A listener on KLOK asked me a question whether it is a good time to buy a home in Bay Area now? And what will happen if they move back to India after 2 years.
In my opinion, it is a very good time for buyers, especially first time home buyers, to buy a home. The interest rates are at historically all time low. The house prices have been coming down continuously over the past 3 to 4 years. We believe that house prices have reached the bottom and will start to creep upwards slowly. So it is a very good time to buy. Investors from all over the world are flocking to buy real estate in USA as they believe that US real estate values are very low and provide a safe investment. Purchasing and holding real estate for a long time is considered a very safe form of investment for many years. Plus home ownership provides additional benefits of stability and tax savings.
Now consider what can happen after 2 years. Many people plan ahead and hope that they will go back to India and settle there. The fact of the matter is that in many cases, such plans do not materialize. The plans change as circumstances change and many people stay in this country much longer, and some times never go back. Even if one goes back to India in 2 years does not mean that they should sell the house immediately. If the market conditions are good and it makes financial sense to sell the house, then one should sell it by all means. Otherwise, one can always rent out the property and manage it remotely. In todays age, it is very easy to manage property remotely. One can hire property management companies to look after the investment if necessary.
All investment properties are not equal. One has to select the investment homes carefully. A home in good neighborhood, good school district, and good condition is easy to rent and manage. If price is a limitation, then one should select compromise on the size but not on the quality. The other important thing to remember is the cash flow. One should only buy the home which has break even or only slightly negative cash flow. This allows one to hold on the property for a long time without breaking your bank.
Let us know, what do you think? We welcome your comments.
