One of the major questions facing homebuyers in San Diego and nationwide in the new year: Is now the time to jump into the housing market or should I hold off for a better deal? There are crosscurrents in the economy that have understandably made buyers cautious. Buying a home continues to be one of the most important decisions most of us will ever make, so it is a choice that requires thoughtful discussion with your financial adviser, your family and other trusted individuals. For the thousands of San Diegans weighing the pros and cons of owning vs. renting, or upsizing or downsizing from their present home, here are 10 factors to consider:
1. No bubble trouble: There is no reason to sit on the sidelines waiting for a dramatic drop in price. While double-digit appreciation may no longer be the norm in San Diego and the Inland Empire, the market is not crashing and average sales prices have remained flat. Buyers sitting on the fence will miss out on the long-term appreciation gains and the tax advantages of homeownership.
2. The bidding wars are over: Homes are realistically priced to move. While there is no need to rush into a purchase, when you do find that dream house, this is a good time to act so you don't miss out on it.
3. An investment you can live with: Unlike stocks, homes have utility value. You have to live somewhere, so make your investment work for you by building equity while you benefit from the tax breaks.
4. The Fed has taken a breather: Interest rates remain at near-historical lows and that equates to good buying power. The Federal Reserve has continued to pause its interest rate hikes, so now is a good time to make your move.
5. Mortgage lenders want your business: The mortgage business has slowed along with housing sales. Most lenders are offering a veritable supermarket of loan types and have plenty of money to lend. One of them is sure to have a payment structure that fits your needs.
6. Pre-approvals put you firmly in the driver's seat: It's still a good idea to get pre-approved for a mortgage and lock in your interest rate before you go home shopping. You'll have more negotiating power with the seller and the ability to speed the closing process.
7. Cash is on the table: Sellers, eager to entertain your offer, are more than likely to make a deal that includes working with your lender to buy down your interest rate, cover the closing costs so you can put more money down or offer more exotic incentives such as vacation trips or cars. Some sellers also may consider prepaying a year's worth of homeowners' association dues to make your initial monthly payment more affordable.
8. Makeovers are all the rage: Facing a competitive market, sellers are sprucing up their properties so buyers don't need a lot of cash for repairs, renovations and upgrades. New landscaping, new appliances and new paint make the perfect housewarming gift from the seller. And buyers save money for furnishings and other move-in costs.
9. Lots of choices, lots of options: A greater selection of homes currently on the market means a greater chance of finding the one that fits your lifestyle.
10. There's no time like the present: The most important fact for a buyer is to get in the game. Housing is a medium-term to long-term investment. During the past two decades, housing in San Diego has appreciated an average of 8 percent per year. How many stock portfolios or savings accounts can make the same claim?
Hoffman is president and COO of Coldwell Banker Residential Brokerage for San Diego and the Inland Empire.