The hardest part of buying a home is overcoming the common myths about it. So what are the common home buying myths you should immediately unfollow?
From foreclosure to housing bubble to somewhere in between, U.S. real estate market has undergone a drastic change over the last decade and thus have acquired a number of rules of home buying.
Common home buying myths you should immediately unfollow?
And these rules are nothing but myths that wander around in the market and potential homebuyers used to believe in them.
Some of them still hover while others don’t.
Below are some of the home buying myths that you must unfollow.
#1). Home buying is a good investment
The housing bubble has taught us a difficult lesson; and it’s that the real estate market can be as perilous as stock market, if not, worse.
And houses lost even 1/3rd of its actual valuation nationwide while at some places the market faced even bigger hit. Over the previous decade, home prices have experienced a rise of about 0.3% per annum while S&P 500 has returned about 8.20% on an average.
Of course, there are some other factors too like maintenance that can eat further into the returns. For example, if you have to repair leaky roof, it will cost at least 500 USD. Also you can’t ignore the need of buying essential appliances like a new water heater and that is another grand.
#2). Buying is better than renting
Since the housing recovery has taken hold, some housing markets have become too pricey for the potential homebuyers. The best and the quickest way to determine whether or not you should buy a house – if the house costs more than 15 times the yearly cost of renting an identical house, you’ll be better off renting.
For example, in Manhattan, median cost of home buying is almost 25 times the median cost of renting a home. Some other points you should also consider – what would the 20% down payment would have fetched if you have invested it in stock market or bond?
Apart from maintenance and repairing jobs, what are the additional costs of having the home include? For majority of people, this decision comes down to the number of years they want to stay in that house.
If you think that you can put a hold for at least five years, it will be worth taking the plunge. This timeline is longer in costly markets as there it may take about 10 years before buying a home becomes more lucrative than renting a house.
#3). Location is the most important factor
In previous days, finding the right home meant it had to be in a well-established community with good schools, low rate of crime and is far from disturbances such as heavily used roads and airports.
However, these days, many good deals can be found in different neighborhoods which are yet to reach their peak. According to the experts, the key focus should be on the potential outlook for a place including its future growth and value appreciation.
#4). Get the worst house in the best community
It’s like fixing up a bad home while you can’t clean up the entire neighborhood. Bad houses often come with ample of flaws. So before you put money into any home, make sure you have an engineer’s report as this may become a huge money pit for you.
Only a very few Americans possess the expertise to do this by their own and thus most of them have to spend money on hiring someone who can do it for them.
To conclude, you may finish up paying much more on that fixer-upper than what you may have to pay if you have bought a home in good condition in an upcoming neighborhood.
#5). Any real estate is local
Even only a few years back, the way to make profit in real estate was to know the market thoroughly. Local situation like wages, joblessness, growth of population were deciding factors for determining the home price.
But the time has changed a lot. Today, real estate and real estate prices depend on global market. With the widespread of Internet as well as social media, the real estate business has altered the business drastically.
Overseas homebuyers accounted for almost 7 percent of all U.S. real estate purchased over 12 months that ended on March 31, while investors accounted for about 20 percent of all home sales.
Many of those buyers are paying in all-cash and that drives the price sky-high especially in markets like Miami and New York.
Discussed above are just 5 of many home-buying myths. You can talk to local real estate agent or use Internet to know more about such myths.
This guest post was submitted by Angelina
