By Tali Wee
Although the national housing marketplace is predominately a seller’s market, many aspiring homeowners are taking the plunge into ownership. Why? Monthly mortgages are incredibly low compared to median rent prices, due to low mortgage rates and rising rents. The potential monthly savings of owning combined with a long-term investment are making many people consider buying. Inventory is still tight in most markets, requiring buyers to complete their due diligence rapidly to get the best deals. Otherwise, you could end up with buyer’s remorse on one of the largest purchases of your lifetime. Here are some tips to narrow your search and feel confident in your purchase.
A sought-after location can skyrocket the price of even the most unattractive homes. Most buyers see the potential in the, “worst house on the best block,” but only if they are saving enough on the price to undergo renovations and profit at resale. Otherwise, you may end up spending as much on initial costs plus the remodel. Focus on location but think about the amount of time and money you’re willing to apply toward renovations.
Look at School Ratings
Even if you don’t have kids, school ratings are highly important. You may choose to raise your future kids in the neighborhood and certainly a quality school district will increase your home value for resale. Typically, higher school ratings indicate a more affluent neighborhood which draws families and inspires safe communities.
Analyze Long-Term Value
Your neighborhood might be popular one minute, and then completely irrelevant the next. If you’re concerned about home values in your desired neighborhood dipping during the next 10 to 15 years, check out the home value history of the area.
Take the Gold Coast neighborhood in Chicago as an example. Homes on the Gold Coast have a median value of slightly over $300k. Although that seems high, the median value has actually dropped 5.4 percent in the past year. Keep projections in mind, too. Even though homes values in Chicago’s Gold Coast declined significantly, they are only expected to drop 0.3 percent within the next year. Now might be a better time to buy since values could level out or start rising again. Plus, the Gold Coast is positioned right next to Lake Michigan. Proximity to the water and a central downtown location usually indicates strong, withstanding home values.
Consider Taxes and Fees
Popular locations also come with higher property taxes, since land is pricier. Usually, mortgage estimates include four factors into projected monthly costs: principal, interest, property taxes and insurance. Unfortunately, condo fees are also a reality for many high-rise residents. Homeowner’s Association (HOA) fees can cost as much as monthly mortgages. Usually older buildings require more upkeep and buildings with unparalleled amenities charge higher dues. Be cautious of the extra costs of homeownership before committing to buy.
If you’ve determined you’re ready to buy, be sure you complete all of your research to better your changes for a strong return on investment when it comes time to sell.
Tali Wee is a Marketing Content Specialist at Zillow.com. She writes about personal finances, mortgages, and home improvements for the Zillow Blog and other Zillow partners.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.
Tips for Buyers to Narrow Their Home Searches
By Tali Wee