A New Way To Think About Real Estate?
One of the many things that went wrong with real estate in the great bubble of the 2000’s was how everyone began to think about the purchase of their own primary residence, which makes up the vast majority of all residential real estate purchase and mortgage transactions. It seemed that everyone lost sight of the fact that the most important aspect of that purchase was to put a roof over your head and not have to worry about a landlord every being able to kick you out. It’s about security.
Why am I talking about this? Because I see perfectly able buyers that are unwilling to buy in today’s market because they are worried the investment value may go down. I believe these buyers have it all wrong (well they may have it partially right, but let’s look at it a little closer). Maybe prices will drop further from where we are for any given market, but that’s just the investment value and it’s a snapshot in time. Are they considering interest rates still at amazing lows which is another huge discount today that won’t last forever.
Let’s back up a generation or two. This was before buying a new house every few years and refinancing your existing house to take cash out was ever in vogue. This was a time when home buyers were looking to get themselves into a house for the shelter value, pay the mortgage off over time and eventually own the house free and clear so their retirement wasn’t all about trying to figure out how to pay a mortgage with Social Security income and their pension.
How does this mentality play out today? We all have agree that it is going to cost you to live somewhere. Whether you are renting or owning, you are going to pay. I look at many of the markets I do mortgages in (mortgages in San Diego, Temecula, Murrieta, Washington, California) and see that you could buy a house and end up with a payment that includes taxes and insurance and still have a lower total housing cost than renting the same house. Interest rates are unbelievable and housing prices are way down, which equates to very affordable living. Add to this the fact that you get to write off the mortgage interest and every month you are chipping away at the principal balance of the loan and now you have an old school strategy for financial freedom in your retirement years. In 10, 15, or 20 years, how insignificant will a possible drop in the value of your house seem? It won’t even show up on your radar. And your mortgage payment will still be the same, comparable rents will be significantly higher and you will be well on your way to paying off your mortgage and finally getting to FREE living.
If you are knowledgeable enough to invest in real estate, I still believe real estate is a great investment tool, but that’s the wrong way to think about the place where your family will rest their head every night.
All you fence sitters waiting for the absolute bottom of your local market give me a call so we can dig into the merit of purchasing today. Take advantage of great rates and killer mortgages in Temecula, Murrieta and San Diego.