It's important to be smart about the home-buying process because a home is probably going to be your biggest purchase ever, and you will be paying for it for the next 30 years. Unfortunately, trying to time the real estate market is difficult, even for professional real estate investors. If you're hoping to try and buy when prices have fallen, here are some key factors to consider:
Timing the real estate market
The best time to buy a home is when housing prices are low. When prices are low and there are fewer buyers than sellers, the market is considered a buyer's market. Buyers can get homes for lower prices and can often demand more concessions from homeowners eager to sell. By contrast, in a seller's market, home buyers may become involved in a bidding war as homeowners consider multiple offers.
Check out pricing trends in your area:
Compare historical sales to what homes are selling for today. If home prices are significantly higher, your market may be in a bubble. If houses sit on the market for a long time, it's likely a buyer's market. But if homes are selling very quickly, it's a seller's market -- and you can expect to pay more for a home.
Evaluate interest rates
Another factor to consider is the home loan interest rate. When interest rates are high, borrowing money for your home will cost more. When interest rates are low, your mortgage payment will be smaller and you'll pay less in interest over the life of your loan.
Choose the right time of year
Home prices not only vary over time, but they can also vary over the course of the year. For instance, Spring has proved to be the most popular time to move and is a popular time for sellers to put their home on the market. While you'll likely see more inventory in the Spring, it's the worst time to buy if your goal is to get the best deal because prices rise when demand increases.