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Is It a Good Time to Buy a Home? Everything Buyers Need to Know About the Current Real Estate Market

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Is It a Good Time to Buy a Home? Everything Buyers Need to Know About the Current Real Estate Market

Are you ready to buy a house?

If so, you should pay attention to the market and ensure you're getting your money's worth.

Just imagine: over 5.3 million homes were sold in America in 2018. This is great news for the real estate market, which has totally bounced back from the 2008 housing crisis.  


You might be wondering: Is it a good time to buy a house? The truth is: absolutely! 


Are you someone who's in the market for a new home? Here's everything buyers need to know about the current real estate market. 


Timing Is Everything 


When is a good time to buy a house? 


Consider this:  the best time to buy a house is when the cost of housing is super low.  


Why is this so important? 


Prices are often lower when there are fewer buyers than sellers on the market, which is fantastic news for future homeowners.  


Ever heard of a buyer's market? 


A buyer’s market means the supply of available homes exceeds the demand for homes. A buyer’s market is the ideal time to buy. You might be able to buy a home at a lower cost than you would in a seller’s market. 


On the other hand: a seller's market is probably not the best time to buy a home. How do we know this? The answer is simple. A seller’s market means that the demand of available homes exceeds the supply. So, the homes that are available are much more in demand and may have multiple buyers bidding on them which drives up the price.  


How do you know when the right time to buy is? 


In reality, even professional investors in the real estate industry can have a hard time predicting the housing market.  


But there's still hope.  


Waiting to buy a home when the cost of housing drops? Here a few things that you should keep in mind: 

  • Trends in your local housing market 

  • The months of supply 

  • How long it takes a house to sell 

Have you researched the trends in your local housing market yet? If not, then it's a good idea to do a price comparison of the historical sales in your area. That will help you get a sense of what houses are selling for in your area.  

What about the months of supply? The months of supply is a measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales.  Most markets have a six-month housing supply. Lastly, if you will be selling your home, research how long it typically takes a house to sell in your area.  


Should You Rent or Buy? 


Think about it: how do you know if you should become rent or buy a home? That depends on what your economic situation looks like and where you want to live.  


When it comes to renting versus owning, you should consider the price-to-rent ratio. The price-to-rent ratio measures the affordability of renting and buying in a given housing market. It’s a good factor to consider if you are trying to decide to buy or rent in a given area or city.  A lower price-to-rent-ratio indicates that a place is more favorable to buyers. A higher ratio indicates that it is a place that is better for renters.  


Don't know where to start?  


Luckily, there are price-to-rent ratio calculators online that can do the hard work for you! There are even sites that have the price-to-rent-ratio determined for most major cities in the U.S. 


Here's the deal: If your price-to-rent ratio is between 16 and 20, that means that you might be better off renting a home in that area. 

A word of advice? Look for a price-to-rent ratio that is between 1 and 15. 


Why? A lower price-to-rent ratio means that you should definitely buy a home instead of renting in that area! 


All About Interest Rates 


Have you thought about interest rates yet? 


If not, you might want to. Why? Because it's a good idea to know when mortgage rates are higher or lower.  


What should you do if interest rates are sky-high?


Just remember that it will cost you more money to get a loan for your future house. That means you will pay more over the term of your loan.   


How about when interest rates are low? 


Good news: lower mortgage rates can save you money over time and your mortgage payments will be less. 

But here's the kicker. It's extremely hard to tell when interest rates will be high or low. That's why the Federal Reserve and the Congressional Budget Office provide their own predictions of housing market interest rates.  


Do you think that interest rates are about to go up in your area? 


Then consider buying your house before interest rates go up and take advantage of the lower rates. 


For those who think that their interest rates are on their way down, then it doesn't hurt to be patient. Why? The longer you wait, the lower your rate could be! 


Best Time of the Year to Buy 


Fun fact: finding the best time of year to buy a house is the key to getting the best selection. However, it's not always so easy to figure this out. That's because the housing market changes a lot throughout the year. 


Get this: the supply and demand of the real estate industry is the biggest reason why the cost of housing fluctuates so much. 


So, when should you invest in a home, anyway? We can't emphasize this enough: summertime is the #1 season for potential buyers to purchase a house. 


Why is this?  


Not only do a lot of homeowners move during the summer, but they're also more likely to put up their homes for sale at this time. The result? More housing inventory on the market.  


But there's a catch: the price of housing is probably going to be higher during the summer as well. That's because the prices rise as consumer demand grows! 


Research has shown that you shouldn't buy a house if you're looking for a deal during June or July. 

The solution? 


Buying a house in August means that you'll have the biggest selection and the lowest prices for the summer season! 


What about purchasing a home in the winter? 


Even though it might be cheaper to purchase a home in the winter, there are going to be way fewer options on the market. Want to know why it's so affordable to buy a house in the wintertime? Homeowners are more likely to offer a lower price in order to get their home sold during a time of year when not many people are buying homes. 


Find a house you like in the winter season?  


We highly recommend that you buy it if it's within your budget. 


Haven't found what you're looking for yet?  


There's nothing wrong with waiting for summertime! 


Look at Your Personal Finances 


Wondering when the best time to buy a home is?  


Have you taken a look at your current financial situation? There are a few things that you should consider before you purchase a house: 

  •  Your personal income 

  •  Your financial credit score 

  • Your down payment amount 


Is now a good time for you to buy a home? That depends on your income. The general rule is that the mortgage payment should be  36% or less of your income. If you're having a time finding a house within your budget, then you should think about holding off until your income increases. 


Plus, you can always think about moving to a less expensive area too. That way, you won't have to give away such a huge chunk of your income to housing costs. 


What about your financial credit score? 


Your credit score is the single most important factor in getting a low-interest rate. 


News flash: if your credit score is higher than 760, then expect to find an interest rate of around 4.25%. 


Is your credit score under 659? Then prepare to pay an interest rate of about 5.3%. 


Ready to buy a home? It doesn't hurt to do your research first! 


Is it a Good Time to Buy a House?


Are you still asking yourself: Is it a good time to buy a house? 


Fortunately for you, we've got you covered. From the right time to purchase a home to price-to-rent ratios, our handy guide has everything you need to make a smart decision.  


Want to know when the best time to purchase a home is? 


If you want the most options, then there's no better time to buy a house than summer.  


Looking for a huge discount on housing costs? 


Then you should purchase a home during the wintertime. 


Have you looked at your personal finances?  


If your credit score is higher than 760, then you should be good to go. Happy house hunting! 

Need some help? Contact us to find an expert real estate agent!