical that someone will sell you a home worth 500k, for less than 500k, some people get lucky to find that needle in haystack home where the seller just wants to give her home away.
Will interest rates go down,
Yes, and they will go up.
Why should I pay over appraisal.
You shouldn’t if you don’t have too, but if you want the home of your dreams, you may decide to pay more than the appraisal value and more than the market value. In my opinion , paying over the appraisal amount is no worse off than paying rent of 50-100K and NEVER getting any ownership. I have had clients that will pay 40K in rent a year, but wouldn’t pay 20K over appraisal.
I have worked with client that have said they would rather hold off for 10-15 years to get a cheaper price for a home.
Owning a home is not for every single person, otherwise every single person would have a spectacular home in the most spectacular neighborhood. Most Buyers should understand that buying is a very mature decision, it is an investment that could benefit several generations, not to be taken likely.
My advice to would be owners is to find an affordable home, that compliments your life style. Be ok with having a good first start.