The concept of location, location, location is important to many buyer’s when purchasing real estate. This is because for many buyers, a home is an investment. The concept in real estate is to buy the worst house, if the homeowner can get it below market price and in the best neighborhood; any renovations will increase property value.
Purchasing a home is the dream that many in America want and is a symbol of the American dream realized. Where you buy is important in regards to the value of the property long term. The buyer that purchases a home is considering many factors that make their property an asset, such as the building of equity with the property, the neighborhood stats on crimes and school ratings and the prices of other homes in the area. Many buyers purchase homes in different states because they move constantly due to a job. Consequently, they consider how the property would sell quicker based on their future plans.
2008 was a year that global housing bubble burst
The 2008 global meltdown that affected many countries and the United States. This affected many sectors in the economy; and caused the bubbles to burst and collapse such as the housing, banking and corporate sectors. Financial institutions were creating different mortgage products to sell to people that could not afford to purchase property. These mortgage products were sold to investment banks in bundles. These investment banks then recklessly sold these worthless notes to others in the form of mortgage backed scurities.
When homeowners started to default on their loans, lending companies started to close down, and at the same time, many of the mortgage products created had reset at extremely high interest rates which increased the mortgage payments on buyers. Homeowners then started to lose their homes, as Wall street investors which used 401(k) plans and pensions to purchase these worthless notes started to lose money. The banks and mortgage companies were losing money so quickly that they stopped lending to small businesses and individuals. Homes started to be foreclosed upon; and home values for all homeowners started to drop.
In one year, many Americans saw their 401(k)’s drop along with their home values, in addition to losing their jobs. The global meltdown has decimated many neighborhoods where homes were abandoned and foreclosed everywhere. In 2013, home prices have gone up a little, so purchasing in a better neighborhood would increase the home in value depending upon the location. An example is that city homes are more expensive than rural homes because of approximate close distance to available jobs and services.
Knowing the potential
Real estate is very expensive depending upon the different areas around the US; in NYC affordable housing is a big issue as the minimum amount spent on average in the city for a rental can range from 1,500 to 5,000. Space is a premium in large cities and so are specific neighborhoods. In NYC, it is unique because the city is divided into five boroughs which make up the city. The rents are lower in the outer boroughs since the distance is farther from Manhattan. Some of these outer boroughs are starting to revitalize certain areas that have been abandoned to create affordable housing for New Yorkers.
The Bronx is a great example of how the borough has had a construction boom in the recent years to bring back families and attract the middle class. There are many historic landmarks and architectural gems that are being revived in hopes of attracting middle class. These revitalized areas can be a gamble because if the homeowner invests in a home in the area, and there is no improvement in the neighborhood, it would be difficult to maintain value and find potential future buyers for the property.
The other side of the argument is that if the homeowner invests in a home in the revitalized area and the neighborhood is revitalized successfully than that home will increase in value. An example would be Brooklyn which has seen revitalized areas bring up home values in neighborhoods around the Brooklyn bridge.
In summary, home buyers must do research on the neighborhoods, cities and states that they plan to purchase a home. A great method to find information about neighborhoods is to visit the chamber of commerce website of the city or town the home buyer wants to move to. Zillow is a good tool to find out statistical and home values in the local area market.
Each town or city has a government web portal, there population statistics and demo-graphical information can be found through links to other agencies of that city or town. Home buying is an important investment, it provides a secure place to raise a family and it is an important vehicle for up incoming revitalized neighborhoods to grow and build communities. Knowing the potential and taking a chance to purchase a home in an area that is not desirable and which can become desirable in a few years; is a good long term purchase.