Is Now a Good Time to Buy a House?

It's the most commonly asked question of economists and realtors, the question that is on the minds of most buyers. Is this a good time to buy a house? The answer depends on a number of personal factors, but the general response in most cases is - yes. It's nearly always a good time to buy a house.

Buying a house for quick profit

Of course, that answer is qualified by a number of factors. For instance, what's your reason for buying? If, for example, you're buying with an eye to turning a quick profit, some experts suggest that you have about another five years before the current trend in rising house prices slows or evens off. As long as house prices are rising at 15% or more per year, it's possible to make profits of as much as 100 - 200% of your initial cash investment. A $10,000 down payment on a $200,000 property has the potential of netting you over $20,000 profit if the property value rises at 25 - 30%.

It depends as well on the market in which you're buying. In some markets, notably urban centers on the East and West coasts, real estate prices and values are rising at astronomical rates. A savvy investor with a nose for a good deal can conceivably turn a profit in the high double digits by 'flipping' a piece of real estate - selling it within several months of buying it.

What about those that say that the real estate bubble is going to burst and people are going to lose money on their houses? Again, the answer depends on your intent for buying a house. Even the most negative of the naysayers agree that housing prices aren't likely to drop much, if at all. If you're looking for a quick profit in high-turnover real estate sales, experts suggest that you keep your ear tuned to the unemployment and interest rates. If they start to rise, home sales will slow down and prices will either even out or drop. As long as the interest rates and unemployment rate remain low, it's a good time to buy a house as a quick turnover investment (flipping houses).

Buying a home to live

What if you're looking for a home rather than a house? You're still in luck. Over the short term, there is a chance that home prices will drop. On the other hand, odds are extremely high that home prices will be higher in the long term. In other words, real estate will continue to be what it has always been - a steadily appreciating, long-term investment. If you plan to buy a house and will be living in the home for at least five years, it may not matter so much what happens with home prices now. Home prices could fall as a result of rising interest rates, but a lower price home might not save you much.

For instance, if you finance the entire $400,000 home with a traditional 30-year fixed mortgage rate at 6 percent. Then, your monthly payments would be $2,398. If now, we assume due to rising interest rate, the home prices fell to $350,000. If you finance $350,000 at 7 percent, your monthly mortgage payment would be $2,328. As you can see, it's really not much a difference from today's payment on a $400,000 home.

It is always a good time to buy a house as long as you know how to take necessary steps to protect yourself against a downturn in housing prices. If you've bought a home, experts say, this is the time to put as much into the paying off the principle of your mortgage as possible. The more you put into the principle, the higher your equity in the house when and if you do decide to sell. Never take up crazy mortgages loans such as adjustable-rate, interest-only, option-payment ... and other risky mortgage loans that will get you into trouble should the home prices soften and interest rates rise.

Most importantly, buy the home that suit the type of mortgage you can afford; do not change your mortgage to suit the home you 'want' to buy. Most experts do agree on one thing - the longer you own your house, the more your investment will be worth. If you're buying during a hot real estate market with prices at all-time highs, they suggest that you plan to hold the property for at least five years to see a real profit in it.

Is now a good time to buy a house? The absolute bottom line is, of course, your own finances. If you're in a position to support a monthly mortgage, if your credit is good enough to qualify for low interest rates, and if you expect to live in the house for at least five years, then you're almost guaranteed a profit when you sell. If you love the house, and know that you can afford the mortgage - it's a good time to buy a house, no matter what the market might do.

By: www.buy-and-sell-house-fast.com