As a Realtor I will tell you that just about any time is the right time to buy your first home. As an investor, I am happy to collect your rent. What is most important though is how you buy it. So is now the right time to buy your first home?
Before you tune out and say any time can't be the right time to buy a first home, let me give a little background. In 2004 I genuinely believed the California Real Estate Market was about to burst. I missed the call by two years because the big banks got together and figured out how to make it look like loaning people money that didn't have the income wasn't really that risky.
From 2004-2006 I would have told you that it is very hard to "buy right", and probably wouldn't have sold you anything. I sold my personal home and my investment properties at a substantial profit. The reality was none of my properties value went below what I originally paid for them, so I would have been petter off sticking to my original plan and holding the properties.
In that little nugget is the truth. Buying right is everything. So how do you know if you are buying right. First of all, you need to be able to afford the payments. Even if values drop and you can afford to stay, you will be alright. The mortgage crisis was fueled by people who over bought, banks that extended loans to people who where already over extended, and then it was accelerated by people who just wanted out of their loans because they could.
If the government said "tough luck, if you can afford it, it is yours" the dip might not have been as bad. At the same time though, they couldn't let people stay in their homes if they couldn't afford it. A very small percentage who were able to renegotiate the loans to a much lower value or interest rate were the only real winners. Everyone else got the shaft because the government wouldn't hold people accountable for buying homes they couldn't afford, nor did they really hold the banks accountable for the loans they should have never made.
So here you are today, pondering the question, "Is now the right time to buy your first home?"
And the answer of course is "Yes, if you buy right". Buying right isn't just buying a house you can afford, it means buying in a place you want to live. Buying right means buying in a place where you would be willing to spend the time and energy to make the house your home.
If you can get a deal, then you are even better off. Normally I favor older homes that need work in good areas. You might not want to do a lot of work though. If this is the case, then negotiating with a builder can be tough. Watch the options and compare prices from other contractors. Don't let the builder overprice your new home with upgrades.
Don't just listen to me, here is a very nice chart from my friend Michael Wright at United American: