The Perpetual Tourist

You probably think I’m crazy for even addressing this question, when all we hear on the news is how bad the housing market is, how awful the economy is, and how things are only getting worse. True, the situation is bad — worse than it’s ever been in my memory — so unless you are already in a really good place financially (and most Americans are not these days), you should not even consider tying yourself up in a mortgage right now.

If you are one of the lucky ones with your head still above water and your bank account still well in the black, it may be worth it to you to dig a little deeper than the doomsday news reporting. Yes, the housing market is awful — for most people. Given the credit crisis that kickstarted this whole mess, you will have to have excellent credit to get a decent mortgage. But for those who do have good credit, mortgage rates are very low right now, and might be as low as they’re going to get for a while, since the Fed finally put an end to its string of rate cuts earlier this week.

More good news for home buyers — it’s the sellers who are hurting the most right now (besides those being foreclosed). Prices are dropping and the market is absolutely saturated with houses for sale — that means that sellers must be willing to cut their asking prices and put up with more demands than ever from buyers. If you are a buyer with good credit, you hold all the power in this market.

You probably can get a heck of a deal on a vacation home now, but there are still some other factors to consider before you call your realtor. If you are buying a summer home on your favorite beach to live with your family for a few months out of the year, there may never be a better time to do it. But if you’re thinking of a second home as some sort of investment or income generator, don’t get too excited.

What are you planning to do with your beach house? Rent it out to vacationers? Don’t count on it. Economic woes are keeping travelers closer to home this year, and there’s no telling when the economy will be healthy enough to fill all those beach houses again. Can you afford to maintain the place if no one is renting it? Think about the cost of gas and your own travels — how much are you going to realistically be able to use the place?

If you’re simply thinking of real estate as a better investment than the stock market right now, well, that could be true, but this is a risky gamble. Prices are likely to continue to drop. We won’t know where the bottom is until we’ve already hit it. Don’t expect to be able to flip any properties for a profit anytime soon. People are still out there trying this, and there are some success stories, but these are the exceptions.

All these caveats in mind, if what you want out of a vacation home is just a place to kick up your heels when you want to get away, and you’ve got the money and the credit to get into the market without stretching your finances thin, then this is a great time for you. The house may drop in value in the short term (and possibly, but hopefully not, the long term), but as long as you are able to afford the mortgage and don’t depend on the equity, you don’t need to be scared off by all the bad news in the media.