Prices beyond your budget? Downsizing to a condo or co-op will be your best strategy.
As prices have escalated since the start of the Covid-19 pandemic in March 2020 and interest rates have increased ¼ of a point as of March 16, I have noticed more and more
individuals and families rethinking their decisions to consider purchasing a
home. Now I see greater potential gravitation toward considering townhome, hoa’s, condos and co-ops. I am not sure if this will be a trend that will continue as a mindset of buyers or not. I will be able to look back in the next 3-6 months to see if my prognostication is accurate or not. However, staying in a rental or even considering one, is still a mistake in my professional and expert opinion.
There are still a few reasons why and they are:
1.) If you earn $100,000 or more and your debt-to-income is in the 30
percentile or lower and you have credit in the $700+ range or even higher, you need
deductions that you are not currently receiving to reduce your taxable
income. Unless, however, you are socking away a substantial amount of money
into your retirement plan, but then purchasing is still a viable path to take.
However, if you are a day/night trader and are making a consistent
return on your money, then renting could be a better choice, but it all
depends on your individual financial situation.
2.) Consider how hot the current rental market is and what increases you
might face going forward and the impact on your wealth. You provide hard-earned dollars to pay your your landlord’s mortgage, taxes and potential profit, Or if the landlord’s mortgage is paid off, then you’re providing increased income that will be added to their current wealth as well as the write-offs and tax deductions that they will receive.
3.) Turn your lease into one that is fixed for 15-30 years, which is called a
mortgage. Become your own landlord and decide when and if you
want to move up to the next level of luxury or “dream home” as well
as keeping your monthly payments level and consistent as lease
payments will most definitely increase over the years. Greater
demand will occur and will fuel the rental market from those shut out from the opportunity for homeownership. This group will be resigned to becoming potential long- and short-term renters and tenants while they save enough to jump back into the purchasing mode.
4.) Many hedge funds, like Black Rock as well as Warren Buffett, who had
purchased 1,000 homes a few years later after the implosion of the
market in 2008, institutional investors and fix n’ flippers
have added to the challenge of regular “end user” buyers trying to
purchase their first primary residence. Therefore, this has reduced the housing
availability and has exacerbated the low housing inventory.
5.) The ability to create and grow roots in the community as well as
owning a single or multi-family home, townhome, Hoa, condo, coop
provides a healthy environment for children as well as adults by adding
to new potential long-term friendships, stability, and again forced
savings in future wealth creation.
Where our market is heading could be extremely treacherous. If you are paying anywhere from $1,800 or more in rent and have excellent income, credit and a low debt/income ratio, we can show you how you may be qualified to purchase, unless you have a better method and path to increase your wealth for the long run.
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Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3
Grace Ave Suite 180 in Great Neck. He has 40+ years of experience
in the Real Estate industry and has earned designations as a
Graduate of the Realtor Institute (G.R.I.) and also as a Certified
International Property Specialist (C.I.P.S). For a “FREE” 15 minute
consultation, a value analysis of your home, or to answer any of
your questions or concerns he can be reached by cell: (516) 647-
4289 or by email: [email protected] Just email or snail
mail (regular mail) him with your ideas or suggestions on future
columns with your name, email and cell number and he will call or
email you back.
