Is now a good time to buy a house in Burlington, VT?

Question

We are moving to work at Burlington, VT for at least 3-5 years. Looking at the rent market, we start to think about buying a starter home there since the price to rent is really not that cheaper than the mortgage payment. However, some people are saying house price will keep dropping while others tell us the market won't change much in Burlington. Any suggestions, ideas??

Answer 1

With that time frame, this is a tough call.  I usually say if you are planning to be somewhere more than 3-5 years buy, but for less rent.  If its exactly 3-5 years I guess you are right on the line.  Anyhow, its very hard to say what home prices will do.  I think they are likely to keep falling nationwide, for awhile, but no clue what they will do in Burlington, Vt.  So, here are some pluses and minuses:

Buying Pluses:

-Guaranteed to have a place and not need to move (assuming you pay the mortgage)

-No annoying landlords to deal with

-Get a break on your taxes, interest deductible

-$7500 tax break if you are a first time homebuyer and new housing bill passes - see link here http://www.nytimes.com/2008/07/25/busine...

-can put a nail in the wall, paint the rooms, do whatever you want, nobody to tell you otherwise

-Hedge against inflation

-Make money if prices go up

-With fixed rate mortgage, monthly expense won't change that much over time

Pluses Renting:

-Probably cheaper (but you said maybe not in this area - research this carefully)

-Lose money if prices go down.

-Won't pay many 1000's in closing costs to buy and sell place

-More flexible, can leave or move more easily.

Really thats all I can think of.  Anyhow the big plus is the possible $7500 tax credit (if that bill passes), but bear in mind you will pay alot of money when you buy and sell the home (3% of sales price to buy, like 9% to sell) and this is a huge cost.  If you have to pay this and prices go down you will take a bath, but its just a risk you take if you choose to buy.

Best luck.