WHY YOU SHOULDN'T WAIT TO GET INTO THE PROPERTY MARKET
- Written by Melanie Toye, August 16, 2014
When buying your first home, it is easy to get swept away with the idea that your first home will be your dream home.
Take this for an example:
Property is one of those investments that could have you achieve $100,000 in profit over three years. If you had an extra $100K in your property, you could use the equity to renovate and create your dream home. Using the current property and land.
Or you could take that $100K and use it as a down payment on a bigger dream property.
When you first start out in the housing market, it is hard work trying to save $10K to $20K. So you can imagine how long it would take to save $100K. Therefore it is important, to jump into the market place, get an affordable mortgage and an easy to maintain property, for your first property purchase.
This way, you have the opportunity for the property to build equity, rather than you trying to still enter the market, if you saved an extra $10K a year later. Because in a year later, property prices may have risen. And not just by $10K, but possibly $60K.
Take this for an example:
If average homes were $400K and now those same properties are worth $60K more. Because you didn't enter the market, you not only lost out on that potential equity growth, but it is now even harder to find a property, with your expectations at that $460K home, which you can only afford to pay $400K for.
Of course, it is not just jumping into the market place you need to consider. But if you jump into an already high priced market, you need to be able to sell at a high price time. And in this case, this could leave you stuck in the property longer than you originally wanted to be there for.
Real estate, isn't easy to create a buying and selling plan. The market place changes all the time. There is some rhythm to it, but it is dependent on a multitude of factors. Including unemployment levels, interest rates and the general vibe, if it is safe to enter into a mortgage at that precise time.
What do you do?
Talk to people.
Everyone. People who own a mortgage, real estate agents, mortgage managers. Everyone has their own 'learning lesson' story to share. And if you pick up their mistakes, you will be less likely to make them yourself. Not only this, but you receive a wealth of information. Visit the local stores, cafe, and newsagents and ask them what they think of the area. The will be honest with you.
Are there new developments in the pipeline that could build the growth in suburbs area in the future and in turn boost home prices up? Follow the suburbs local social media pages for the latest news on the area.
Nobody knows when the property market will drop at a particular moment. Yet, when low interest rates stabilise and you can see properties are starting to sell again. You know the market place is starting to improve.
If nothing is moving and everyone is trying to sell to get out of their mortgages, because they can no longer afford the higher interest rates they didn't budget for. Then, it may be a great time to find a bargain.
And once the market starts to rise. It can rise very quickly and if you miss out, it could take some time before it gets back to a low place where the first home you had in mind, is once again affordable.
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