The parties I attend usually include a conversation about our local real estate. For the most part, area owners enjoy the subject even when their homes aren’t making them wealthy as in past years.
Since the 1960s, we have had five cycle changes, each bringing higher lows and higher highs to our property values. This is truly a wonderful place to live and own property.
As a Realtor, I talk with many people every day about their real estate options. I spoke with a friend whose daughter makes $100,000 a year and expects to have that job for many years to come. She is a prime candidate to buy in this buyer-friendly environment, but she tells her mom that she’s waiting to get married before she buys her dream home.
I have two questions for her: First, will you be able to afford your dream home if you don’t have a foothold now when prices and interest rates are low? Secondly, would you be better off to invest in an income property now that could cash flow now?
Since real estate has been an excellent inflation-fighting asset in the past, why not use it as a place holder for when the dream home is closer to a reality? Now that we know the circulation of currency has been increased tremendously with the TARP money from last year, we also know eventually we will have to pay for that infusion of cash.
What do you think will happen when the government begins raising the rate on FED funds to the banks? Our interest rates will go up and could go up rapidly. Now at 5 percent, buyers can lock in a low long-term rate, therefore controlling their costs for the future.
If my friend’s daughter doesn’t want to change her lifestyle now, she can still invest in real estate, thereby giving her more to trade later for her dream home.
The conversation of real estate is much more interesting when you have your own piece of the pie to talk about. When tax and interest deductions await, why not think outside the box? You could be a winner in the long run.
— Elaine Abercrombie, a broker with Abercrombie Fine Homes, is past president of the Santa Barbara Association of Realtors. She can be contacted at elaine@afhomes.net or at 805.450.0086.