Buying Real Estate the Smart Way in a Tight Economy

Ok, so as mentioned in my previous blog, we are due for another recession. Every 5 years, a recession occurs. We haven’t had a recession in 7.5 years. Yikes! So it’s time to tighten up the proverbial expenditure belt. And you might be thinking, “Well, crud, I wanted to finally buy a house this year!”

NEWS FLASH: The #1 reason to buy a house is NOT, “Oh, it’s not a recession right now — Let’s buy a house!”

Wait– I shouldn’t NOT buy a house during an almost-recession?

There are actually some very good reasons to buy a house right now.

Reason #1 Interest rates are still really, really low. Even in the fours, they’re still historically low. I mean, they may not be this low again when they start to rise up to normal rates. Keep that in mind, and take advantage of that as soon as you can.

Reason #2 Phoenix home prices are still really affordable. If you look at the median income versus the median home price, they match up pretty well.

Now that I’ve captured your interest and made you realize that now may be an excellent time to buy a home, here are some tips on how to buy SMART:

This is a hawk watching his budget like, well- A hawk.

Smart Home Buying Tip #1 WATCH YOUR BUDGET LIKE A HAWK. Ahhh! I know it’s not a sexy idea to live within your budget, but it sure does make you feel good at the end of the month when you’ve got a few extra dollars to put away *cue the womp-womp’s and yay’s!* I’ve worked with a number
of buyers over the years that wanted to buy a house, but had a budget to stick to. Sometimes it was really challenging to find them a house that would meet their needs within that budget. Sure, they had to give that perfect, dream home mentality (e.g. pool, 3-car garage, helicopter landing pad — the works). But they ended up in a great home that they really loved with a payment that’s very manageable. Experts say you should spend 30% or less of your take home pay on your housing expenses. So if you can stay within that budget, you’re gonna sleep a lot better at night.

Smart Home Buying Tip #2  RIGHT-SIZE YOUR HOUSE. Ok, I know that moving sucks. Nobody wants to move, but it’s impossible to think of everything you’re going to need in a house the rest of your life. Things change over time, so think of it in terms of a 5-7 year window. If you do need to move, you’re probably going to have enough equity to be able to cash out of your house and move to the next one that’s going to meet your needs for that time. It’s way less stressful than trying to think of everything that’s
ever going to happen in your life all in one house. And good for you if you do end up staying in the same house for the rest of your life.

Smart Home Buying Tip #3  LOCATION, LOCATION, LOCATION. It’s not just a cliche. It is like one of the most important things when choosing a home. And when you’re talking about it in terms of a recessionary period, where there’s a chance that things are going to slow down, you want to pick a home that is less likely to be impacted by that. Back in the Great Recession, when house prices were tanking, there was a clear distinction between houses in the boonies and houses in town and the more popular areas. Houses in the boonies took a lot faster and deeper dive during the recession, and took a longer time to recover than those that were in town that maintained some of their values. Yes, you might be able to get a bigger house if you move out to the sticks, but people like living close to things. They like living close to shopping, their jobs, and their schools. They just do. Nobody wants to drive 20 minutes to 1.5 hours just to get a gallon of milk or visit the ER. It’s just gets old really, really fast. Plus, when you see a neighborhood that’s economically sound and conveniently located, that’s probably going to be a better buy than buying a gigantic house in an area where there are zero conveniences around.

Chip and Joanna Gaines of HGTV’s “Fixer Upper.”

Kid, their names are Chip and Joanna Gaines, but- Ok, whatever. We can’t even see your eyes.

Smart Home Buying Tip #4  BEWARE THE LURE OF THE FIXER-UPPER. Now, a lot of people think to themselves, “I’m into Sweat Equity (‘Sweaquity’ for short), I can fix up up any house!” I have had a lot of conversations with buyers who say, we can remove a wall here, gut a kitchen over there, add a room up there. All those things sound awesome — on TV. In reality, it takes a lot more time, patience, and money than you ever planned on investing in your life (3 months to 10 years, sometimes). So unless you’re a professional, or a very focused fixer/flipper-type person, it usually doesn’t go quite the way you might think. If you’re interested in doing something like a sweat equity type of deal, be realistic about what you can really accommodate, given your lifestyle, habits, and budget. And remember, in a slowing economy, the budget might be a little bit constricted, and so it might be harder to get these types of projects completely finished.

Smart Home Buying Tip #5  PLAN TO PAY OFF YOUR HOME. When you’re thinking about buying a home, think about the idea of paying it off. Now, I just said you’re probably not going to stay there 30 years. You’re probably going to move in 5-7 years, but when you move, take the equity out of this house, and put it into the next house. Always increase that equity gain over time. The idea being that eventually you’ll have a paid off home, and you won’t have a house payment at all. That’s really recession proof. Building equity in the home is one of the main reasons why homeowners historically in this country have more wealth than renters. Paying a mortgage is like a forced savings program because it’s money you’re going to spend anyways. And it’s compounded by the fact that the value of your home is going to go up, historically over time. So it’s a great way to build a little nest egg.

Don’t be afraid right now to buy a home. There are really a lot of good reasons to do it, as long as it makes sense for your particular situation.

If you want to talk more about it, contact me and let’s chat!

Kristin LaVanway

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1201 W Tyson Street, Chandler 85224, Camelot Estates

  • $230,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,384
  • Lot size: 7,353
  • Year built: 1972
  • MLS #: 6002619

244 N Hawes Road, Mesa 85207, Meets & Bounds

  • $185,000
  • Bedrooms: 2, Baths: 3
  • Home size: 1,309
  • Lot size: 8,148
  • Year built: 1996
  • MLS #: 6005785

6036 W Sun Dance Drive, Queen Creek 85142, Santan Ranches Unit 3

  • $299,995
  • Bedrooms: 2, Baths: 2
  • Home size: 1,465
  • Lot size: 149,410
  • Year built: 1986
  • MLS #: 6005662

2401 W Southern Avenue, Tempe 85282, The Meadows

  • $15,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,248
  • Lot size: 4,000
  • Year built: 1974
  • MLS #: 6003010

950 S Valencia Avenue, Mesa 85202, Pace East Townhouses

  • $179,900
  • Bedrooms: 3, Baths: 1.5
  • Home size: 1,320
  • Lot size: 1,603
  • Year built: 1974
  • MLS #: 5994939

1714 W 7th Avenue, Mesa 85202, Alma Ests 4 Lots 241-274, 302-318

  • $175,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,295
  • Lot size: 6,334
  • Year built: 1960
  • MLS #: 6003565

2 W Fairmont Drive, Tempe 85282, NU Vista 6

  • $242,000
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,670
  • Lot size: 7,762
  • Year built: 1961
  • MLS #: 6003592

543 S 97th Place, Mesa 85208, Golden Crest Terrace

  • $160,000
  • Bedrooms: 4, Baths: 2
  • Home size: 1,441
  • Lot size: 13,125
  • Year built: 1979
  • MLS #: 6003369

1424 S Bonarden Lane, Tempe 85281, Jen Tilly Terrace Lots 19-29 /TR A/

  • $169,900
  • Bedrooms: 1, Baths: 1
  • Home size: 960
  • Lot size: 4,781
  • Year built: 1950
  • MLS #: 5989308

1112 N Harold Street, Tempe 85281, North Tempe

  • $279,000
  • Bedrooms: 3, Baths: 1.5
  • Home size: 1,514
  • Lot size: 7,906
  • Year built: 1950
  • MLS #: 6001491

1444 E Flossmoor Avenue, Mesa 85204, Mcafee Place Unit NO 1

  • $239,900
  • Bedrooms: 5, Baths: 2
  • Home size: 1,679
  • Lot size: 8,764
  • Year built: 1974
  • MLS #: 6001342

8695 W Sun Dance Drive, Queen Creek 85142, Santan Ranches Unit 4

  • $270,000
  • Bedrooms: 4, Baths: 2
  • Home size: 1,400
  • Lot size: 145,055
  • Year built: 1974
  • MLS #: 5822843

103 S 58th Street, Mesa 85206, East Mesa

  • $140,000
  • Bedrooms: 2, Baths: 1
  • Home size: 810
  • Lot size: 7,199
  • Year built: 1948
  • MLS #: 6003063

2864 W Allens Peak Drive, Queen Creek 85142, Village AT San Tan Heights Parcel 6

  • $220,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,766
  • Lot size: 5,611
  • Year built: 2004
  • MLS #: 5999612

1765 W 4th Place, Mesa 85201, Mesa Vista Amd Lots 136-149, 158-197

  • $229,500
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,532
  • Lot size: 7,449
  • Year built: 1957
  • MLS #: 5972346
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ARMLS Listing Data last updated 11/16/2019 5:08 PM MST.