Buyers Beware In Hot Housing Markets (Video)

by: EconMatters

We discuss economic data relevant to the overall economy which the Housing Market relies upon for support, checking in on the JOLTS report, MBA Mortgage Applications, PPI and CPI, along with Consumer Sentiment, and concluding with some Housing Bubble Talk.

It is better to rent in a hot housing market than buy to preserve your credit rating. The strategy of walking away from your mortgage if the housing market corrects significantly in your local area, remember real estate is local in many cases, really damages your credit history and score. This black mark will be on your record for at least seven years before being able to fully restore your credit score potential. These days credit scores that are the highest quality provide lower borrowing rates, employers use them for making hiring decisions whether explicit or not, and availability and financing future growth ventures all rely on a healthy credit rating.

It is better to rent in the short term and buy a house in a down real estate market, it makes quality of life sense in a balanced housing market in many cases, and can be a total nightmare in top ticking or buying at the heat of the hottest housing market in the country. There are still some homeowners believe it or not who are still underwater on their real estate purchases from the 2005/06 market highs in some of the crazy markets like Phoenix, Miami and Las Vegas. Moreover, or have just gotten back in the green from an equity standpoint with this latest surge in home prices over the last 15 months. Those of course are the diehards who stuck it out and didn't bolt from their mortgage obligations which many homeowners made the economic decision to do because their equity hit was just too large relative to their personal situation. Remember, the Market Phrase, you want to buy when there is Blood in the Streets - as Warren Buffett says!