Yes, I know it will go down further (market overreaction combined with the tough economic times).
However, I’m not buying from an investment point of view – I’m buying it because I’m tired of renting. I held off this long because the numbers simply didn’t make sense. I probably could hold off another year and maximize my gain (though I doubt interest rates will stay as low, so from a payment standpoint, it’d probably just be break-even for me).
Now I’m buying a 2200ft new construction townhome in an area where it would rent for at least $1/sf – even assuming rents go further down. Based on what I’m paying for it, my price/rent ratio is now under 15 – significantly below if you include the builder’s incentives on the townhome, which is in-line with long term price/rent trends. At this point, it now makes some sense to buy, and I will be in a 2200 ft2 townhome for only a few hundred dollars more a month than my current 2br/2ba 1200 ft2 apartment.
I’ll lose money short term, but I’ll enjoy where I’m living much more – and since the numbers are now in line with long term trends, I’m no longer concerned that I’m making a significant financial mistake (as I would have been buying the same townhome 2 years ago for 550-600K, when it would have nearly doubled my apartment payment as well as being unlikely to return to it’s sales price for over a decade).
