Ever since the real estate bubble burst a few years ago, the market has been on shaky ground. Buyers have been wary to place any offers and sellers are finding it hard to get the price they want. However, this year has proven to be different as it appears as though the market is headed for a recovery. We are starting to see home prices on the rise while the average days on the market have decreased. It shows that buyers are willing to pay the list price of the home if they find it worth their while.
Deciding whether you should buy a home now or wait for prices to come back down is a tricky decision. For one, there are no guarantees that the current trend will continue and prices might take a tumble tomorrow. Secondly, the ‘peak’ real estate seasons, i.e. the spring and summer, are long gone and the market generally remains stagnant during fall and winter. So, what should you do if you want to buy a home?
Here are four factors that may help you decide.
Inventory on the Rise
Generally, sellers hold off for the warmer spring and summer months before listing their properties for sale. However, the recent trend of increasing prices has compelled some to take advantage of the situation. You are likely to find more homes listed for sale this fall meaning the current inventory will increase and, more importantly, you will be able to find a home that has not been on the market for long.
Interest Rates Stagnating
Home prices and mortgage rates generally go hand in hand. Since the prices are unlikely to come down in the near term, you shouldn’t expect mortgage rates to decrease either. However, the demand during the fall is usually low, so mortgage rates become more flexible. Because of the falling demand, interest rates are likely to become stagnate before moving higher by the end of 2014, making credit less expensive for you.
Lenders’ Attitude Changing
The recession had made it difficult for people to repay their debts, so lenders started tightening their purse strings. Now that things are getting slightly better, their attitude is changing accordingly. It is easier to obtain a loan now as compared to a year ago. The main reason behind this is that the demand for refinancing has gone down significantly. Lenders have to recoup lost earnings through mortgages.
Cash Buyers Are On The Decline
Cash offers usually signal a great buying opportunity for real estate investors. Unfortunately it tends to push a lot of normal buyers out of the market since most sellers would rather avoid the need to work with a bank. So far in 2013 the amount of cash offers on homes have been down compared to 2012. This is a great sign that now might be the perfect time for home ownership.
Get the Best Professional Help
The fall in demand over the next couple of months will mean that real estate professionals will have to tend to fewer clients. Hiring an agent at this time of the year is easier. Plus, because it’s the offseason you will have a little bit of wiggle room when it comes to the fees that they charge. This way, you can get the best professional help, find the right house and get the process sorted out quickly.
Keeping these factors in mind, it does appear as though now is the best time to buy a home. The more important factor, however, is whether or not you can afford to purchase a home; and if yes, what your budget is. Given the fact that home prices have been on the rise since the beginning of the year, a home that cost $500,000 a couple of years ago might now cost 20% more.
There are no guarantees in the real estate market. The trend can go off-course at any given moment, but the signs of recovery in the market clearly show that it is probable that the prices will keep rising for now. As long as the demand eclipses the supply, home prices will not come back down.
So, now that the cards have been laid out in front of you, it is up to you to decide your next move.