What should homebuyers ask themselves before entering the market?

A for sale sign stands in front of a home on March 26, 2013 in Miami, Fla.

You've made it. You are settled in life. You are on the path for financial security. Homeownership means more than just a picket fence or a two-car garage. It's emotional and personal. Even with the clouds that hung over the housing market the last few years, it was hard to get away from this idea -- that buying a place is part of the American Dream. It's certainly a part of the economic recovery. We still pay close attention to home sales, prices, inventory.

The National Association of Realtors says existing home sales topped an almost four-year high in July. So what do you need to ask yourself before you enter the market? We're getting some advice from Alison Rogers, a real estate agent and a columnist for Time.com.  

What is the right moment to get in?

"Sometimes people have a desire to own a house. You have to remember that purchase of your single-family home isn't an investment, it's a consumption. I would certainly recommend that people have saved up a 10 percent down payment and feel that they're going to stay in the house for at least five years," says Rogers.

Rogers says first-time home buyers are always surprised to find out how expensive it is to own a piece of property.

"When you're considering purchasing, ask the current homeowner for his or her utility bills, his or her property tax bills, and also factor in the idea that you'll probably be making one major repair a year. I would just add in maybe 2-3 percent of the house's purchase price in my head as annual maintenance," says Rogers. "For maintenance, for example, if you're buying a $400,000 house, I would think of wanting to have $8,000 in annual maintenance costs. That sounds like a lot, but if you're replacing a roof or have boiler problems, it starts to add up."

Nowadays, people are looking at mortgage rates, which have been low for the past few years, but are now starting to creep up. Rogers says the rates are still historically very low.

"We've seen a bounce from 3.5 percent to 4.5 percent, which is very scary if you're thinking of buying. But historically anything below 6 percent is still a very low mortgage rate. I wouldn't use the rising rates as a reason to be too hasty in my decision [to buy]," says Rogers. "I wouldn't panic and I wouldn't make a decision you're going to regret based on just seeing those numbers move around."

Rogers says people shouldn't think of a home as a way of building wealth. She says building wealth is a wonderful extra of buying a home and is a worthy purchase you should save up to make, but you shouldn't expect price appreciation.

"The price appreciation that we got in this country in the '90s and the '00s really was whipped cream on top of the sundae. It wasn't something you should have expected and you shouldn't necessarily expect it to repeat," says Rogers.


About the author

Lizzie O'Leary is the new host of Marketplace Weekend.
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The guests you've had giving advice on who should buy a home seem to have no touch with the reality that exists for most people. Most of us can't afford rent, except in dilapidated areas and subsidized housing, which usually have long waiting lists anyway. Why don't you do some research on the true costs of living in THOSE areas- food deserts, not safe to leave your home after dusk, constant theft of personal property, car parts, tires, etc., dangers to your children and yourself, lack of decent transportation to work and access to decent health care. Developers and leasing companies are taking advantage of the catastrophe caused by the banks by buying up properties, jacking up rents and driving "the rest of us" into deeper poverty. It makes me ill every time I hear another npr show with another economically cozy guest telling us we shouldn't try to buy homes if we don't have a year's income in savings and a college fund for our kids- that would be laughable if it wasn't downright sinister- the rich telling the poor to get poorer. A years income in savings???!!!???- how is that possible for the 99% who spend more than 60% of their take-home income on RENT???????? We are netting about 16,000/year down here in the mud underneath the feet of your lofty financial advisor guests. A college fund???!!!??? Do you not know how ridiculous that sounds? Get some perspective. Owning a home is a WAY OUT OF POVERTY if you are lucky enough to pull it off right now. Low interest rates make it possible to reduce the percent of the household budget that goes to the actual roof over your head to around 45% rather than 60%- why don't you calculate THAT "return on investment" into your advice? If it wasn't for PMI requirements, we could get down to 35% of take-home income! That number is much closer to the "economically healthy" number of housing being no more than 25% of your monthly income- it almost single-handedly brings a family out of poverty level living. Why don't you do a show that would actually HELP someone, such as how managing to get into a home while the interest rates are being controlled to a reasonable amount by the Obama administration can actually help lift families out of poverty? This is the last best hope that the 99% have of not getting driven back into indentured servitude.

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