These Ls are reminders for undecided buyers
By Alexis A. Acacio, contributor
Inquirer News Service
I HAVE received a lot of e-mail and inquiries from
friends and readers saying that when it is time for them to part with their money and invest in real estate, they tend to
retract and not proceed since they feel that they can still get a better deal in the future. Some of them have been looking
for pieces of property for years and up to now, they still have not bought the home of their dreams.
Signals to buy soon
Prior to investing in real estate, it is always best to be well informed and comfortable about the property that
we are considering. If you have waited too long to buy one, then think of the Ls as signals that you should buy soon. The
various Ls are:
-
Land prices. Prices of real estate have been gradually increasing with time. Even if it went
down during the financial crisis in 1997, it has steadily gone up since then. If you postpone your purchase, you will have
to face a higher price by the time you buy.
In buying land, it is best that you fully assess your financial capability to ensure that you can really afford
what you would want to have. Buying real estate is a big financial decision and takes a lot of planning and preparation.
-
Labor costs. Labor costs are continuously on the rise. With increasing prices of fuel, basic
commodities, labor and professional fees, the cost of constructing a house is expected to go up. This increase of production
would translate to higher selling price of real estate products.
-
Lumber costs. While lumber is the commonly used material, especially for houses in the provinces,
its cost and that of other construction materials are also increasing. Prices of steel bars have increased tremendously over
the past few months. This of course would have an effect on the completed cost of the project. Many builders are now charging
additional amounts from their clients due to the escalation of prices.
-
Legal costs. Since real estate prices are going up, then the cost of maintaining these pieces
of property also is going up. Many local government units increase taxes on real estate on a regular basis. Transaction costs
have also gradually increased over the years and it is difficult to imagine a reduction of these costs.
-
Lending rates. Lending rates are still very affordable and are still low. But take note that
they have gradually increased over the past few years. When the purchasing power of the peso weakens, interest rates tend
to inch up. If you think that interest rates for housing loans may go down, it may take some time before they do.
In borrowing money to finance your home, you may want to be protected against any interest rate adjustment over
the next few years. It may be a wise idea to fix the interest rate for a fixed period. Although you might get a rate that
is higher, the protection will be worth it.
-
Leasing costs. The construction of infrastructure requires heavy equipment that is normally leased.
Again, with higher fuel prices, lease costs will go up. Higher lease costs translate to higher total costs for real estate
products.
Best time to buy
If you keep postponing the purchase of your home, you may have to continually catch up with the increases
in real estate prices. Once you have decided on the property that you want and have looked at your finances, then it may be
time to go ahead with the purchase.
After looking at all of the Ls of buying real estate, you will be rewarded with
