Monday, August 25, 2008

Dream Homes At Prices You Can Afford

Is buying a new home a good idea in today's economy? As a long-term investment, homeownership is still one of the best investments for individual households.

Housing, like all markets, has its ups and downs. Homeownership has a track record that is virtually unmatched by any other purchase in terms of its real benefits.

If you have good credit, a job, and a steady income, you'll find there's still plenty of mortgage credit to be had at good rates. For well-qualified buyers, rates are running at near historic lows.

Based on the housing stimulus program recently signed into law, you might even qualify for a first-time homebuyer tax credit, if you purchase a new home now.

Homeownership's Real Value

Dollar for dollar, homeownership is a solid stepping-stone to a future of financial security and the single largest creator of wealth for many Americans.

Over time, real estate has consistently appreciated, even through periodic adjustments in response to economic conditions. In the state of North Carolina, home appreciation has stayed at a solid 8% annually, with Raleigh real estate at a 6.4% annual home appreciation rate, compared to the national home appreciation rate or 5% annually.

The returns of such high appreciation rates are much more than an equal investment into the stock market. For instance, at the national appreciation rate of 5%, if you put 10% down on a $200,000 house, for an investment of $20,000. At a 5% annual appreciation rate, that $200,000 home would increase in value by $10,000 during the first year. Earning a $10,000 on an investment of $20,000 is an extraordinary 50% annual return. As you can imagine, an even better investment return occurs with an 8% home appreciation rate.

In contrast, putting that $20,000 down payment into the stock market and getting a 5% gain would only yield a $1,000 profit.

Should I Wait to Buy Until Home Prices Go Even Lower?

If you wait for what you think is the absolute best deal, you could end up waiting for years and missing out on your dream home. All the market fundamentals show that now is a good time to buy – prices are down, interest rate are near historic low levels, and there are lots of homes to choose from.

There are many things to consider when “shopping around” for a new home, and waiting for something that might now happen will only prolong that process. In addition to taking advantage of currently offered incentives, one of the most important things you can do when looking to buy a new home is to hire a home inspector to make sure the home is safe. A home inspector focuses on the condition and structure of the house and points out observed safety concerns. However, a home inspector will not do and destructive testing and will not inspect what they cannot see, leaving your new home in stable condition.

Therefore, if you buy now, you'll not only be in the driver's seat during the buying and home inspection process, you'll also reap the gains of price appreciation. Remember, those who purchased homes in the early 1990s during the last big economic and housing downturn came out as big winners.

The Advantage of New Construction

Today's new homes are better than ever. When you buy a new home, you get quality, new construction, the latest technological advances, and low-maintenance, money-saving, energy-efficient appliances. Many new-construction homes are built to Green Building standards. Homes are designed to fit your lifestyle, featuring larger kitchens for family gatherings, bigger closets, ample storage space, and more bathrooms.

In addition to cutting edge construction, it is easier than ever to get a home warranty. A home warranty will provide a new homeowner with coverage that will help curb the costs for common frequent household breakdowns. A home warranty will help keep the house looking and functioning like new, and is also a good selling point down the road.

So it's a good time to buy – if you're a first time buyer and qualify for the tax credit, it's an even better time to buy – and there are quality, new-construction homes and condos in every price range throughout North Carolina waiting for you. Don't wait and risk missing out on your dream home.

No comments: