Imagine you’d been keeping your eye on a desirable neighbourhood over the years. You had hoped that one day you could buy a home there. But then you saw prices creeping up — to a point where they became unaffordable.
“Oh well,” you’d thought. “I guess we won’t be moving there!”
That scenario is familiar to many homeowners. In fact, you too may have been keeping your eye on a neighbourhood you’d love to get into but have decided it’s become too expensive.
If that’s so, it might be worth taking a second look.
The real estate market changes. One year an area might be a red-hot seller’s market with prices soaring. The next year, things may have cooled, and prices stabilized.
That means the desirable neighbourhood you’ve been coveting might, today, be more affordable than you think. Prices might have become more reasonable. There might be more inventory (more homes for sale), giving you, the buyer, a competitive edge.
And don’t forget that your own property may have gone up in value, perhaps considerably. That means the money you make from selling your home may make buying in the desirable neighbourhood doable.
It’s something to think about!
So, if you’re dreaming of getting into a particular neighbourhood, don’t make assumptions about affordability. At least, not yet. Find out the current state of the market. You might be delighted to learn that the “un” has been dropped from the previously unaffordable for that area.
But what about buying the cheapest house in the best neighbourhood?
Some buyers have been advised that “if you’re looking to buy, check out the cheapest house in the best neighborhood”, but is there any wisdom to this question? In all earnest, the answer is no!
Grounded in our love for a bargain, buying the cheapest home in the nice neighborhood you couldn’t otherwise afford could be perceived as good deal, and indeed, having access to short-term goals and amenities in richer neighborhoods - like beautiful parks and excellent schools - can outweigh the long-term growth of the value of your home. But you could find that the cheap house you bought could be quite old or rundown, and in a few years time you may need some expensive renos. Or your utilities and property taxes could become expensive as the rich neighbourhood raises in market value.
So, is there a better way to get a good home in a good area?
In short, yes there is!
Look for lower-priced neighborhoods adjacent to the expensive ones. As prices rise in those neighbourhoods, higher quality coffee shops and stores will start to move into the more affordable areas.
In these shoulder areas, you could find some really fixer-uppers at a bargain price that wouldn’t cost the earth to buy and would leave you capital to get the renos done, so with a little investment, you could be much closer to your dream location in a few years time.
The cheapest house in the best neighborhood isn’t always the way to go. Instead, buy a less expensive house in a good or older neighborhood close to your ideal areas.
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