Some people are still avoiding the real estate market because they predict yet more steep declines in home prices. Other people have decided that now is a great time to buy. My husband and I have decided to take the leap, but only after making some careful consideration. Here are our reasons for buying our first home.
We’re Taking a Huge Tax Hit
Right now, we’re being hit with what I call the no-mortgage-no-kids marriage penalty. Mortgages in California are high enough that the interest deduction offers a substantial savings. Since we’re not owners or parents, we’re paying way more than our fair share of taxes and we’re sick of it.
We Hate Our Neighbors
Seriously, we hate them. They throw watermelons off the roof and dogs in the pool. We’re tired of living around idiot twenty-somethings. Rather than get another apartment only to buy a house in a year or so, we might as well take the leap now.
The Los Angeles Real Estate Market Is Affordable Again
Affordable for us, anyway. Certainly the market could come down a bit more, but several homes and decent neighborhoods are within our range. We plan to own at least five years, longer if we buy a home rather than a condo, so we’re not terribly worried about additional declines. It seems clear that the government intends to prop up home prices this year – we might as well take advantage of that opportunity.
We Want a House
Quite simply, we’re tired of renting. We’re tired of waiting for someone else to fix the leak in the bathroom ceiling or the garage. We’re tired of being at the mercy of noisy neighbors. We’re tired of paying rent rather than a mortgage.
We Can’t Buy a New Car Until We Buy a House
My car is due for replacement and we can’t do that until we buy a house. (We don’t want another debt on our credit.)
I Hate Our Apartment
Anyone who reads this blog with any regularity knows how much I loathe my kitchen. I also hate my carpet, the leaky bathroom, and the chipped walls. I’m just plain sick of living here. It’s time to move on.
It’s Likely There Will Be Additional Tax Incentives and Low Mortgage Rates
Mortgage rates for qualified borrowers are pretty low already. Congress is batting around the idea of a 4.5% loan for new purchases. If that figure gets approved, we’d save thousands of dollars a year. The lower rate and tax savings would bring our mortgage payment down to nearly the same as our rent. In addition, there’s talk of offering first-time buyers up to $20,000 in tax incentives. That’s a big number and we definitely want to take advantage of that.
Foreclosures Are Filling the Market
The Los Angeles market is loaded with foreclosures, short sales, and desperate sellers, which means we have a lot of bargaining room. We’re also seeing uncompleted condo developments running out of money. There’s no telling whether they’ll be finished or torn down, but it’s definitely a buyer’s market right now.
We’re not rushing into the market. First we’re going to spend a month or so visiting open houses and getting a feel for potential neighborhoods. Then we’ll fax in our mortgage application to see what sort of loan we qualify for. I’ve spoken to a broker, so we do have a ballpark already. We already know we’re likely to be approved for much more than we want to spend. Finally, we’ll hire a real estate agent and take our time shopping for just the right house in the right neighborhood. With luck, we’ll buy around mid-spring. By then, any tax incentives or low rates should be in place.
Are you considering getting into the market? What are your reasons? If not, why are you choosing to sit on the sidelines a little longer?
