Sacha Nash's Blog
19
Oct

Is the Looming Real Estate Downturn Preventing you from Buying?

 

“In California, the market is insane and I've been struggling to find anything better. Should I just wait until prices come down?”

 

Apprehensive about another Crash?

Think about if everyone said we are waiting for a good time to get married, have children or take a year off to travel the world. There would be no marriages, planned children or travel instagramers. The dichotomy is there is no good time to do any of these things, because they are all pretty inconvenient and scary.

There are many economists who have put their two cents into the world about a looming US economic crash. One like, How An Economy Grows And Why It Crashes by Peter D Schiff, Andrew J Schiff, is predicting another big economic crash resulting from all the debt the US has acquired from keeping the economy afloat over the past few years. While there is merit in their observations, what the market does should not affect your life goals of owning a home.

 

Does it make sense to buy now? 

The right time to buy your first home is when you are ready emotionally and financially. So long as you are confident that you can make the payments on your mortgage, who cares what the market is doing?

Real estate is cyclical. Roughly every seven- eight years in San Diego, we have another up-swing and another down-swing. That means that if you buy in an up market and hold if for seven-8 years, you will be selling in an up market. Historically appreciation grows 6% in this area. Some years are more and some are less, but if you hold the property long enough you will see 6% growth in appreciation.

 

How much are you loosing because you didn’t buy three years ago when you initially wanted to, but didn’t have the balls to? 

 

BE EFFICIENT WITH YO’ MONAY!

Think about all of that rent money that bled your bank account dry with no chance of ever seeing it again. We need to give up our fears in order to move onto the next season in life.

Setting aside appreciation, if you had bought 3 years ago, you would have been paying yourself rent for the last three years instead of that landlord that never fixed the doorknob to the bathroom. Even if you broke even on the sale of your property, you still would see your money again. Economics 101 teaches us that every choice you make has an opportunity cost. Economics are primarily about the efficient use of scarce resources, and the notion of opportunity cost plays a crucial part in ensuring that resources are indeed being used efficiently.

 

There is Always a Way Out.

I don’t generally focus on the negative, but for those of you out there that feel it is a necessary evil I will entertain you. Let’s say you loose your job, because of a crappy economy and can no longer make the payments on your mortgage. There are still ways out - sorry to crush your pessimism.

  • Refinance your home to a more manageable payment.
  • It is easy to call your lender about a loan modification
  • Sell your home before you get behind on payments and downsize your mortgage to something more reasonable – HGTV says tiny homes are the new trend.
  • You can get assistance from Making Home Affordable that will work you on down payment assistance programs.
  • As always, there is a last resort of doing a short sale on the property. It will make you ineligible to purchase another home for the next two years and you will have to pay taxes on the difference in purchase verses sale price (Maybe).

Not all of these are ideal, but neither is loosing your job. Think of these as a safety to save your credit

 

Bottom Line

The goal of this first purchase is to simply get out of paying rent and into a property that could pay yourself rent, get tax breaks, and gain a little appreciation.

 



Sacha Nash
01998907
Mobile: 619-757-3838
eMail: Contact

Coldwell Banker West
4538 Bonita Road
Bonita, CA 91902
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