I couldn’t agree with LaMoneyGuy more. I’m in the situation – for the first time in my adult life – where I’m in a position to buy rather than rent. I came into an inheritance a few weeks ago, and the money is already ‘burning a hole in my pocket’ as my old grannie used to say.
Hole-burning or not, I’m still not going to take the housebuying plunge until early 2007 at the earliest.
I’m in LA – where house prices over the last 5 years have meant that my husband and I – while making wages in the top 25 percentile – cannot afford to buy. We’ve been lucky in our rentals, and are now renting a lovely 2b/2b for 2000pcm.
Which, for that kind of money, we would be lucky to buy someone’s converted garage in Culver City…and we don’t have the hassle of maintenance, property taxes, closing costs etc, etc. Until the cost of buying comes down further, we are happy to pay a fraction of someone elses mortgage, with none of the problems.
Sure, the rent will go up, but only by about 4% per year. Which is far from the kinds of increases some homeowners are going to see in their ARMs over the next year or two.
And, no matter how they spin it, prices will come down, or at least stop going up.
Sorry to all those who get caught out by this, but with inventory rising (even for SFHs in LA) and DOM increasing , something has to give.
LA is more expensive to buy in than London(my home town), which always seems ridiculous to me, as there really is no land left at all in London, whereas in LA…
Why not save some money?
Americans save less money than anyone else in the Western World.
Put the money you would put down on a house into a tax-free interest account (like the HSBC one mentioned in LaMoneyGuy’s post…where, incedintally, my money is going until I can figure out what to do with it) and pay off both your Student Loans? Keep on putting the balance between renting and buying away in an account for a year or two, and wonder at the miracle of Compound Interest..
Build up some readies for the considerable expenses you will incurr when buying.
If you’re seriously thinking about a mortgage, then you will do yourselves a huge favour by not having prior debt of any kind. If you have a mortgage and credit card, car payments, student loans etc.. then its going to be really tough to pull off.
Anyway, I’m one to talk! Up until my Mom died and left me all her money I never had more than 10K in the bank at any one time. No matter how tempting it is to go out and buy!buy!buy! I’m going to save!save!save instead.
I hope your spouse can sit on his hands for a few more months until things get better 🙂
