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  3. With housing prices down significantly in many parts of the country and inte

With housing prices down significantly in many parts of the country and inte

游客2024-08-16  64
问题     With housing prices down significantly in many parts of the country and interest rates low, it may be an affordable time for twentysomethings to buy that first home.
    In some instances, the price of owning can be comparable to renting in the long run. But a lot of uncertainty still remains about the housing market and the economy—making the decision to buy more complicated.
    Nicole Stivers, a 24-year-old who works in public relations in Contra Costa County, Calif., purchased her first home with her fiance in February. They were able to capitalize on what she calls a "perfect storm"—job stability, a desire to settle down, a surge in home foreclosures and the $8,000 tax credit for first-time buyers. Still, the move was not without its concerns. "Would we be able to afford this if we both lost our jobs? Do we have enough for a down payment? Do I have enough for moving? It’s really nerve-racking when you’re first doing it," says Ms. Stivers.
    Here are some questions to consider when deciding if buying or renting is the right choice for you.
    How long do you plan to stay in your home? "There are high transaction costs associated with buying and selling a house," says Dean Baker, co-director at the Center for Economic and Policy Research, so home buyers should plan to stay put for at least four to five years.
    The reasoning? The costs for buying and then selling a home—which can include a real-estate agent’s fee, a transfer fee, closing costs, and inspector and surveyor fees—could add up to about 10% of the sale price, or roughly 1.5 years worth of rent. "If you average that over 10 years, it is not that big a deal," says Mr. Baker, "But if you average it over, say two years, you’re paying an awful lot of money to own a house for a short period of time."
    Can you handle the monthly expense? While a monthly mortgage payment may be comparable in some cases to a monthly rent, there are other expenses to consider. To get a feel for the financial burden you’ll be taking on—and to see if you can handle it—"practice" making payments. "Each month, set aside projected mortgage and property-tax payments, maintenance costs, utilities and any other home-related expenses into a separate savings account," says Gary Smola, a certified financial planner with financial-educational firm Financial Finesse.
    What’s the price-to-rent ratio? Home prices have come down significantly in some areas of the country, but "nobody knows what tomorrow’s going to bring in the housing market," says Daniel Morris, a certified public accountant in San Jose, Calif.
    To determine whether it makes more financial sense to buy or rent in your area, compare home sales prices with the cost of renting a similar place. Divide the price of the home by the total cost of rent for one year. "If the result is more than 20, I’d be very concerned that the price of the home might fall more," says Mr. Baker, "and you should consider waiting to buy." "If it’s 15 or below," he says, "you’re probably reasonably safe with prices holding steady or growing."
    What is your job and relationship status? Twentysomethings are still getting a grasp on their futures and a constantly changing lifestyle might require the flexibility of renting. "But if your career stability is strong, you are comfortable doing what you’re doing and you are committed in some form to your lifestyle," Mr. Morris says, buying a home becomes a more attractive option.
Directions: Decide whether the following statements are True or False. [br] According to Gary Smola, the experience of a mock monthly payment is a good way to feel the financial burden.
选项 A、TURE
B、FALSE
答案 A
解析
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