Money

Should we buy a house in 2012?

A lot of people are likely asking this question. The current interest rates are at their lowest in decades. The housing market appears to be bottoming out. The latest S&P/Case-Shiller reports indicate that home prices has gone down nationally by 33% from its highs during the bubble. It’s a buyer’s market and a good buying opportunity if you have the resources.

Prior to having our son, my husband and I discussed possibly retiring in our current home. We agreed that we will consider moving to a better area if we have kids. We currently live in a modest neighborhood that is relatively safe with the elementary school only a block away. However, the school is not exceptional. The test scores and school performance are lacking. I would like for our son to attend a much better school.

We like our house. It has fruit trees we enjoy. The layout and size are perfect for our lifestyle. Something that we cannot take with us. Being our first home, it also has a lot of sentimental value. More importantly, our mortgage and property tax is relatively low since we bought it prior to the real estate bubble. We are also on track to pay it off in several years. Paying off our mortgage would realize our dream of living totally debt free.

On the other hand, if we buy a new house, we can rent the current one. This can be a good passive income stream and someone else can pay for the mortgage. The down side are the risks of renting. There are plenty of horror stories on rental properties.

Pros
– Better neighborhood and school
– Low mortgage interest rates
– Possible good value on housing

Cons
– Increase in debt
– Higher property taxes
– Will take longer for us to be debt free

This is a bit of a tricky situation. The upside of moving to a better neighborhood needs to outweight the financial compromises. Our son is only 17 months old so we have a bit of time to decide before he starts school. Are you on the same boat? What would you do? What is more important to you?

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Discussion

5 thoughts on “Should we buy a house in 2012?

  1. I’m not thinking of buying right now, which is why I suggest that you do. Last time I bought our closing was the Thursday before the housing market collapsed on a Friday. Since I’m not buying, you’re probably safe doing it!

    Good luck.

    Posted by Elyse | February 27, 2012, 6:15 pm
  2. We are in the same boat. I am forty-three and my husband just turned fifty-one. When we bought our home we were not concerned with the schools in our area, because we did not have any children living in our home. Fast forward and we have a two year old, who will start school in a very short three years. The downside for us is we did buy our current home before the bubble collapsed, so we are upside down by quite a lot. The condo we are in is nice and we feel at home here, but the surrounding areas seem to be going downhill quickly and the school system is the pits. It is such a great time to buy, but I am not sure we could rent our home for the amount of our mortgage plus padding in case something like the AC breaks down. Good luck in whatever you choose. šŸ™‚

    Posted by KLynn | February 18, 2012, 3:31 pm

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