Discover Virginia


Is Real Estate Still The Road To Riches?

With home sales slowing down and condo pricesUp"  market.
slipping sellers all across the country seem
unable  to  get  their  asking  price.The 1st time buyer will normally start with a
one or small two bedroom house or condo with
Christopher Mayer, a Columbia Universitythe hope that price rises will allow then to
economics professor said recently "If you're"Move Up" to a bigger 3 bedroom home in a
expecting a short-term gain, you should bebetter area within a short period of time,
looking elsewhere," he had argued for manysay one to two years. Slower price rises or
years that land shortages and risinghigher interest rates will put the loan
populations would translate into ever-risingrepayments on a new larger home out of the
prices in the "superstar" cities like Newreach of the buyer and this leads to the
York  and  San  Francisco  and  LA.whole  market  getting  weaker.
With many of the real estate bulls now wavingThe Europeans have an interesting system in
the caution flag we have clearly reached theplace, credit scores have no bearing on the
time for a re-think on this subject. Beforeway they calculate your ability to repay the
we start going down the "Doom and Gloom" roadloan. Under the banking and home loan laws
it should be understood that owning your ownyou most provide proof of income, once this
home is still the corner stone of theis done they will offer you the chance to
"American Dream" and it will always be thatfinance up to 4 times your income. Most
way.programs will finance up to 90% of the loan
to value of the property this system seems to
What does it take to fuel that dream, homeensure a steady supply of 1st time buyers
prices are normally driven by 3 things. Thealong with regular increases in house prices
first is low interest rates, the second iswith  affordable  loans.
the willingness of home buyers to pay for
their idea of the American Dream and lastlyLA and New York are the so called "Super
the ability to attract 1st time buyers to theStar" markets and not really reflective of
market.the whole county, so your strategy will
largely depend on where you live. Local
Let us take a look at Los Angeles as a marketmarkets are affected by many forces like
place for home buyers, the average home sellsjobs, the new house market and inflation to
for 10 times the average salary. Whatever wayname but a few. Homeowners who hold on to
you look at it this is unsustainable, notheir homes for a number of years and pay
matter how creative the banks and lendersdown their debt do far better than those who
become 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 is the
enter the market it starts to affect "MoveNumber One Cardinal Sin for homeowners.



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