Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here Monday mornings.
My wife and I recently found out some good friends of ours are returning to Atlanta after spending five years in San Diego. They have a pretty good sense of where they want to live, but with a new job and six-month-old twins, our friends need at least a year to get their bearings before they buy a home and commit to the five-year time horizon I discussed in my blog post Is It Time to Buy a House Again?
The housing data still hasn’t improved since that post. Pending home sales for the month of April were down 11.6 percent, and nationally, home prices have officially entered into double dip territory. The slight rise in prices we saw in early 2010 has been erased, and we’ve touched on fresh lows. In the first quarter of 2011 home prices fell 4.2 percent, and they’re down 5.1 percent compared to April 2010. Prices on average have shrunk back to 2002 levels.
Despite all of this bad news, I still think if you are prepared to buy a home and live there for at least five years, this isn’t a bad time to buy. Of course there are lots of variables to consider when deciding whether you can/should commit to five-plus years in a home. These include:
Children — both current and future. Does this house have enough room for your children? After having two rowdy boys (whose favorite game is run-and-tackle) I can attest to needing a little space. And most importantly, how are the local schools?
Career — Do you see your income rising over the next few years? By how much? Is there a chance you might have to relocate?
Our friends from the West coast won’t know the answer to many of these questions for at least a year. For that reason, renting is the smart thing to do. Here’s why it might make sense for you, too:
Rental Search Tip – Knock on doors. Well, maybe not literally. But it’s something I’ve done in my neighborhood for the past month as I’ve walked past houses listed as FSBOs – “For Sale By Owner.” In most cases, the owners I spoke to were very open to discussing the possibility of renting to our friends from California. So when you are in the market for a rental home, don’t be afraid to ask about homes that are listed for sale. You just might be able to strike a deal.
– By Wes Moss, for Atlanta Bargain Hunter