Here's my situation. I am single, i have a stable job, no girlfriend, i don't drink or do drugs. I payed off my car. I barely have no bills. I rent a room in a house for only 300/month and i walk to work because its only 2 minutes away so i barely use my car. And my cell phone bill. Since i really have nothing to spend my money on i am saving about 1000$ /month Now im thinking of buying a house september 2009. Because i would like a bit more space. But i am happy with my current living situation. I am not even sure if i do need a house, it might bring me headaches and i have no stress right now. So I was thinking should i stay renting a room for maybe 4 more years while keep saving up or should i go ahead and start looking late 2009 The reason im asking is this because i want to buy a new computer which is going to cost me 2000$, if i dont im going to use it for my downpayment on a house. And my friend told me a house is a good investment. But is it a good idea for me? What advice would you give me?
Simply because of the lack of debt you're in, go treat yourself and get the computer, maybe a nice sound system to go with it. Then late next year or even 2010 start looking at somewhere to buy for the long term. You can spend all day listening to people telling you to get a house/flat and to have your sensible head on, but for aslong as you're not with anyone and have no real commitments why not treat yourself as much as you can?
I would save, if you're seriously making a good amount of money, why change a working formula? Houses aren't really going to go anywhere in 4 years. Prices may differ, but by that time you should have even more money saved up to afford something you truly like. I'd definitely wait, save, and treat myself to a few luxuries here and there.
I would spend those 4 years of cash on a deposit for said house, so they are more likely to give you a loan for said house.
Wait 3 - 6 months tops, no more, sellers are now at their worst financial times atm imo. One example is my parents, they have just made it. Times for us will now be better and by March we will be financially stable. We have a few properties on the market and if anyone gave us an offer in the last few months we would of have said yes, now we want the full asking price, and by next year we won't be interested in selling. See how things change? That's if you are buying, if you don't need too, then don't.
Hmm, well this is interesting. There are arguments for and against. Right now, interest rates are near rock bottom, real inflation is close to zero if not negative. Thus, it's a pretty bad time to hold money, especially in bank account. Saving is a bad idea. Then again, if house prices are low, then it would be a epic investment to buy a house. Though I'm not familiar with real estate in the US, so I'm not sure what the current situation is a buy or not. Certainly, if it follows the general economy, then the golden rule of finance, buy low sell high, applies here. For reference, Q1 2009 is predicted to be the bottom of the bear market. Maybe you could do some further research in this area? Do take into account that real estate prices will recover eventually, it's a question of when. Also, check out the mortgage rates. Securing one may be difficult, and you'll probably pay a premium for one these days, even if you have an excellent credit rating. However, I suspect long term rates will be lower than you expect due to the low interest rates. Thus, my conclusion is this: if you're nearly got the capital for a house, go for it. You'll likely make a tasty profit when the market recovers. Think of it as a 5+ year investment. However, if you're no where near the capital required, I would probably sit and wait for a year to see how the market reacts. However helpful the BT crowd are , I would still suggest you seek some professional advice on a large decision like this, buying a house is no joke.
I would say you have a year at least in the American market before you have to start thinking about buying a house because prices are rocketing, almost certainly longer. At the end of the day, a mortgage is going to be hard for you to get and it will be expensive. Conversely property is pretty damn cheap in the US at the minute afaik so that could easily level it out. It could either be an amazing time to get onto the housing market because eventually it will recover, and I suppose next year is a possibility for that. BUT, the US is up **** creek with no paddle at the moment so it's more likely there are another couple of years to wait, maybe more if the American budget doesn't stretch any futher to bail out the economy - which is probable. Either way it's going to be a gamble. One big downside to saving at the moment is you will find very few funds which are going to give you much for saving, very soon it's looking like keeping your money in cash under your bed could be safer than a bank. So on that front spending your money isn't the worst idea in the world. Plus you are free and single, this is probably the only time in your life when you are going to be able to have this sort of freedom. Have you thought about a classic sports car if that's your thing, or something along those lines? I realise you have your heart set on a PC but am just trying to think of some other ideas for you. I'd personally sit it out for a year. **** all will happen in the US in the next 3-6 months even though Major seems to think otherwise, his parents story is completely different to yours as they already have property and probably quite in an obscure financial situation to be recovering at this point in time - very very few people are doing this, and it really doesn't correlate with current trends. In short, wait a year and see how you are set then. Be VERY careful with your money especially if you are considering investing it. Spending will do you no harm providing your job is safe, and the US economy needs people to spend at the minute. Edit: Forgot to say, there are a couple of success stories of buying property up in the US at the minute, i think there is a chap on this forum that lives in South Africa that has managed to buy several properties and the long term is looking VERY good for him. You could well get the same thing if you are willing to bear the possibility of negative equity for the first 2 years of purchase. 10 years of sitting on a house you buy now will almost certainly get you a really nice profit.
It's a classic finance question of would you rather have £x now, or an average of £5x in 10 years? Patience is heavily rewarded in finance. Such is the power of compound interest. Also, ever considered your pension? I know for many of us it may early to think about pensions, but in 30 years, the UK will have an age pyramid just like Japan or Italy today, with many more elderly than youth. That means we're up shits creek, so an investment today may mean the difference between a comfortable retirement and living in less than ideal conditions for the latter stages of your life.
Cars have never been my thing. I just bought a brand new car 3 years ago and it pretty much just sits in the parking lot. I only use it once a week to go to my music lessons. And supermarket. I don't require to much stuff to be happy. As long as i have my guitar and a nice computer im happy. But right now i have a gutiar and slow computer. My job gives me a pension, and i also have Canadian bonds, and GIC investments, and RRSP's I'm really good with my money. I really want a house too, but im a single guy sometimes i wonder if i need a house yet. Since im pretty fine in a room for now. And all the talk with the economy sometimes scares me out of buying something as big as a house. So i was thinking computer now house more later or house in a year computer way later... Since i don't even have a bed or forks.... Thanks for all the replies !!! P.s. i forgot to mention im Canadian
I think of it like this, rent = money lost, house = money made. You are far better off with a house than rented property. They money you pay out on your mortgage will favour you in the long run when it's time to sell, or time to retire. If I could buy a house right now I would. Think about the rest of your life before you think about a few years entertainment with a computer. ^^ To quote dragontail you're pension is the most important thing you should ever consider; Without it, you will live hand-to-mouth for the rest of your old age, and that shouldn't be so. After working for "the man" for your 30+ years, you should be damn well entitled to a decent retirement, but unless you invest for it in some way this won't happen. A house is bloody good financial move. Here in Britain, thousands of people have lost their entire pensions because the people that are supposed to be looking after it have made unwise and risky investments. House prices rarely fluctuate, and you can choose more or less when to sell. Once you have you're foot on the ladder you can afford to expand as you're family denotes. Then, when your children move out and hopefully marry, you can shrink down and use that money earned to enjoy your free life. Things like this should never require a second thought. If you can afford it now, do it. It is never too early to plan your future. (multiple edits, tired and can't write for ****)
If you buy a house you'll be making a long-term investment. Right now, you're paying X-amount of dollars/month in rent, but you don't own anything in return. With a house, you'll be spending X-amount of dollars/month for the mortgage, but you're putting that money into the house. When it comes time to sell, if the conditions are right, you'll make money. On the other hand, if you don't need the space, and if you're happy where are now, there's no real need to invest in a house. Sometimes, when people upgrade from an apartment to a house, they only look at the difference in cost between the rent and the mortgage. What they fail to take into account is that a house requires a significant investment, both in money and time. Buying a house is more about responsibility than simple monetary investments. People who live in apartments don't have to maintain the yard, they usually don't have to fix the toilet, and if the roof is damaged in the storm, the apartment management has to deal with it. When you buy a house, all of things are now your responsibility. If you want someone else to mow the lawn, you have to pay for it. If you want a plumber to fix the toilet, you have to pay for it. If you want a contractor to fix the roof, you have to pay for it. If you don't want to pay someone else to do it, guess who becomes intimately familiar with the home improvement store? I love my house. Now that I have a family I'm happy for the space. My favorite thing about owning my own home is the privacy; I don't share a wall with anyone, and my yard belongs to me. The flip side is that a lot of my free time (and money) is now devoted to maintaining the house. -monkey
If you can actually afford the payments and still live comfortably, owning property (as compared to renting it) is generally a good investment. If you're looking at a $1250/mo mortgage payment when you're currently paying $300/mo rent and saving $1k/mo, that's probably not a great idea. I'm hardly an expert, but paying rent is always just throwing money away. But it's usually a hell of a lot less money wasted than having to foreclose on the house you can no longer afford. I'd also strongly look at terms of the mortgage if you go that route - you really don't want to be making minimum payments if you can avoid it, since you'll have almost no actual ownership of the house/property for several years as you'll only be paying off the interest (even an extra ten bucks a month could make a significant difference). Some mortgages had terms where you weren't allowed to pay extra per month to put money directly towards the property (!!!) but I believe that those terms have been made illegal as the result of the housing crisis, at least in America. IANAL, and you'd want to meet with one before signing anything
