Dena Land News A
M O NT H L Y N EW SL ET T E R B Y L I N DA LA N E- WH IT E – K EL LE R W IL LIA M S REA LT Y S E R VI N G M Y H O M ET O W N OF A LT A D E NA/ PA SA D E NA A ND O UT L Y I NG A R EA S
Is It Possible To Time The Market?
June/July 2008
Linda Lane-White “Singing” Realtor ® CA Lic #01091347 Notary Public In T un e W ith Y ou r N ee d s
445 S. Fair Oaks Avenue Pasadena, CA 91105 Phone: 626-786-1231 Fax: 626-296-1979 www.lindalanewhite.com
Home Office: 519 Alameda, Altadena, CA
Inside this issue: Timing The Market
1
Active Adults Corner
2
Recipe of the Month
2
8 Ways to Cut Vet Costs
2
For Sale and Sold
3
Ask An Expert
4
Ceedub Construction
4
Personal Message
4
Augusta Financial
(sponsor)
5
Recent Area Sales
5
Professional Organizer
5
June/July in Dena Land
6
Buy low and sell high— what a great concept and a great formula for accumulating wealth! The trouble is, how do you know when the high is high and the low is low? How do you know when is the right time to jump in and when to jump out? If you are listening to the media hype, now is a bad time to sell, but good time to buy. What if you need to sell before you buy? Well, trying to time the real estate market is a difficult, if not an impossible, proposition. The only formula that seems to truly work is investing in homeownership for the long term. According to the National Association of Realtors®, in 1998 the national median price of a singlef am ily home was $128,400. For this year the estimate is that the “national” median will be $213,700. This is a good reminder that while in a short term prices may rise and fall depending on many factors, in the long term they are almost certain to end up higher. How can one be sure? One of the main reasons for this is the demand. Mark Twain once said, “they are always making more people, but they ain’t making any more land.” And the U.S. Census Bureau seems to agree. According to their census PopClock (w ww.cen su s.gov/c gibin/popclock) the population of the U.S. increases by one person every 11
seconds. They estimate that our nation’s total population should reach 400 million in 2050, compared to today’s 304 million. And all these folks will need a place to live, thus driving the housing demand (and prices) higher. I believe that trying to time the market is a futile
endeavor, especially if you already own a home. If the market is hot, and the prices are high, you will be selling your home for a high price, but you will be buying your next one also during the same time of high prices. If the market is bad, and you are selling your home at a loss, you will likely buy your next home during the same bad market, so you will pay less for it. In either case, it evens out. But in the long run you should come out on top. And you will benefit from home ownership in more ways than one. One of the great financial benefits of home ownership is Uncle Sam’s favorable tax treatment. By being able to write off your mortgage
interest payments on your tax returns, you save hundreds of dollars in taxes annually compared to someone who rents. Also, when you sell your home, the profit (capital gains) is tax-free in many instances. Need I mention that you also have more stable housing costs than a renter? Plus owning a home is a form of forced savings - by making monthly payments you are able to build your equity over time. A renter only builds his landlord’s equity. Still many people sit on the fences, trying to recognize the right moment, the perfect opportunity, to plunge in and buy a home. They try to time the market. Is it worth the wait? In addition to the financial benefits, there are other benefits of owning a home. The freedom. The ability to personalize your living space to suit your needs. Having more space. Not having to deal with a landlord or share walls with noisy neighbors. Actually knowing your neighbors as opposed to having them change every few months. And the economy changes over time. Since 1983 we had two relatively long periods of economic expansion, and only short periods of recession in between. That represents an average up-and-down cycle of ten years. Even if you could predict the future, and the economic peaks and valleys, would you want to wait ten years to buy a home? You could miss out on many benefits of home ownership by waiting, and still end up paying a higher price in the end.