When the housing crisis occurred back in 2007 many people vowed they would never again purchase a home, but here we are six years later and the market seems to be doing much better. In fact, the real estate market seems to be prime right now for purchasing a home, but should you buy a house based on market timing? The answer will vary depending on who you talk to, but the general consensus is that if there is a housing feeding frenzy, purchasing a home may or may not be the wisest decision, as you may see conditions change a few months down the road and you could get an even better deal- or not. One never knows exactly what the market will do.
For the past six weeks, interest rates have increased, jumping above 4 percent for a 30-year, fixed-rate mortgage. Yet despite the jump, interest rates are expected to stay low for the next 6 months or so due to the Fed purchasing $85 million in bonds each month for said time frame.
Home prices will become more constant
According to the Case-Schiller home price index, over the past year house prices have jumped over 10 percent. Many real estate experts believe that the increasing will level out and prices will become more moderate. They assure the public that we are nowhere close to being in a housing bubble.
Increase in inventory
One reason home prices have been increasing is because the market has been driven by a limited supply, but we are beginning to see an increase in inventory, which will cause prices to level out.
Assess the housing market
Anyone who wants to purchase a home can assess the housing market based on the three most common factors: home prices, interest rates, and inventory. But in doing so, there is no guarantee that you will know for sure that “now” is the perfect time to buy. In fact, there are experts who work full time to read the market and sometimes even their predictions are off.
There are some hot markets out there right now, so if you can purchase a home, it is a good idea to get started in the home-buying process. Check out your local market and scope for trends. Talk to your real estate professionals to get their input. No one knows for sure what the market will do, but if you sit around and wait for the perfect market conditions, you could be waiting a very long time and miss out on great opportunities now. Some professionals say that purchasing a home in the winter over summer is your best bet, as some save 1 to 3 percent in winter since the demand is lower than in the summer.
Should you buy a house based on market timing? By all means, go for it, but be sure that all of your financial ducks are in a row before doing so. Be sure that you have ample funds for the down payment, closing costs, and other costs associated with purchasing a home. The more financially secure you are when purchasing a home, the better off you will be in the long run.