New Homebuying Strategies for a New Market

The real estate market is changing.

With appreciation rates in many areas slowing to a more normal pace, you'll likely find yourself unable to sell for an "automatic" $20,000 profit next year. So don't stumble into a new place. Be deliberate. Think in 3-D...

Dimension #1 - Affordability

Step away from the martini for a sec...

Cuz no matter how clearly you envision living out your 'Sex in the City' fantasy in a pretty, shiny new condo dripping in luxury, you DO NOT want to be in over your head when it comes to your mortgage payment.

Being house-poor is not sexy -- trust me on this.

Set your price range according to what size payment will be comfortable for your overall budget, even if a lender says you're pre-approved for more. And don't let anyone (including the granite countertops that'll be whispering your name) push you to buy outside your financial comfort zone.

Dimension #2 - Re-Sale Dynamics

You might get married ...divorced ...have a baby ...move "down south" ...or transfer to the London office.

And you will need to sell. The question you want to try to ask yourself now is "What will the market for my home be like at that time?"

Waves of new construction in redeveloping areas can be a mixed bag for your home's value. On the one hand, the prospect of having fewer vacant lots or dilapidated structures generally does good things for appreciation. On the other hand, all those newer homes being built may be your toughest competition when you sell.

Ideally, you want to buy a home with the knowledge that you'll need to improve it in ways that make it stand out from the pack during your ownership period. It helps if your floorplan and finishes are not identical to everything else on the market when you buy.

Dimension #3 - Lifestyle Fit

Do your parents visit often?
They may slow all that down if they have to climb three flights of stairs to do so. (which could be a good thing, I suppose...)

Known for your lavish dinner parties?
Make sure the dining area will accomodate the right table size. Will half your guests end up on folding chairs in the living room?

Bottom line: Choose well and your new place will let you live out most of your fantasies -- including the one about you not being broke!