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
480-282-7464
kristin@hereinphoenix.com

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2300 W Vineyard Road Tempe 85282, Knoell Gardens Amd

$230,000
Bedrooms: 3
Baths: 2
Sqft: 1,358
MLS: #6037912
Broker: My Home Group Real Estate
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311 W Laguna Drive Tempe 85282, Laguna Estates Replat

$264,900
Bedrooms: 3
Baths: 1.75
Sqft: 1,352
MLS: #6039692
Broker: Superlative Realty
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210 S Dakota Street Chandler 85225, Chandler Block I Mcr 9-2

$169,000
Bedrooms: 2
Baths: 1
Sqft: 744
MLS: #6039860
Broker: Keller Williams Integrity First
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5104 S Stanley Place Tempe 85282, Park Premiere Townhouses 1

$205,000
Bedrooms: 3
Baths: 2.5
Sqft: 1,452
MLS: #6039754
Broker: Berkshire Hathaway HomeServices Arizona Properties
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232 S Horne -- Mesa 85204, NO Hoa

$147,900
Bedrooms: 3
Baths: 1
Sqft: 848
MLS: #6034635
Broker: HomeSmart
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108 N 88th Place Mesa 85207, EL Cortez Mobile Home Ranchos 2

$62,000
Bedrooms: 3
Baths: 2
Sqft: 1,100
MLS: #6017736
Broker: American Allstar Realty
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1813 W 3rd Place Mesa 85201, Evans Park

$180,000
Bedrooms: 3
Baths: 1
Sqft: 1,050
MLS: #6038976
Broker: Waldenwest Realty
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830 S Dobson Road 37 Mesa 85202, Skyview Mesa Unit One Amended

$129,999
Bedrooms: 2
Baths: 1
Sqft: 784
MLS: #6038824
Broker: Desert Fairways Realty, LLC
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151 E Broadway Road 301 Tempe 85282, Broadway Terrace

$139,900
Bedrooms: 1
Baths: 1
Sqft: 775
MLS: #6028375
Broker: Rachael Richards Realty
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457 S Grand -- Mesa 85210, Stewart Add TO Mesa Ext

$119,000
Bedrooms: 3
Baths: 1
Sqft: 1,428
MLS: #6036182
Broker: Gentry Real Estate
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6036 W Sun Dance Drive Queen Creek 85142, Santan Ranches Unit 3

$299,995
Bedrooms: 2
Baths: 2
Sqft: 1,465
MLS: #6005662
Broker: HomeSmart
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1162 W Tulane Drive Tempe 85283, Wood Park Village Lot 1-314 & TR A-C

$219,900
Bedrooms: 3
Baths: 2
Sqft: 1,172
MLS: #6036837
Broker: Tierra Bella Realty
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2149 N Higley Road Mesa 85215, Apache Wells Mobile Park 4A

$159,900
Bedrooms: 3
Baths: 2
Sqft: 1,537
MLS: #6037792
Broker: Long Realty Partners
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1507 E Dunbar Drive Tempe 85282, Park Riviera South 2 Townhouses

$221,700
Bedrooms: 2
Baths: 2
Sqft: 1,320
MLS: #6026349
Broker: HomeSmart Lifestyles
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2220 W Fremont Drive Tempe 85282, Knoell Garden Villas 1 Amd

$150,000
Bedrooms: 2
Baths: 1
Sqft: 928
MLS: #6037903
Broker: My Home Group Real Estate
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ARMLS Listing Data last updated 2/21/2020 7:37 PM MST.