First Time Buyer? Thinking of Buying? Should I Buy or Rent?

To Buy or Not to Buy – Should I Buy or Rent a Home?

Buying a home is not for everyone in every area nor is renting. Obviously consideration needs to be made on both a personal and market location basis.

The National Association of Realtors recently published results from it’s 8^th Annual Housing Opportunity Pulse Survey which indicates that nearly 8 our of 10 Americans still believe that buying a home is a good financial decision. 77 percent believe strongly or not so strongly, 68 percent strongly so. More than 68% believe that now is a good time to buy a home.

Here in Austin, we have fared better than in many regions of the country. A recent article in Newsweek ranked Austin as one of four Texas cities in its list of the 10 cities best situated for economic recovery. It described Texas as the “Number 1 destination for job-seeking Americans, thanks to a hearty energy sector and a strong spirit of entrepreneurism.”

With respect to housing, projections are that the Austin area will have increasing rental rates over the next year(s), which will make homeownership more attractive to many. Marcus & Milchap reported in November that area apartment vacancies are expected to fall with relatively few projects coming online. Developers report bringing about 2900 new units on line this year versus an annual average of about 4300 per year for the last five years. Rising demand and reduced supply is expected to push rental rates up about 3% in the near future.

In addition, the number of spec homes being built has decreased dramatically over previous years. The combination of these two reductions in conjunction with new job creation will likely create some reduction in housing availability. So far, we have had about 23,000 new jobs created this year and it is anticipated that we will continue to have net job increases over the next several years. The Milken Institute’s October 2010 Report – Best Performing Cities-2010: Where America’s Jobs are Created & Sustained lists Austin as #2

Fiserv Inc forecasts average single-family home prices to fall another 7.1 percent during the next 12 months in the US, though less than 1 percent in Austin. Continued home price declines are expected in markets that have been hurt most by the housing crisis. In Austin, however, we are fortunate to have many popular areas or popular price points that have remained fairly stable or had recent increases in values, not decreases.

Very low interest rates, tax deductions and even a small or neutral average appreciation, combined with relative market stability, potential increased rental rates and decreased rental availability and current home affordability mean that home ownership may make sense particularly for those planning to stay in a home for 3-5 years, at least in the greater Austin area.

For those who stay in their home and pay it off, there are obvious benefits since they will no longer be making mortgage payments - just taxes, insurance and maintenance. For those looking toward their future retirement, continued home ownership can be the right thing.

For many, there are psychological advantages to owning - personally I just prefer to be my own landlord, so to speak. I have the flexibility to do what I like and no matter what, I have to have a place to live. If I have to pay for a place to live anyway, I'd rather have the control myself and not rely upon a landlord to maintain the property properly and in a timely fashion or to keep a fair rental rate indefinitely.

Most investment advisors will tell you that you need to hold your investments in stocks or bonds over a longer time period. There will be ups and downs in the market, but over time, their goal is to make you money over that time period. Selling at any given time during that period may net you a loss or a profit. If your investment goes up 20%, have you really “made” money? I say “no”, unless you actually sell the investment. You could own that investment for 10 years and it could go up and down over time, but you really only “make” that gain (or loss) when it is sold.

The same could be said for owning a home or other real estate. Many markets have experienced substantial ups and now substantial downs. Over time, if you view your home in the same way as you might view your stocks and bonds, chances are you will experience a positive gain over time. The difficulty for many right now is how long that time period is and can you wait it out. One positive in the Austin area is that we generally have experienced a less dramatic downward market swing and are now trending positively in many categories.

If you know that you are going to have to move again in 2 years or think you may lose your job in the near future, it may not be prudent to buy, but if you plan on staying in your home 5 years or more, particularly if buying now while prices are affordable, it may well be the right thing for you to do.

To buy or rent - it’s a very personal decision, largely based on your own circumstances and locale. For some, renting is the way to go for now. For others, now may be the best time to buy and take advantage of low interest rates and affordable home prices, particularly here in the Austin area.

Here in Texas, we are fortunate to be able to offer a Downpayment Assistance Program to make it easier for people to buy a home. And, if you are military, former Military, an Educator, Medical Personnel or a First Responder, we have a CASH BACK Bonus whether you are buying or selling.

Give us a call, email to suemellett@yahoo.com or visit our website at www.ParagonPropertyGroup.Com

Sue Ellett

Broker-Associate

Paragon Property Group

Coldwell Banker United Realtors

866-693-7741

Credit Score Got you Down? A few Easy Tips that might help improve your Credit Score.

Poor credit can keep you from buying your first home. Obviously we can't all pay cash for everything all the time - using credit cards and getting loans is necessary for most of us. But, you can protect your hard-earned credit score and keep it....you'll be glad you did!

Buying your own home is a great investment in your future, keep your credit in check and you'll have a much easier time of getting a loan when you are ready.

• Don't use all of your available credit on a credit account - try not to use more than 10% on any particular account and try to keep it to 10% total maximum on all of your accounts.
  
• Don't close your old accounts. The longer you have had accounts, the better it looks. You might consider using it for a small amount from time to time and paying it off again in a timely fashion.
  
• It's good to have different types of credit, including gas cards, retail store cards, credit cards, car or motorcycle loan, home mortgage, student loans and personal loans. All can be reported to the credit bureaus.
  
• Don't be lured by offers that say, "No payments until...." These are often high interest rate loans. Plus, it's easy to forget that a year from now you will have to start paying for them. If you forget and then you don't have the money, you will be in trouble.
  
• Don't apply for a lot of credit/credit cards within any 6 month period. Every time you apply, the credit card or loan company will check your credit and an "inquiry" is posted to your account. A lot of inquiries with a short period of time can cause your score to drop.
• Check your credit periodically for mistakes. If you find any, report them immediately. It may take some time for these corrections to be posted, so keep that in mind if you are looking at getting that new home loan.
• www.annualcreditreport.com - you can check your credit for free once every 12 months.

And, if you are thinking of buying your first home in the greater Austin or Highland Lakes areas, give us a call or send us an email, we can help. We are certified Texas Affordable Housing Specialists, too, and can help you get a great deal on a home, help you find a lender to pre-qualify you and get you into your very first home.

It's a great time to buy.....

We'll even send you a free booklet on Buying versus Renting and one on First Time Home Buying.

Contact Brooke LeMond at 512-284-0799 or email brooke@brookelemond.com for more information.


Sue Ellett, Broker Associate