ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Should I Buy a House Now?

Updated on January 11, 2013

The Current Housing Situation in Light of the Mortgage Bubble

In today's housing market, many people got burned. Inflated home values caused by cashing out home equity loans and greedy Wall Street banks giving loans to people who could not pay them back under good circumstances led to a housing bubble. This condition caused many people to be underwater on their mortgage by owing more than the house was worth.

In addition, many people lost their jobs and fall into the yet to find work or underemployed categories. Many of those severely underwater just walked away from their mortgages. Many of those who lost their jobs also lost their ability to pay their monthly mortgage payment. This situation hurt the credit of those who suffered from the housing bubble. In addition, banks have foreclosed on many properties, leading to depressed housing values. If you put all of this together, many Americans are afraid to buy a house.


When Should You Buy a House?

In light of the current mortgage mess, the question then becomes, "Should you buy a house?" The answer depends upon your current economic situation. If you are unemployed, it's probably not the best idea to buy a house unless you have a large chunk of cash stashed in a buried sock in your parent's crawl space. If you are employed 30 hours a week making minimum wage, it's probably not a good idea to buy a house at this time.

Buying a house is a good idea if you are gainfully employed and the cost of buying a house is less than what you are paying for rent. Rent goes up just about every year. A fixed-rate mortgage is just that, fixed, unless you initiate a refinance. That 2-bedroom apartment that costs $750 today could very well cost well over $1,000 in ten years with inflation. The $750 mortgage on a 3-bedroom, 2-bath house in a rural area will still cost about $750 in ten years (although insurance and taxes can vary over time, the mortgage will remain constant).

The money paid out in rent is gone. It goes to the pockets of the landlord. If the landlord owns the property outright, this is money in his/her bank account free and clear, less applicable taxes and insurance. This is why some real estate investors are among the wealthiest members of American society.

On the other hand, the money that you pay out in a mortgage helps your lender, but only in terms of interest. If you pay $100,000 for a house, it is likely to maintain that value or even rise if taken care of. When you go to retire and sell the family house for a smaller home, you will get whatever the buyer pays. If the house sells for $150,000 after 20 years and you own it free and clear, the vast majority of the $150,000 goes into your pocket. When leaving a rental, you get nothing.

Now Is the Time to Buy

Some people may feel that it's a bad time to buy a house because of the economic uncertainty. Actually, it's probably more likely that right now could be the best opportunity to buy a house that will be available for some time. Here are a couple of really good reasons why it might be time to buy.

  • Interest rates are at a record low. Fixed-rate mortgages are going for well below 4% right now. In the late '70s, people were happy with double-digit mortgage rates. They have been hovering around 3.5% for months. You can literally save thousands, if not tens of thousands, of dollars over the life of a loan with such a low rate.
  • Houses are on sale. Back when the housing market was on fire, people were trying to upgrade to bigger houses that they could not afford when they lost their jobs. Many of those houses are now either foreclosed or their owners are selling for quite a bit less than they did five years ago. Prices have not gone up to pre-crash levels. Therefore, houses are on sale. Investors like to buy low and sell high. This might be the best environment for housing.
  • Buying can save hundreds per month over renting and you actually have equity that you can sell at a later date and get some, if not most of your investment back.
  • Tax breaks are another good reason to buy. There is a mortgage tax credit that allows you to deduct the cost of mortgage interest from your income. This can cut your tax bill at the end of the year, and renters don't get this benefit.

While there are a few good reasons to buy now, there are some things to remember when going to buy. Here are a couple.

  • After the crash, banks are not taking liar loans. In other words, you actually have to have the income that you say you have. You will also be more likely to need a significant down payment. This was not the case during the housing boom.
  • Do not buy in a really depressed area. Some cities are dying and their tax base is drying up. It is not likely that you will benefit by buying in these areas. Check the overall market in a neighborhood and find some comps to see what a fair price is for a property.
  • While it seems that the worst of the housing bubble is over, things could always take another nosedive. It's important to remember this and weigh your options.
  • If you are only planning to be in an area for a short time, it might be better to rent, rather than pay thousands in closing costs and broker fees twice--once when you buy and once when you sell. Also, it is possible that you would be stuck with the house for a few months, which could wind up doubling your housing expenses.

It is best to think these things through and weigh your options. If in doubt, check with a financial adviser who will be able to speak to your specific situations.

Buying a House?

Do you think right now is a good time to buy a house?

See results

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)