Timing the Real Estate Market

Time to Buy Real EstateIf I have learned one thing about the real estate market, it’s that home prices, just like stock prices go down as well as up. The real estate market can be and has been notoriously volatile over the last few years, making the idea of trying to time the market difficult if not impossible.

So the question is why do so many people stress so much on trying to make sure that they buy at the right time, well everyone likes a bargain, and no one wants to pay for something that goes down in value.

First time home buyers stand to gain the most if they time the market right. If they buy at the very bottom they get a home at a bargain basement price and a low interest rate (interest rates are usually at or near lows at the bottom of the market).  But the chances of buying at the bottom are rare; it’s a bit like trying to buy a stock at its lowest value. Just like stocks real estate should be seen as a long term investment, something you keep for years and which hopefully appreciates in value over time.

If you are a first time buyer and you miss the bottom you can either wait until prices drop again (this can be many years and even then they may not drop to the same levels), or take the plunge and ride the real estate wave.

For people who already have a home and are looking to move up, there is even less reason to try and time the market. What must be remembered is that even if the price of your home is falling, the chances are the price of the home you are looking to buy is also falling, thus cancelling out any perceived losses on your home. The same goes for a rising real estate market, where you’re home’s value and the one you are looking to buy are both increasing.  There are some exceptions to this rule, especially when you are moving to completely different area or another state where the market conditions may be different.

What you should really focus on are your own personal circumstances to determine the right time to buy a home. Some of the main questions you should be asking is can I afford to buy, do I have the down payment, do I feel my job is secure. The answer to these questions may be no at the low of the real estate market, when the economy is bad, but change when the economy picks up and home prices are on the rise.

There may be circumstances that drive the home purchase decision; maybe you are relocating with your job; maybe you are having a child and you want a home of your own or a bigger home; or maybe the children have moved out and you want to downsize.

In the end your decision to purchase involves many different variables, and should not be limited to just trying to buy at the low point of the market.

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