Top Five Reasons You Should Buy a Home In Redondo Beach NOWDoes this sound familiar?
You've been renting for 7+ years and have recently had your rent raised. A few years ago your roommate moved out and now your fiance has moved in. Between the two of you, you certainly have enough income to justify a purchase but the down payment would cut into your savings. And with property taxes and other expenses of home ownership you may have to cut back on some travel or fine dining.
But you know that once you write that rent check, the money is gone forever and your accountant keeps telling you at tax time that a write off would lower the amount of taxes you pay.
You've gone to a few open houses but are concerned about the economy and whether or not we are in a housing bubble. So, like a lot of other potential home buyers you are eyeing the market more carefully and weighing the pros and cons.
Here's the top five reasons to buy now.
1. Interest Rates are Still Close to Record Lows
We've all been hearing for quite a while that interest rates will go up. And they will. If not in the very short term certainly over the next 12-18 months. And once it is apparent to the general public that rates are on the rise there will be a rush of buyers entering the market creating greater competition for available listings.
2. Rents Are Forecast to Continue to Increase
If you haven't had your rent raised recently it is coming. Or your landlord may decide to sell the property you are in and you will have to move and be entering a very competitive rental market.
3. The Money You Pay for Rent is Gone Forever
Let's say you are paying $2,500 a month, which is fairly nominal in the South Bay. Over 3 years you've given your landlord almost $100K that you will never see again. On the other hand, when you make a mortgage payment, part of that goes to pay down your principle building your equity in the home beyond your initial down payment. Think of it as forced saving.
4. You (Most Likely) Get a Tax Break
With the disclaimer that you have to check with your CPA, most likely you will be able to deduct the interest on your mortgage and your property tax from your income taxes. This can save you real money and for many people may reduce their marginal tax rate.
5. Redondo Beach Home Prices Are Currently Undervalued and Will Appreciate
While Redondo Beach is not inexpensive by any stretch of the imagination, compared to other coastal LA County locations, it is under priced. Compare the price of any property in North or South Redondo Beach to a comparable property at an equal distance from the ocean anywhere else and Redondo is lower priced. Period.
And with improvements to Redondo Beach that are in the planning process, it will become even more desirable going forward. Specifically at some point the power plant comes down and whatever replaces it will not be the eyesore and pollutant it has been. Whether this is a park, condos, mixed use or smaller industrial use it will not be as tall and that alone will increase values to the immediate east and south. Depending on the final disposition, there is a small chance that the power lines running up to Prospect Ave can come down as well. Taken together those may be a game changer.
Reasons Not to Buy a Home Now
To be fair there are a few valid reasons to rent and not buy.
The primary one is that you do not expect to be in the area for more than 2-3 years. Even with reasonable price appreciation your transaction costs may outweigh the short term benefits.
Another reason might be that you need more time to get your financial house in order before you buy a house. For example you had a short sale or foreclosure that you need more time to get past or a career change or other factors that affect your credit profile today but will not be factors a year or 2 from now.