Raptor – all I can say is that having looked at buying a home in the last few years myself – most agents out there are idiots who all jumped on the real estate gravy train. Its kind of like the headhunters who got in during the .com boom of which most of them are no longer headhuntres because they had no clue of the difference between a DBA and a LAN administrator. There are some very good agents who have brains, but I’d spend some time asking people you view as brighter than yourself for recommendations – at least that’s what I do. I find that I have far more sophisticated cash flow models analyzing rent vs buy vs alternative investments than many financial planners much less real estate agents. Unless you find an incredibly good one, I would not look to them for “advice” on what is a good buy – they should be relied on for finding homes that you dictate are in your buyer profile – and then completing the transaction for you. Do your own homework and analysis – the internet is a beautiful thing and allows you to do all your own research and comp analysis.
Like everyone else has stated – you should not view your primary home as an investment – its a home you should want to live in for 5-10 years. Property historically has always appreciated over time, but how much time is the question and when you bought is the other. If you need the down payment amount for other things, or would rather invest it, then rent. Evaluate the opportunity cost. There are many cash flow studies out there – and if you need to “stretch”, then hold off on buying. What is your PITI + Debt as % of gross income? If it exceeds 28%, do you have enough cash to support your lifestyle? Invest your down payment and use those gains and additional savings to properly buy the right home at the right time for you- not to mention this market will have continued to correct. Go rent that house you dream of buying.
If however the amount you’d spend renting exceeds the amount of your monthly net payments (tax benefits), or is relatively on par, then buy the home – particularly if it will provide a stable environment for you to enrich your life.
To Shari who knocks people who rent – perhaps you need to build your own financial model of evaluating why people do indeed rent vs buy – over 30 years – and still come out on top of those who spent their hole lives paying a mortgage, and at the end of it, have less money than those who rented for the same period. Perhaps then you will have the credibility to write about this topic or knock renters with some actual facts.
