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Is Real Estate Still The Road To Riches?

With home sales slowing down and condoThe 1st time buyer will normally start
prices slipping sellers all across thewith a one or small two bedroom house or
country seem unable to get their askingcondo with the hope that price rises
price.will allow then to "Move Up" to a bigger
Christopher Mayer, a Columbia University3 bedroom home in a better area within a
economics professor said recently "Ifshort period of time, say one to two
you're expecting a short-term gain, youyears. Slower price rises or higher
should be looking elsewhere," he hadinterest rates will put the loan
argued for many years that landrepayments on a new larger home out of
shortages and rising populations wouldthe reach of the buyer and this leads to
translate into ever-rising prices in thethe whole market getting weaker.
"superstar" cities like New York and SanThe Europeans have an interesting system
Francisco and LA.in place, credit scores have no bearing
With many of the real estate bulls nowon the way they calculate your ability
waving the caution flag we have clearlyto repay the loan. Under the banking and
reached the time for a re-think on thishome loan laws you most provide proof of
subject. Before we start going down theincome, once this is done they will
"Doom and Gloom" road it should beoffer you the chance to finance up to 4
understood that owning your own home istimes your income. Most programs will
still the corner stone of the "Americanfinance up to 90% of the loan to value
Dream" and it will always be that way.of the property this system seems to
What does it take to fuel that dream,ensure a steady supply of 1st time
home prices are normally driven by 3buyers along with regular increases in
things. The first is low interest rates,house prices with affordable loans.
the second is the willingness of homeLA and New York are the so called "Super
buyers to pay for their idea of theStar" markets and not really reflective
American Dream and lastly the ability toof the whole county, so your strategy
attract 1st time buyers to the market.will largely depend on where you live.
Let us take a look at Los Angeles as aLocal markets are affected by many
market place for home buyers, theforces like jobs, the new house market
average home sells for 10 times theand inflation to name but a few.
average salary. Whatever way you look atHomeowners who hold on to their homes
it this is unsustainable, no matter howfor a number of years and pay down their
creative the banks and lenders becomedebt do far better than those who
with their new programs. As it becomesrefinance every two years taking out the
more difficult for the 1st time buyer toequity they have built up, this really
enter the market it starts to affectis the Number One Cardinal Sin for
"Move Up" market.homeowners.



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