Surprise Home Buying Wisdom
But what you need as a homebuyer is a perspective on the housing market, as it applies to your housing and investment needs. To provide some balance in home buying advice, we've compiled some tidbits that often are exaggerated (and others that get downplayed) to give you perspective in your search for a new home.
Three Things to Consider
• The danger of brand-new subdivisions: For decades now, people have misunderstood the risk of these homes, especially during the early stages of development. The initial housing starts may be spacious, luxury homes selling for $400,000. But demographics are destiny: When the pool of affluent homebuyers dries up, the builder may start building
• Versatility: One of the more creative ways that people have avoided foreclosure is to take on roommates, especially people who bought bigger homes than they could handle. Another common scenario involves recent college grads moving back in with their parents. Buying an oversize home may not be the best course of action, but looking at homes with versatility is a good idea. Some of the possibilities might include rooms with multiple roles: home theater, home office, home gym, etc. A flexible design might allow you to take in additional residents, whether you need extra income, a space for extended family members, or a live-in health aide. (Find highly rated designers in your area.)
• Planning for the future: Your home can act as a financial investment in many ways other than appreciating within the housing market. A home design that's easily convertible into an aging-in-place dwelling (wide hallways, no stairs, large bathrooms) can save the family estate tens of thousands of dollars by postponing the need for institutionalized care, while improving your quality of life in the twilight years. It's never too soon to think about aging-in-place. Even if you do move, a home that accommodates people with limited mobility will have a wider home-buying audience when it comes time to sell.
Three "Truths" to Reconsider
• Mortgage rates: Every last expert seems to be talking about rising mortgage rates. It's the easiest advice in the world to give. Mortgage rates, at historic lows, have had nowhere to go but up. Yes, mortgage rates are favorable right now. Yes, they're going up. On the other hand, the rates aren't going to double overnight, nor are home values. There is no reason to think that you need to rush into buying a home -- especially one that's less than ideal -- with a continued surplus of available homes on the market.
• The tax credit deadline: Many saw the April 30, 2010 deadline for a federal homebuyer tax credit as a looming countdown, after which only suckers would buy a home. In fact, where a $300,000 home is concerned, good old supply-and-demand may be a bigger factor. There's a decent chance that this deadline has thinned the herd of your home-buying competition. Imagine the home seller who couldn't move his or her property off the market as this deadline expired. It may sound ruthless, but these discouraged sellers may now be lowering their selling price.
• Unprecedented selection: With this huge inventory of homes on the market, it should be easy to find a home, right? Not necessarily. First, buying a foreclosed or distressed property is usually not a good idea for the average homebuyer. Competing with banks and seasoned property investors over a home that you won't be allowed to inspect is plain lunacy. Second, people exaggerate this bloated inventory into an idea that they will suddenly be able to find the "perfect" home. But beware, the "perfect" home rarely exists.
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.
Want to learn more about home buying and home finance? If so, you won't want to miss
our online discussion with industry experts,
"What Works Now: Smart Moves When Buying a Home,"
created by AOL Real Estate in participation with Bank of America Home Loans.
Watch it now on AOL Real Estate.