Inspired by The Wall St. Journal’s timely and relevant 10 Reasons To Buy a Home, I thought our readers would enjoy hitting the same points but with a hometown flavor.
Keep in mind that the WSJ article is primarily targeting renters but some of these points apply to all new home buyers. Here we go!
1. You can get a good deal.
The author of the WSJ piece, Brett Arends, cites a 30% drop from the peak of home prices nationally, Louisville is a different animal. Prices did drop, just a bit, but nothing like other parts of the country.According to the Federal Housing Finance Agency, our yearly home price averages look like: 2005 (+4.9%), 2006 (+2.8%), 2007 (+2.4%), 2008 (+1.1%), 2009 (-0.5%) and so far in 2010 (-2.4%). Louisville simply doesn’t have the wide swings of other markets.
Could prices go lower by next year? Certainly. Are they likely to? Probably not. Start back to 1978 and move forward and you’ll see that Louisville doesn’t have a single year of negative appreciation until you reach 2009.
2. Mortgages are cheap.
This is something that we’ve hit on here at LouisvilleHomesBlog.com several times; most recently with Mortgage Rates Lowest in 40 Years. Rates are likely the #1 reason to consider making a move sooner rather than later as they can’t remain at this artificially reduced rate because the government fund working to keep them there is empty.
For a more in-depth explanation of that and China’s role in this situation, please read Why Interest Rates Will Rise in 2010.
3. You’ll save on taxes.
If you’re a renter, this one is a no-brainer. The deduction for mortgage interest is significant.
If you’re trading up, it’s a numbers game. Depending on your situation, you could actually pay more taxes, especially if you’re buying a much more expensive home or if you don’t qualify for the capital gains tax break compared to taking the standard deduction. Even still, it’s worth investigating.
4. It’ll be yours.
No more abiding by the landlord’s rules and restrictions. Paint where you want to paint! Knock down a wall or two! Have some fun!
5. You’ll get a better home.
To me, this sounds like marketing hype. How many times have we heard the voice-over on a commercial say, “Don’t you deserve a new [insert product name here]?”
Now, if your family is growing and your current home is creating space problems, maybe you should buy a larger home. If you recently took a new job that has created a 40-minute commute, you might consider buying a home closer to this new location. There are lots of ways to get a better home and they aren’t all about spending more money. Having a savvy Realtor® can truly help you in this area.
6. It offers some inflation protection.
A Case-Shiller study says that home ownership beats inflation by a couple of percentage points a year. In uncertain times, having a monthly payment that you can afford increases your peace of mind. That’s just as true in Louisville, Kentucky as it is in Alaska, California, Florida or Maine.
7. It’s risk capital.
This point is related to #1 in that sooner or later the market will move upward and buying “low” is always a good investment. Another aspect is the idea that having some of your overall net worth in real estate helps to diversify risk.
8. It’s forced savings.
Now the author is reaching to get 10 reasons because 7 Reasons to Buy a Home isn’t as catchy a headline.
9. There is a lot to choose from.
This is a point I made in an article I wrote last month entitled, Is It Good Time to Buy Louisville Real Estate? In my view, there are the Big 3 and then there’s everything else. These are Home Prices, Home Inventory, and Mortgage Interest Rates.
Currently, all of the Big 3 favor buying a new home here in Louisville. [Selling an existing home is a related, but essential variable to the equation as well.] There are currently over 10,000 properties listed on the Greater Louisville MLS and more than 8,200 of those are single-family homes. Wow!
10. Sooner or later, the market will clear.
Unlike cities in Nevada and Florida, Louisville doesn’t have the glut of over-production. Our high inventories will slowly decrease as more and more buyers decide they shouldn’t wait any longer. New construction starts have fallen off considerably. This adjustment of supply and demand will return inventory levels closer to historical averages. What would that look like for homebuyers? Not nearly as good as it does right now.
Is your current employment situation stable? If so, the biggest hurdle is financing. Contact your loan specialist to see what you can be approved for with today’s stricter guidelines. Maybe a new Louisville home is a smart investment.