Several times over the past few years, I’ve asked myself whether I should take advantage of the lower prices for real estate, put my renting history to rest, and buy a house. I’ve brought up the topic several times on Consumerism Commentary, as well. Every time the news media comes out with another wave of reports of the real estate market dropping to historic lows, I think the bargains are here.
I haven’t purchased a house yet because I haven’t decided where I want to settle down. I’m not thrilled about locking myself into a long-term financial commitment until I’m pretty sure where I’d like to spend the next few decades of my life. As almost anyone who has tried to sell their home during the past few years during the real estate market’s fall, moving once you own a home is not an easy process.
Based on the Case-Shiller price index, real estate has now falling further from its peak than it did during the Great Depression. In that instance, real estate prices took 19 years to reach their previous highs. If today’s market echoes last century’s reality, housing prices won’t recover until 2025. Low prices are great for buying — but will they go lower, and if they do, will you need to sell while your house is worth less than the purchase price? These are points that I would need to consider before buying a house. They’re not the most important points, but bad timing could have a negative effect on a family’s personal finances. While you can’t predict the future and time the market, being aware of these issues can help prevent devastating loss.