The Right Time to Invest in Property – Today or Tomorrow
There is nothing like owning a house of your own – it spells security, privacy and a feeling of independence. With the financial market in turmoil and a plunging real estate market it seems to be a right time to invest in a property today. But with the trend of plunging continuing a question arises about postponing the purchase for tomorrow. To find an answer one needs to know in brief something about the crisis, its causes and results.
Buying a house that is going to be a home is a big investment and should not be done hastily. The first thing is to decide whether one needs to buy a house right now. If not then it may be wiser to wait. But since prices are at an all time low perhaps it will be unwise to forego the opportunity. In that case the purchase will be an investment. Taking a lesson from the foreclosure crisis one should weigh the pros and cons about buying today when the banks are offering reckless discounts.
With the withdrawal of regulations the financial sector went wild and injected the market with sub-prime mortgages. Anybody with a pulse could get a loan and the result was that flushed with cash flow the housing market went booming and zooming with activity. Real estate prices began to swell. Speculators honed in and snapped up houses by the dozen. The inevitable happened and the bubble burst. Those who did not have the capacity to carry on with the mortgages did not do so. They defaulted. Banks foreclosed. Now the banks are sitting uncomfortably with not thousands but millions of unsold houses that are white elephants. The entire society is held hostage by these vacant houses while millions are seeking shelter.
Apparently it seems to be the best time to buy a house with the banks offering sometimes 50% discount. But can it really be regarded as discount? If the value of the house had been falsely increased by say 100% few years ago, a 50% discount means that it is still 50% above the real price level. It is better to buy the house when the market corrects itself and wait for further plunges – opine some experts.
A novice or a new nest builder should carefully test the waters before entering the market selling bank repossessed foreclosed houses. The banks have given a cosmetic face-lift to the houses but there may be deep cracks inside going to the roots with termites and moulds having already taken over the structure. The previous owners in frustration have often resorted to vandalism before leaving by inflicting the maximum possible damage. Even if all did not stoop so low, it is an undeniable fact that the previous owners were financially constrained and it is this led to them being foreclosed upon. As such there were in no financial condition to see to the maintenance of the house. Thus the price may be apparently cheap but one should not be surprised if hidden expenses pop up.
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