Weak Housing Market May Not Be Signal to Buy
Real estate has often been referred to as the one of the surest investments, and homeownership has long been part of the American dream. But in a market that seems to be in a freefall, buying may no longer be the safest bet.
The Federal Reserve recently warned that the housing market is unlikely to recover anytime soon.
Shira Boss, the author of Green with Envy, says first-time buyers probably shouldn't rush to get a mortgage.
"Nobody knows where we are on the curve," Boss tells Renee Montagne about the housing market. "It could be a little bit cheaper now or it could be getting cheaper for the next five or six years. You really don't know."
Boss says people should examine their individual situations "and not really rush and try to time the market."
In recent years, prospective buyers have been able to purchase homes with small down payments, or even no money down, and borrowing more than the house is worth. But these days, Boss says, buyers should count on saving enough to put 10 percent or 20 percent toward a home purchase.
"You shouldn't even look at houses until you have that kind of down payment," she says.
Before deciding to buy a house, you should also consider how stable your job is, and the likelihood that you will be required to relocate in the near future.
"Friends of mine bought a house and had it for less than year," Boss says. "And he got laid off and spent months job searching and this week accepted a new job in another city. Next week, their house is going on the market." It probably hasn't appreciated since the couple bought it, Boss says.
"Real estate is not a sure thing in terms of easy and quick profit.... There are situations where you can be stuck and lose money."
Boss says young people often feel pressured to buy a home.
"That's something I would love to caution young people against ... that feeling that, 'Oh my gosh, owning real estate is something to aim for, and if we're renting, we're basically losing money every month....' You can get in this kind of panic attack when you're young about having to buy.
"It's not necessarily something everybody can do or everybody should do," Boss says. "We should ... relax and not push people into real estate as something they have to do."
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