Think Through Strategy Before Considering Home Purchase | REALTOR.com® Blogs

Think Through Strategy Before Considering Home Purchase | REALTOR.com® Blogs

Is it really the right time to buy your next home? Chicago Realtor® Marie Leaner shares her own recent experience with considering whether it’s time to buy or not.

“…Deciding whether it’s really the right time to buy your next home means taking a deeper look at where you are in your life and where you want to be over the next seven to 10 years. A big mistake homebuyers made over the last decade was to think about homeownership as a liquid financial investment.

But buying a home isn’t the same thing as day trading stocks, even though it felt like that for a while. Real estate is, by its very nature, illiquid. It’s been historically difficult to unload a home quickly without taking a huge financial loss.

Two years after my husband and I bought our first home (a vintage co-op along Chicago’s lakefront), I wanted to sell. I decided I wanted to plant a garden, something not necessarily compatible with living seven stories in the air. But by the time we had made that decision, our type of home had fallen out of favor. No one wanted to live in a vintage co-op. Everyone wanted to live in a single family house with a garden. So we watched our home grow stale on the market for about six or nine months, before pulling it off.

Two years later, we put the home back on the market and sold it six months later, feeling lucky to get an offer. Back then, in 1994, six months was a long time to be on the market, and while we hadn’t found a place to buy, we decided just to sell and rent so we’d be in better shape when we finally found the right property.

The early 1990s seem like a long time ago, but it was at the beginning of the upswing that culminated in the frenzied irrational exuberance of the housing bubble. And as every school kid knows, the bigger the bubble, the more bubble gum you get all over your face.

Our housing market is still gummed up, but that doesn’t mean there aren’t amazing, once-in-a-generation opportunities to buy property. I was in Atlanta last week and someone asked me if I was planning on buying a condo or two in Midtown. There are condos selling for $30,000 to $50,000 that originally (three to five years ago) sold for $150,000 to $200,000 with granite countertops, great views, indoor parking, the works. I supposed I could buy something. I have the cash and available credit. Heck, at these prices, some of my colleagues are charging their real estate purchases on credit cards.

The question I have to answer is what are my long-term intentions with this property? What’s the business strategy? If the purchase is an investment property, what is the expected rental income and what’s my exit strategy? And how much time and energy do I have to put into this investment? You really have to think through any real estate purchase you make these days, and not let yourself fall in love with a property. Good judgment can’t be overruled by emotion.

And, don’t forget to pull out your crystal ball, because you should plan on a seven- to 10-year timeline, just in case. And in some cities, even that might not be long enough to see the housing market get all the gum off its face…”

Click here to read more blog posts by Marie Leaner.

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