Considering the decision to Buy or Rent. Home Owning remains a commitment to a quality of life and continuity often unavailable as a renter.
Is now the right time to buy real
estate? Only you can answer that based on your life position, personal goals,
satisfaction with your current housing, current financial resources, employment
status, commitment to this area, and unique past experience. Most people pay a
portion of their income for a place to live. You have to decide how to best
invest that money based on the current factors that affect your life, balancing
your personal goals and needs. There is no one answer for everyone. My
experience can assist you in determining your best course of action when we
review my Lifestyle Priority Index
Consider
my Monthly Commentary on the
Greater New Haven Connecticut Real Estate Market
30 year FHA mortgage rates achieved at 50 year low (3.875/1)
on August 18, 2011. FHA Rates are below
still this mark at 3.75% on January 4, 2012. When we combine recent
introduction of 3% FHA 5/1
Adjustable Rate Mortgages, increased inventory and
lower prices, properties are more affordable today than in the past five years
or more.
Remember historical interest rates dropped to a low of 5.25% in 2003 from levels around 7% in 1998. 30 Year Mortgage Rates have been as high as 17% since in 1981, averaging 8% since 1975. Since October 2010 we have seen 30 year fixed rates as low as 4.000%
To decide if you want to buy in the immediate future consider:
1) Your income and financial resources. How will you pay the monthly expenses
2)Is the appreciation window for real estate brighter than the window for cash?
3) How satisfied are you with your current living arrangement?
4) What is your commitment to live in Southern Connecticut for the next 5-10 years?
5) What is the actual financial value of the mortgage interest deduction to your
situation
6) What will you use the property for? Your Residence? with a Home Office?
7) Are you willing and able to maintain a property?
8)What is your current housing expense? How will that change if you own?
Other factors you choose are welcome for consideration.
You Can Lock in your Monthly Interest Payment for 15 or 30 years. At the same time your house will increase in value over time as they have since the 1950's with a couple exceptions created by questionable lending practices.
Inflation benefits borrowers at the expense of lenders Inflation benefits those who receive the money first before prices rise. Inflation hurts people on fixed incomes, or owning non invested cash reserves.
In January 2012 we see CT house prices comparable to 2002-2004 depending on location, condition and who you buy from. Freezing monthly payments is where a major value lies since most landlords will increase annual rent 1-2% a year.
When you pay off your mortgage your monthly costs will drop to taxes, insurance and maintenance, while the value of the property will continue to rise in relation to inflation and cost of living.
Plus you can deduct the annual property taxes paid from your annual IRS taxes if you itemize deductions. Be sure you understand these minimum requirements to obtain this much publicized credit.
My professional goal is to help you make the right
choice, be a property owner or to wait, either way earning
your trust and future business
Add value, security and peace of mind to your next home purchase or investment
Benefit from my
$30,500,000 closed transaction experience.
I am a full time REALTOR working with Coldwell Banker in North
Haven Connecticut. Since 1996 I have consistently participated in The New
Haven County real estate market representing buyers and sellers
(private/corporate/foreclosed) of single, multi-family residences and
vacant land.
Despite the recent 4 year declining price trends in the United States housing market,
people are wondering if this is the time to buy. We have seen real estate prices rise
to new heights from 1996 up until mid 2006. Connecticut values have
consistently declined in price
in a variety of increments since late 2007 through the 3rd quarter of 2011. Current values have not been seen since December 2003 or before
depending on the property and specific neighborhood metrics.
While
property values continue decrease we see across the board increases in consumer goods
and speculation of increasing energy and consumer commodity prices.
One popular tool for defining affordability is the Rent To Own Ratio,
a relationship between rent payments and mortgage payments adjusted for tax
consequences. When we see the index drop below 15 this is considered a buying
signal. A ratio of under 10 is a strong buying signal.
To Figure the Rent to Own Ratio divide the purchase price of a property by the annual rent of a comparable one to get the result. This formula is similar to a PE (Price to Earnings) Ratio used in stock evaluation, or a Cap (Capitalization) Rate used in investment/rent income property
Consider Annual Rent of $2000 per month (annual rent and insurance) is $24,000.
Apply the Purchase Price (property cost, taxes, insurance, Private Mortgage Insurance, closing costs and personal tax credits) of a comparable house is $240,000 the Rent to Own Ratio Equation is 240,000 divided by 24,000 which equals 10.
A Rent to Own Ratio over 21 is often considered a strong rent signal in the current literature should you decide to explore this formula
A Rent to Own Ratio between 12 and 18 is considered a highly probable buy indicator in the current literature should you decide to explore this formula
A Rent to Own Ratio under 10 is often considered a strong buy signal in the current literature should you decide to explore this formula
Finally, I appreciate your forwarding commentary to your
friends and colleagues who may desire expertise regarding this Connecticut Real
Estate market. I appreciate your referrals and confidence in my commitment
to your future. I look forward to talking with you about your goals in
this market.