Lots of people are in good shape financially despite the recent gyrations of the stock market. Sure, their retirement portfolios may have taken a hit – a bad one at that – but they’re income is stable and they’re still able to stash away some cash for the future.
Moreover, there is a segment of the populace who are renting their homes and are looking to jump into a housing market that has seen double digit declines in value and sales for the past year or two. Inflated beyond belief, many markets have returned to more modest valuations, shedding years of hyper growth almost overnight.
For the person in the position to buy a home, an opportunity awaits them. However, many people are timing the market in a bid to buy in at the best possible price, particularly as housing prices hit the bottom.
Unfortunately, there isn’t any way to determine when the bottom has been reached, and that usually becomes apparent several months after a recovery has begun. For these home buyers, the bottom has been missed and they’ll end up paying more for their homes, perhaps thousands of dollars more if the market rebounds quickly.
I like to read various real estate publications and articles to see what the experts say about when to buy a home, but cannot give to you consensus based on what has been written. Clearly, there are contradictory statements being made, information which can leave you more dazed and confused, than reassured.
Happily, there are some things to consider which can help you get in the market at a good price, bottom being hit or not. Sure, prices may continue to drop later on, but if you’re planning to be in your home for at least five years, you should recoup your investment and then some. Consider the following:
Your local market has already retreated considerably – Get with a real estate agent who knows your local market and ask her to pull up price comparables (comps) over the last few years. Some of that information may be online, but if there is a specific neighborhood that you like, get reports for that area directly. Try to find similar sized homes and compare what those homes sold for 1-3 years ago and what they are selling for today. If the drop has been sharp, the worst of the pull back has likely taken place, but if the decrease has been small, there could be additional changes over the next several months. One caveat: that neighborhood could be incredibly stable, bucking local trends or the opposite may be happening.
Your local economy is turning the corner – Newspapers, television news shows, and online publications can be good sources to help you discover what the job market is like in your area. Is a major company cutting back, instituting a hiring freeze, or have they announced an expansion which will lead to new jobs? One company’s good fortune doesn’t make for an improved market, but if you’re hearing good reports from several employers, then housing demand will soon climb as people move into your area. One more sign: new home builders are putting up fresh housing developments – they don’t start new projects in a sour economy.
You have enough money for a down payment and are pre-approved for a mortgage – Perhaps the best reason to buy a home now is that you have the financial wherewithal to swing a sale. You not only have a significant chunk of change to put down, but you’ve lined up a mortgage, and you have enough cash left over to cover closing costs, make monthly payments, etc. Guess what? The market may not have bottomed out, but you’re in an excellent bargaining position to pay even less than what the owner is asking. You don’t want to make a low ball offer, but a bid that shaves 5% off of the asking price is definitely reasonable.
The national economy may be going through a recession, but your personal economic forecast could be a good one. Waiting for the market to “bottom out” could end up being a wonderful opportunity missed, so don’t delay – there are bargains out there awaiting you today.
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