Home Loans and the price of your home 2012

Home Loans and the price of your home 2012

Buying a home includes making so many decisions in so many different areas of expertise it is no surprise it is a daunting task for the vast majority of us. You must decide where to buy? How much to pay, how large, which bank? What interest rate? Is it a good investment and ah, yes, you must like the idea of living in it also. A pretty big decision with way too many variable for the average blog.

Well, I’m afraid we can’t simplify it too much for you. Except with this advice, don’t invest in homes or houses, they are a ludicrously volatile sector which is best left to professionals. If you have money to invest, invest it in a medium risk stock fund and let time and compound interest do its job for the next 20 years. Buy a house; because you want to live in it, then it will always have value to you no matter what the nuts at Wall Street do to the economy.
Having said that, there is no reason not to make sure the home you buy is as good an investment as you can. In fact there is every reason to do so, for most people their homes is their largest investment and most expensive material possession.

A good way to see how good an investment your home is, is to look into the future and see how much it will be worth in say… three years. I can see you smiling, or rolling your eyes and cringing in pain. If only we could look into the future and see with detail how much our house will be worth or the stock price of any given company for that matter, making money would be easy. We can’t obviously give a detailed prediction of how things will look tomorrow never mind three years from tomorrow.
However, BusinessWeek has done its best to provide a likely prediction of the prices of homes in 2012. How can that be done? Well even though it is practically impossible to predict the price of homes, just like it is impossible to predict the exact location and speed of an electron or who will be the most valuable player in the NBA, you can provide an educated guess based on past trades and current conditions.

What has to be understood first though is that there is not an average American, French or Indian house price in predictions. That is an artificial factor that does not take into account one of the most important forces in Real Estate, location. The price of your property will strongly depend on where it is located. The above mentioned study by Business Week acknowledges this fact and provides predictions for various different locations in America to make the prediction more realistically and locally adapted. For instance if you are buying a house in California, which is currently experiencing Real Estate freefall it is going to fare far worse than if you buy a house in Alaska which enjoys a much more stable economy based on oil, tourism and military bases.
So if you are planning to make the most important financial investment of your life you are probably well advised to have a look at how your end of the country is doing and if prices are dropping are rising, it is a question of not only how much your house and home loan is worth now but how much it will cost in 3 years.