Mon Jan 21st, 2008 at 11:01:40 AM EST
My girlfiend and I have noticed some pretty good deals on real estate lately, but I was wondering whether this is a good time to buy.
We live in Cincinnati, OH. We've been looking at some apartments which are downtown. We've got limited income, but Cincinnati is one of the few major cities where you can buy a condo for less than 100,000.00 right in downtown. Even better, now you can buy one for less than that, maybe 90,000 or less. Downtown Cincinnati is an area that has long been somewhat depressed, but which has recently begun a revival, which I predict will really take off if plans to build a streetcar system are carried out.
Cincinnati never got a big boom out of the real-estate market bubble, but it is experiencing somewhat of a bust. One big advantage in buying a condo right now is that at a decent interest rate (less than 6.0 percent), purchasing the condo would be considerably less expensive than renting.
But I am wondering about some things. In the short term, it seems real estate prices might even further, along with interest rates. But if the other shoe falls in the financial crisis, no matter how low the interests rates, it is possible that it may be very difficult to borrow money even for the most credit-worthy buyer.
And in the longer term, if inflation continues its upward tick, interests rates would eventually have to follow. If we get hyper-inflation, then we might have cheap real estate with very bad financial terms.
So what is the rational thing to do: buy now, or wait a few months (assume that it is a good idea for me to live with my girlfriend in the first place)?