I think I’ll wait until the market picks up.

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“I think ill wait until the market picks up.” Obviously a great idea because we never want to buy something and see it lose value the next day. The only problem with this thinking is that we do not know when the market will pick up or even what “pick up” means. Does pick up mean an increase of 5% from values year to year or does it mean prices are increasing 1% month to month? One of my greatest concerns with buyers is that many are thinking about waiting until there is a pick up in the market, but waiting until that magic moment when you purchase a home and the next week see increases in prices every month is not possible. After all we purchase homes for the long term, it’s not about timing the market, it’s time in the market that counts. Here is an example: Renter, waits until the market picks up and sees an increase of values at 5% year to year and does this for 3 years, meanwhile paying $2,535 a month in rent and insurance for a total of $95,835, accounting for a 5% rent increase yearly. In the end having a total net worth of 0.

A buyer on the other hand purchases a $650,000 home with a payment of $3,484 plus a tax benefit of $999 bring payments to $2,484. Add in the 5% increase of property values year to year and you now have a home worth $752,456. Not only did the buyer make money, but year to year comparisons to the renter is also much better. For 3 years you will pay $95,835 in rent and have nothing to show for. A buyer will pay $125,385 subtract $35,978 in tax benefits for a grand total of $89,408. Saving nearly $6,000 in payments while also making 5% in equity which totals $232,456. Even if home values do not increase at 5% yearly (the national average is 6.3% since 1968) you will still be saving money by not paying rent.

Again, it’s not about timing the market, it’s time in the market that will save and make you money.

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The Moxley Team   | September 28, 2006

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Moxley Team serves Pleasanton Home Buyers and Pleasanton Home Sellers. From Dublin Ranch Condos to Dublin Ranch Luxury Homes the Moxley Team of Alain Pinel in Pleasanton provides Home Buying Tools and Home Selling Tips. MoxleyTeam.com provides info from Pleasanton Home Sales to Dublin Ranch Developments, Dublin Ranch News and Foreclosures in Pleasanton and Short Sales in Dublin Ranch.