As I have mentioned before, Linda and I are planning on buying a house later this year and we recently began looking at houses. Interestingly, when we got married almost 4 years ago I really, really, really wanted to buy a house, but the more I prayed about it, the more I felt like the timing wasn’t right for me. I remember being very frustrated and asking God “why?”. I didn’t get an answer then, but it is starting to make a bit more sense.
Suddenly just a few years later many more houses fall into our price range that didn’t before. I am now so thankful that we didn’t buy at the peak of the market, but are going to become first time home owners in the midst of a valley. As the old adage goes “buy low, sell high.” Thankfully God is smarter than me and helps me out even when I don’t realize I am being helped…
A perfect storm
I don’t know what’s going to happen the next few years, hopefully we will see a lot of economic recovery in the US. But even if we don’t, 2009 looks like it is shaping up to be a great year to become a home-owner. Here are a few of the reasons that I am glad we are going to be buying this year…
$8000 tax credit for home buyers – This is a nice incentive for all of us apartment-dwellers. And actually you qualify as a first-timer if you haven’t owned a home in the last 3-years. In order to qualify we have to close on your house by November 30th, 2009.
Interest Rates are very low – If you look at the historical data about interest rates you will see how low rates are.
Home Prices are low – I have watched some of my mutual funds’ values get cut in half, so I can imagine how some home-owners might feel who bought a home a few years ago, only to have it go down in value. Especially when some of the talking heads were basically saying that you could never lose money in real estate. But either way, real estate is still a good investment – but it is nice when you get it on sale.
Lots of bank-owned properties available – With the increase in people walking away from their mortgages and all the other negative effects of the credit crisis the banks own a lot of properties right now. Most banks don’t want to be in the real estate business, so bargains can be found.
Have we hit the bottom yet?
I was having a discussion with a reader (Randy) on Twitter (Follow CPF) about whether we have hit bottom yet. Personally, I think if we haven’t we are getting pretty close – at least in the housing market. But either way, while I am all for buying at the prime times, even Warren Buffett says that you should buy when you know it is a good investment – rather than waiting around the price to be perfect.
What do you think? Are you going to become a first-time home-owner this year?
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Hate to be “that” guy, but you say “Thankfully God is smarter than me and helps me out when I am getting ready to do something stupid!”
If you had purchased in 04 after prayerful consideration (as no doubt many did) would that make God any less smart? I don’t know if in the grand scheme of things if God cares too much about seeing to it that you collect on low interest rates and a nice tax credit. Maybe I’m wrong, just a thought…
Thanks Chef,
After re-reading it, I can see what you mean… My intention wasn’t to say that people who bought 4 years ago were stupid, because like you said it very well could have been the right time for them. But for me it clearly wasn’t, and just like me writing that I find myself doing stupid things sometimes
I appreciate the heads up and I changed the post to reflect more of what I meant to say…
Woohoo!!
My sister is about to be a first-time homeowner. She’s scheduled to close in a few weeks.
Another potential first-time benefit is the Mortgage Credit Certificate. This is a tax CREDIT on the amount of mortgage interest you pay each year. In our case this amounts to 25% of the interest we pay each year. In this year’s case it was the difference between breaking even on our taxes and getting a decent refund.
In our case, this would apply to TRUE first-time homeowners — not the new I-haven’t-bought-in-over-3-years definition.
We did buy our first home last year, but it was in March 2008 – we do not qualify for the credit because it was effective April 1st 2008 I believe. So close!
@Bob Wow, impressed that you updated the post. My frustration shouldn’t have been directed towards you. Background: I’ve been frustrated by friends lately who think that even the smallest things are God’s calling for them to take action in a consuption-obsessed society. For example, someone NEEDED an iPhone and they got a rebate from the insurance company for the $75 that they were short. This indicated it was “God’s will” to my friend. Hardly God’s will IMHO. I think you’ve got the right approach. I bought my first home and closed on 4/14/08, a week inside the $7500 credit. I considered it more luck,
I am hoping to be a first time home owner as well! I am saving up for a down payment and am just waiting to see if this economy turns around and that my job is safe. I am hoping to jump on it right at the end of the tax credit sometime Nov-Dec. I might even wait longer if the government extends that date. The most important decision is that we have job security before we go and purchase a house.
I am also hoping to be a first time home buyer this year. As of next Monday, I will have paid off all of my consumer debt and I will be starting to save for a down payment. I’m sure that a first home is exciting for everyone, but as a single mother it feels especially exciting for me!
It’s an exciting time to be a first time home buyer!
You’ll be lucky enough to have one of the lowest mortgage interest rates ever offered.
That’s a great place to be.
My wife and I just bought our first house — and, like you, it’s the perfect time for us.
We’ve been married for more than 3 years, just had our first baby, and are getting squeezed in our 2 bedroom apartment. Thankfully, a place we were looking at (that was previously under contract) came back on the market for $40k cheaper … right in our wheelhouse. Plus, getting the $8,000 free and a great interest rate certainly helps.
I would say if you can afford to keep the house then by all means go ahead and purchase one. But don’t do it for the sake of the tax credit, low interest or low house prices.
I would consider you think about the trade off you are making by buying a house instead of doing something else such as traveling, starting a business, investing, etc.
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