In the past few years the real estate market has proven that it is not as safe and reliable as it once was thought. The average price for a home almost doubled from January 2000 to mid-2006 (According to the First American Loan Performance Index). Since 2006 house prices have fallen pretty drastically, about 30% more in some areas such as Miami and Las Vegas, mainly due to the financial crisis hurting the economy in those areas a little more than in others. In Miami almost 25% of all homeowners with loans are behind on payments or in foreclosure – The abundance of foreclosures hurt the value of your home and the nice amenities you may have will not matter to home buyers right now.
Is the market getting better?
Signs have shown that the real estate market is getting better, but there will probably never be a definitive point where President Obama will make a speech saying the housing crisis is over. The truth of the matter is, people are still unemployed which leads to foreclosures. Even though the amount of homes that are for sale are down, we still have a long way to go.
How can I find the value of my home?
Contact your real estate agent or hire an appraiser, however you will most likely the numbers they give you will be high, today’s real estate market isn’t about how much closet space or if your home has granite countertops and stainless steel appliances, it’s about finding a bargain and if you list your home on the market today, you will probably not get what you could get for it in the future or five years ago. There are websites that you can go to do get a very vague value of your home such as Zillow.com – these sites pull recent home sales and calculate a number based on how similar those homes are to yours. Remember a home’s value and how much it will sale for are completely different.
If I’m a renter, is it a good time to becoming a homeowner?
Possibly, prices in the majority of areas are hugely discounted and well below market value. As the market rebounds from the disastrous years past prices will increase and homeowners will become greedy, so prepare for that and budget accordingly. If you’re looking to stay in the same general area for the next half-decade (5 years) you might very well consider buying a home as by the time you’re ready to move the housing market will be back on its feet and running again and you’ll most likely net a profit from the sell. However, many homeowners are renting their homes instead of selling them in this market so you could find a good deal as a renter if you do not plan to stay in the same house for the next 5+ years. A Realtor can help you find a rental home as well.
Should I invest in homes that are foreclosed on?
Probably not a good idea; a lot of investors specialize in this particular area and know a lot more about this market then you do, they also have the funds to hire people to do the leg work for you. Foreclosed homes are almost always sold on an “as-Is” basis, meaning if you find mold in the home it will be your problem, not the bank you bought the home from. Mold, and other problems such as termites, wood rot and roof damage can be extremely costly to repair and might make the initial “steal of a deal” a dead fish when it comes time to sell.