Today in Colorado Springs, many of our local communities are seeing home prices that are even higher than what we observed during the 2007 housing crisis.
That period of our market may have been difficult, but it also taught us some important lessons. Today I’d like to share four of the most important things we learned:
1. Don’t buy a home you can’t afford. Many people during, and just prior to, the housing crisis in 2007 bought properties beyond their budget out of fear. They worried that, if they didn’t make a move, they would be priced out of the market and lose out on ever having the opportunity to purchase a home again. In retrospect, we know that this way of thinking is fatally flawed. So don’t buy into the hype. If you cannot afford a home now, it doesn’t mean you never will be.
2. Don’t always believe your home will go up in value. A lot of people in our market falsely assume that home prices will always increase. Yet this is not the case. The reality is that prices fluctuate. Real estate purchases are best thought of as a long-term commitment.
3. Make sure you have adequate reserves. During the housing crisis, homeowners without sufficient savings found themselves in an extremely difficult position. Experts say that you should have at least six months’ worth of reserves so that you can sustain your lifestyle in the event of major unforeseen expenses.
4. Submit a big, healthy down payment when buying. Many people today are putting down as little as possible, but this is not the ideal way to proceed. If a downturn in prices pushes homeowners like these to sell, they are sure to encounter financial hardship as a result. Submitting the largest down payment you can afford will make your home more affordable on a monthly basis and will make it easier to hold onto your property during turbulent times.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.