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Beating the First Time Homebuyer Squeeze: Rent!
Posted By Jim On 07/06/2006 @ 6:31 pm In Personal Finance,The Home | 4 Comments
When I was looking at houses last year, I was concerned that I was buying near the peak of the housing boom and that home prices would stagnate for a few years. As educated as I was with regard to current affairs and as green as I was in terms of understanding the principles of housing markets, I figured I was going to abstract away the housing market forces and make the purchase decision based on the merits of the house, not the market. It turns out I made the correct decision  because now homebuyers are facing what CNNMoney calls the first time homebuyer squeeze. Mortgage rates are at a 4 year high and continued growth in home prices makes a home purchased today cost several hundred more than the same house purchased one year ago. So what’s a homebuyer to do?
I can’t predict the future and chances are you can’t (or you don’t own a copy of Gray’s Sports Almanac, that’s a Back to the Future 2 reference) but buying a house is one of the best moves anyone can make – to a point. Sure, the points of the article are that buyers are now renting instead of buying or looking in less desirable markets in order to buy something they can afford. The article rightfully argues against interest only and 100% financing but honestly, if you can’t afford the house you want and it’s within reason – just wait.
There is nothing inherently wrong with renting an apartment. The only reason why everyone thinks it’s “wrong” is because years and years ago mortgages and rents were much closer than they are now and that fact has been beaten into the minds of every young professional out there. Gain equity! Own a house! In Baltimore, you can split an apartment with a roommate and pay less than $700 a month in rent, I know someone (pmoa ) who has a nice apartment and pays much less than that. Much less.
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 the correct decision: http://money.cnn.com/2006/07/05/real_estate/first_time_squeeze/index.htm
 pmoa: http://www.pmoa.net
 Emigrant Direct: http://www.bargaineering.com/articles/r/emigrantdirect.php
 ING Direct: http://www.bargaineering.com/articles/r/ingdirect.php
Thank you for reading!