Practice Management

Home Prices May Sink 25% More Before The Market Finally Hits Bottom

By chucknewton

As reported on Business Week, the housing and economic storm is still gathering force. The government has said annual economic growth slowed to just 0.6% in the fourth quarter as home construction plunged at a 24% annual rate. The Standard & Poor's/Case-Shiller 20-city home price index fell 7.7% in November from the year before, the biggest decline since the index was created in 2000.  And, home prices could fall another 25% before we hit bottom.

The question then becomes, if you are an attorney, should you be throwing money away in office leases, that are increasing each year, or conserving your money and investing it aggressively in a home (and hence a home office)?

I think the answer is obvious.  The housing market is weakening right now no matter where you are located.  Some places are downright bad.  Some places are only moderately so.  However, the truth of the matter is that we have before us the mother load of good fortune if your objective is to (1) take your practice home, and (2) build your investment.

As house prices fall or moderate, so are conventional mortgage rates.  Many of the most risky financing products might be gone, but you can still finance a house with a cheap mortgage (including government insured loans) for only 1 to 3% down, and lock in your mortgage payment for 30 years.

You simultaneously improve your work-live balance or blending, save gobs of money in downshifting, while greatly increasing your comfort and investment.

What is bad for some, can be golden for you the home office attorney.  Low interest rates, low payments, and generous tax breaks make the home office solution even better.

And, let us face the obvious.  We know from history that this downward trend in interest and house values is not going to continue for ever.  Both are going to rebound leaving you with growing wealth and a comfortable living and work environment.

It is time to take the plunge.

Full post as published by Chuck Newton on February 01, 2008 (boomark / email).