Expert: liznarr - 12/1/2009

Question
We are considering buying a home to keep for 4-5 years in the Milwaukee, area. Is this a foolish time to buy for a short term hold?

What economic indicators will tell us when the right time to buy is? We want to dump it quickly in 4-5 years and want to "CYA" and don't care about making a bundle (if the market wakes up anytime soon) in appreciated equity.

Thank you.

Answer
Hi Gern,

You didn’t say whether this would be a principal residence or investment property for you.  I will assume this would be a home you would live in and occupy as your principal residence.

I’m not familiar with the Milwaukee area, but if it is a buyer’s market there – as it is in many areas of the country right now – my opinion is that it would NOT be a foolish time to buy for a holding time of 4-5 years.  

If you buy now – even at a good price—you need to be able to sell within your time frame down the road.  Unemployment rates in your area could affect resale, depending on the price range of the house you might purchase.  If a large percentage of a community is unemployed, this could affect a sale for you later.  Check with local Realtors in your area and get statistics from government offices on unemployment rates.  Again, 4-5 years down the road is a while off, and many things could change in that time, including unemployment rates.

History always repeats itself, and while no one can accurately predict “when” this market will turn around, I believe everyone is hoping for good movement in the next couple years.

The bottom line would be to look for a home in a good location with good schools, in good condition, and in an area or subdivision that is not likely to go “downhill” in the next several years.  

Last, but not least, if you can purchase below market value, this is always preferred.  Remember, too, that there are other benefits of home ownership such as deductible interest and taxes which could possibly help lower your taxes.

I hope the above is helpful.  Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth