- The Washington Times - Friday, July 31, 2009

Q. I read with interest your article about the family moving from Arlington to Charleston. They had found a desirable house a year before their move, and you advised them to purchase the property.

With all due respect, I disagree with your advice. Real estate has not hit bottom yet. If they take your advice, they will be purchasing a property that will be worth less a year from now. Moreover, they will have to absorb the cost of carrying two homes for one year. Please rescind your advice.

A. Sorry, but I disagree. I personally spoke with these folks at length and my advice to purchase the property stands. Let me list several reasons why.

These folks are purchasing for reasons other than an investment. This is the home that they will, in all probability, live in for the next 20 or 25 years.

They had spent more than six months looking at dozens of homes. They like the home in question far more than any house they had already seen.

Their income and assets are sufficient to carry both homes indefinitely. Buying the house now does not put them in a dangerous financial situation.

While I tend to be very cautious about the real estate market, and certainly would not be surprised if, indeed, real estate values are lower in a year from now, I don’t share your sense of certainty. It is quite possible that the property in question will hold its value during the next 12 months.

Regardless of the slow real estate market, there is no guarantee that the house will still be on the market in 12 months. In fact, it probably will sell to someone else.

These folks could have waited several months and purchased a home closer to their relocation date, but there is no guarantee that a house that they like as much will come on the market. Their decision was not impetuous. After searching for six months, they found a house that perfectly suited their needs.

The extra cost to carry two homes for a year should be factored into the numbers. The purchasers need to understand that the extra cost for the early purchase should be added to the purchase price, as should closing costs and other transactional fees, creating the “acquisition cost” of the property. If this number is unacceptable, they should reconsider.

Real estate is overwhelmingly likely to appreciate in value during the long term. If these folks love this house, they ought to buy it if they can afford it. In this case, quality of life is a bigger issue than trying to time the market.

Henry Savage is president of PMC Mortgage in Alexandria. Reach him by e-mail at [email protected]

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