The April 2012 issue of Smart Money has an article on housing which states how home prices are down a third from their 2006 peak (according to Standard&Poor’s/Case-Schiller 20-City Housing Index) and rents have been rising year over year except for 2009-2010.
Economists often look at a measure of 15 times your annual rent compared to the purchase price of a home to determine if the time is right to buy a home (the purchase price being lower than the rental computation). Here in the New York Metro area with higher average prices the formula might be harder to justify. However if you are confident with your job and financial situation, now is the time to consider buying a home.
We just closed on a sale of a 4 bedroom home where the couple is carrying a $417,000 mortgage at a rate below 4%. Their monthly principle and interest was $2000 and they had been previously paying $1900 a month in rent. Including taxes and insurance they would still have made a good financial decision considering the tax benefits of owning and eventual appreciation.
According to Linda Bonarelli, President of Multiple Listing Service of Long Island, “For the past four months MLSLI has reported that the number of monthly contracted sales has been higher than the year before. This is an indication that the real estate market is in recovery and we are optimistic that this trend will continue as we approach the traditional spring sales season.”