Is Now A Good Time To Buy A Home?

Posted in Buyer Blog | 16/09/2012

Windsor Home

Windsor Home

Real estate agents are often asked the question, “Should I buy a house now?”  In fact, there probably isn’t a day where I don’t hear this asked in one form or another.  If I knew which way the economy was going, I wouldn’t need to be selling real estate.  It’s a tough question to answer because there really is no right or wrong answer.  It really depends on your circumstances.  So the better question might be:  “Is now a good time for YOU to buy a home?”  So let’s take a look:

The best time to buy a home is when interest rates are low, you are financially ready, it’s a buyer’s market and the move makes sense to you and your family. Let’s take away for a moment the question of what is the better TIME of the year to buy a home.  From my perspective, summer, fall, winter or spring, it doesn’t matter.  When buying a home, there is no season or special month where houses go on clearance, like in January where linens go on sale or purchasing a car at the end of the year.  In real estate, this doesn’t happen so don’t think there is a better time of the year to purchase a home.

Interest rates

Right now, interest rates are incredibly low.  We haven’t seen anything like this in recent memory.  When rates are low, you pay less.  Cost of living, market conditions, inflation and other economic factors affect interest rates.

Buyer’s Market

Today we are in a buyer’s market and this is where the buyer’s have the advantage in negotiating.  Here, houses may sit unsold; a buyer has more choices as well as a clear bargaining power.  If you are buying your first property, then this is a great time to consider a home.

Timing

Of course, when considering buying a home, much depends on timing.  Is this a good time for you to consider purchasing a house?  Is your job stable, do you have children in school, are you looking to upgrade your home or is it time to downsize?  Do you have a home to sell or is a lease coming up on your rental?  These are just many of the questions that only a buyer can answer.  Once some serious soul-searching is complete, then a buyer knows what he or she needs to do.

Financial

With the housing and debt crisis that we have seen over the past few years, it is imperative that a buyer has a good down payment and good credit.  Most families in the United States and Canada are over their heads in debt.  Loans are not being handed out to just anyone who applies like previous years.  Hopefully, banks learned their lesson and we won’t see again loans being given out to buyers that simply can’t afford a home in the first place.  So now with more people in debt, a buyer needs to make sure all of their financial ducks are all in a row.  Don’t buy a home if you don’t have the money, especially since we really don’t know where the market will be in a few years.

For buyers, let’s look at the upfront costs of buying a home.  As mentioned above, purchasing a home is huge financial commitment that involves some upfront costs:  down payment and the closing costs.

A down payment can be anywhere from 5 percent on up for a property.  Of course, the banks will determine what you can afford.  If you feel you don’t have the necessary funds for a the down payment, then start a savings program, make a budget and follow through.

Other costs when purchasing a home are the closing costs, which your agent will spell out for you.  Also, don’t forget to include a home inspection and insurance.  Again, it is imperative that a buyer sits down before he or she starts the home buying process and meet with their agent to discuss what finances are expected.  Don’t be caught off guard at the closing of a home, as writing those last checks can be pretty painful if you are not well-informed.

What I recommend to every single buyer is to get pre-approved for a loan BEFORE you even browse the Internet for homes.  Find out what you can afford by talking to a lender and going through the steps to get this valuable piece of paper that you can show a seller when you make an offer on their home.  The advantages?  You know that you have a loan, you know the amount, you can afford and the seller will take your offer very seriously because they know you went the extra step to show that you are able to buy their home.  Your offer will look much more attractive if you are in a bidding war with another prospective buyer who doesn’t have a pre-approval letter, even if your offer is lower!

So is it a good time to buy a home?  Only you can answer that.

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