Expert: Sue Bernstein - 7/24/2005

Question



Hi,

I am in the process of negotiations with a seller of a 2 bed, 1 bath, 752 sq. ft home in Carmichael, just next to Sacramento. It's in beautiful area, on Kenneth Ave. and sits on a lot of around 1/8 acre. It could be mine for $292,000. It is small and needs little work, but could easily be fixed up.

There are so many questions behind this decision.

I have read so much about a possible bubble, but on the other hand I am afraid that if I don't buy now, I will be left FAR behind and unable to afford a house in six months or a year from now.

I am afraid this same house will be going for around $333,000 in a neighborhood like this.

I am currently renting and it feels like I am throwing money away. I have around $150,000 saved in the bank that is not growing in mutual funds right now, so I'd like to form an investment with that money too. A monthly mortgage of over $1900 would be too exspensive for me now, and maybe a year from now too. That's why this house makes great sense.

I was hoping for some advice on which way you feel the market will fluctuate and if this is a great opportunity to get in now?

I see a huge jump between this home and the ones going for $350,000. Obviously I would like to wait a year til I can afford that house, but will those ones be going for $400,000 by then?

Thanks for your help!

Answer
Dear Jimmy,

The only thing I can tell you for sure is that no one knows the future.  Markets fluctuate so we know at some point the market will slow but when.....who knows?
Too many people in the past have put off buying and now can't get into the market.  You need a roof over your head and at the same time have the ability to build equity and get an excellent write off.  If the market slows or drops just hang on to the house (you will still have a roof over your head and will still have the write-off)until the slower market passes and we will once again find ourselves in a booming market. We just can't know when either of those markets will happen until they are on top of us.
I hope this helps and good luck.

Sue Bernstein
www.SueBernstein.com