Is Now the Right Time to Buy a House?

Photographer: jscreationzs,

The market is still declining–wait, it is recovering–no it is still on a downward spin. Everywhere you look there are varying reports and opinions on where real estate is heading. Some feel that we have reached a point where things are going to stabilize and slowly start increasing and others think we have not yet hit rock bottom. If you spend any time reading through local statistics and then review similar reports from other regions you will find even more confusing data. With so many opposing viewpoints and statistics, how do you know when it is the right time to buy?

One of my favorite pastimes is looking at homes listed for sale online. Not that I am currently in the market for a new home, I am just thoroughly entertained by the listings. There is something so appealing about looking at pictures of homes (in the areas I live in as well as areas from all around the country) and dreaming about living in them. I imagine myself in these homes, picturing my furniture and belongings in place and dreaming up ways I would turn those homes into my own–I kinda have a thing for making a house my own, which you would know if you have read any of my remodeling blogs. I love looking at the pictures and imagining all of the things I would do to improve on the current state of the house.

Some of the homes I view are so excessive and out of the scope of reality and others completely practical and easily envisioned into my life. But that is what makes it so much fun. I look through every picture analyzing each room, sometimes taking ideas that I may want to use on my current homes and other times thinking about all the ways I would completely change rooms just to make it more to my tastes. Every home I look at tells a story and just like with stories, there are some that intrigue me just the way they are and others that while reading I am constantly wanting to change.

The other part of looking at real estate listings is you never know when there may be a deal out there simply cannot be passed up. Although we currently own two homes which we have worked tirelessly to change and remodel, there is always the possibility that I may stumble across an even better home that is priced so low I would be foolish to pass up–even though I am sure I would have to make changes to it as well.

The problem with this situation is that ever since the housing bubble burst back in 2008, everyone has been fighting trying to hold on to their houses and waiting for prices to level out. For those who own homes and want to sell, they have to play this balancing game of selling high enough that they can at least cover what they owe and hopefully even profit while not waiting too long and losing potential profits. For those on the market to buy a home it is the same game in reverse–you don’t want to buy a home at the current price if it is still decreasing in market value but you don’t want to wait so long that the prices start creeping back up and you have missed the steal you were after.

This situation begs the question, “Is Now the Right Time to Buy a House?”

Actually it is not that simple. First off, where do you live?  There are some areas across the country that have seen home prices remain more stable and have seen a far less dramatic drop in prices over the past few months and in some places even longer. In these areas it may be the right time to seriously start looking and pursuing that great deal you have been waiting for. However there are other areas that have displayed a greater volatility in values. If this you reside in one of these areas it may be worth holding off for a while longer. Either way another month of watching your market will probably not hurt and it will enable you to see if there is an upward trend or at the minimal have prices stabilized.

Next you will need to consider how you plan on financing your purchase. Banks and lenders have severely tightened their lending procedures and are making it much harder for people to qualify for loans. You need to have a good credit score as well as a decent-sized down payment in order to possibly qualify. If you are not prepared for that and if you have a poor credit score and/or you need to finance majority in not all of the cost of the house, you will more than likely need to wait on shopping as you may not qualify for a mortgage right now. A few decades ago, 20% down was still a decent amount of money (in those same decade’s dollars) however it was not nearly as big of chunk as 20% down is in today’s market. Over the past 10-15 years, 20% seemed to be the starting point for negotiating loan deals and most of us ended up putting a fraction of that down even on second and investment homes, usually in the neighborhood of 3-5% as 20% was and is a lot of money. Not so any longer. Most banks want to see 20% down with far fewer exceptions, and this is just not feasible for most people in this economy. I would suggest that you spend the time you have to wait in reducing your debt, improving on your credit score and saving as much money as you can for a down payment. Purchasing a home may not be in the cards right now but preparing to do so in the future is a wise decision.

For some, when considering the purchase of a new home you also have a current home in which you will need to sell. For home sellers, the focus is going to be on current pricing in your area. At a minimal you will not want to be losing money on your home and the intent is that you will be making a profit. The key to this is watching the trends of other homes for sale and homes that have sold in your area. If the values are generally holding more stable and not decreasing this may be a good time to sell. Again if you are still seeing declining values, if you can continue to wait, it is worth considering.

Currently I am not a licensed real estate agent in my current state of residence (even though I have had my license in the past in a different state and continue to keep up to speed on these kinds of things) so whether you are selling or buying you will want to consult an experienced, licensed real estate agent in your area. I can only give you food for thought while they will be able to provide you with accurate market information and help you make a decision on what is best for you.

Many people are claiming that we are heading into a time of recovery for the housing market, but that has been said before. The only true deciding factor will be time, and only time will tell. That being said, if you keep waiting for the perfect time, you may never jump into the market.

For me, I will take my time, and really consider all of the pros and cons–when and if we decide to buy another home it will only be when we feel the time is right for us. It will not be because someone has written that the market is recovering and now is the right time. So take your time, consider the options, weigh in on the pros and the cons, and you will know when the right time is for you to buy.

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