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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2301 E University Drive, Mesa 85213, Eastbrook LT 101-186 203-288 329-398 445-512

  • $110,000
  • Bedrooms: 2, Baths: 1.5
  • Home size: 792
  • Lot size: 533
  • Year built: 1984
  • MLS #: 5885515

1611 W San Remo Street, Gilbert 85233, EL Dorado Lakes Golf Community Tract C

  • $247,000
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,698
  • Lot size: 6,247
  • Year built: 1996
  • MLS #: 5880649

7518 E Inverness Avenue, Mesa 85209, Desert Sands Golf & Country Club Unit 2

  • $122,850
  • Bedrooms: 2, Baths: 2
  • Home size: 1,120
  • Lot size: 6,177
  • Year built: 1970
  • MLS #: 5880111

532 E 7th Place, Mesa 85203, Fillmore Place

  • $275,000
  • Bedrooms: 5, Baths: 2.5
  • Home size: 2,685
  • Lot size: 16,882
  • Year built: 1966
  • MLS #: 5885137

358 E 10th Avenue, Mesa 85210, Esquire Terrace

  • $189,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,340
  • Lot size: 7,571
  • Year built: 1968
  • MLS #: 5876286

2776 W Santa Cruz Avenue, Queen Creek 85142, Village AT San Tan Heights Parcel 7

  • $198,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,766
  • Lot size: 5,146
  • Year built: 2002
  • MLS #: 5877632

5135 E Evergreen Street, Mesa 85205, Northpointe 1 Lot 1153-1268 1269-1272

  • $188,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,116
  • Lot size: 1,821
  • Year built: 1985
  • MLS #: 5881174

6001 E Southern Avenue, Mesa 85206, Parklinks AT Superstition Springs

  • $210,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,343
  • Lot size: 3,679
  • Year built: 1997
  • MLS #: 5877346

34756 N Peace Pipe Place, Queen Creek 85142, Santan Ranches Unit 3

  • $265,000
  • Bedrooms: 3, Baths: 1
  • Home size: 1,270
  • Lot size: 217,800
  • Year built: 1982
  • MLS #: 5811346

25207 S 195th Place, Queen Creek 85142, Private lot on county island

  • $225,000
  • Bedrooms: 4, Baths: 2
  • Home size: 2,128
  • Lot size: 36,960
  • Year built: 2001
  • MLS #: 5884871

814 E Oakland Street, Chandler 85225, Kingston Manor

  • $189,900
  • Bedrooms: 4, Baths: 2
  • Home size: 1,559
  • Lot size: 6,172
  • Year built: 1971
  • MLS #: 5865264

711 E Broadway Road, Mesa 85204, Lydia Allen Tract

  • $175,000
  • Bedrooms: 2, Baths: 1
  • Home size: 778
  • Lot size: 14,699
  • Year built: 1945
  • MLS #: 5884520

705 E Broadway Road, Mesa 85204, Lydia Allen Tract

  • $180,000
  • Bedrooms: 3, Baths: 1.5
  • Home size: 1,766
  • Lot size: 14,699
  • Year built: 1937
  • MLS #: 5884506

16640 E Stacey Road, Queen Creek 85142, 1 1/3 Acre

  • $299,900
  • Bedrooms: 2, Baths: 1
  • Home size: 1,565
  • Lot size: 59,067
  • Year built: 1996
  • MLS #: 5876052

9348 E Edgewood Avenue, Mesa 85208, Superstition Country 3

  • $118,600
  • Bedrooms: 2, Baths: 2
  • Home size: 980
  • Lot size: 13,133
  • Year built: 1980
  • MLS #: 5877543
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ARMLS Listing Data last updated 2/20/2019 7:37 AM MST.