As the year draws to a close Northern Virginia buyers are still asking the same questions as they were earlier in the year:
“Should I buy now?”
If I had my Magic 8 Ball it would be so much easier to answer that question. It seems the only way to still answer the question is still with “It Depends.”
Let me see if I can explain this in relation to Northern Virginia. In Northern Virginia there are good deals in different neighborhoods and different price points. If you are buyer who is planning on staying in your home for five years or more then this may be a good time to buy.
“But has the market reached the bottom yet?”
No one has the answer to this question. We can all say hindsight is 20-20. There are plenty of people who didn’t buy a home in early 2000 and then found from 2002-2006 that they couldn’t afford to buy a home. Now prices are lower, sellers are willing to negotiate on closing costs and interest rates on loans are competitive. Buyers who have looked at their finances and done the numbers are starting to buy their new homes.
While other buyers are waiting for the market to find a “bottom” the investors are quietly starting to buy properties and will be the landlords for those who decide to wait for another twelve months to eighteen months. The biggest uncertainty is not whether homes will appreciate, even in our slow markets in the 1980’s and 1990’s homes appreciated, but what will happen with interest rates.
Think about the trade off. If the price goes down another 10% but interest rates on mortgages go up to 8% where will you be? The last piece of the puzzle is the tax advantages of homeownership. No one will argue that they don’t exist. How they will apply to you depends on your circumstances and your income but they should be considered as part of your decision process.
“When Shouldn’t I Buy?”
Northern Virginia has a lot of relocation traffic, with military and private sector, moving every three years. If you know you are going to leave in that time frame then it might not be a good time to buy. You might have enough appreciation in your home to break even but when you figure in state taxes and transfer fees you may find yourself on the short side of the deal. There are some nice homes for rent in the area and most landlord will be glad to cut you a deal for a longer lease.
“So What’s My Next Step”
If you aren’t working with an agent give me a call. We will meet and talk about your situation and what you are looking for. Then if it makes sense for you to buy then we will get in touch with a lender. They will talk to you about your finances and what you are qualified for. We will also make sure that you understand the difference between what you are qualified for and what makes sense for your lifestyle. They are not always the same! Then let’s take a look at some homes in areas that meet your criteria. If it makes sense then let’s negotiate a good deal to get you into your new home and let the landlord find someone else who is going to wait and see!