How to Determine if the Housing Market is Right for Purchasing a Home
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It's pretty typical for buyers to wonder if this is a good time to purchase a home. After the mortgage meltdown of 2007, many prospect home buyers have become a great deal more conservative prior to purchasing a home. They question if the market will ever crumble once again. They do not want to duplicate mistakes caused by their predecessors.
Understand Real Estate Markets Before Homebuying
Essentially, you have got three different types of real estate markets. The type of market depends largely on inventory, which is the number of homes for sale, and the supply of buyers for those homes. It is known as the law of supply and demand.
Before searching for a house, ask your real estate agent to explain in detail the present type of market to you. If your realtor doesn't know or can not tell you, then you may want to search for a another real estate agent.
A seller's market:
This is a real estate market populated by fewer sellers, fewer houses for sale and a larger, proportionate share of buyers. For example, when there are more buyers than sellers, typically this causes home prices to go up. Multiple offers are normal in seller's markets.
Logic and common sense tell you it may be smarter to be a home seller in a seller's market and not a home buyer. Nonetheless, a seller's market is when many home buyers favor to buy. Why? Because all their friends are buying a home as well. Everything they read tells them they ought to purchase a home. But the fact of the matter is they will spend much more for that house than in a buyer's market.
A buyer's market:
This is a real estate market populated by a lot of sellers with a lot of inventory available and very few buyers. Because there are very few buyers and a ton of homes for sale, usually this causes home prices to drop. Think of it as a buyer's market is typically a really good time in which to purchase a home.
In a buyer's market, you most likely will encounter very little competition for that same house. Sellers will most likely bend over backwards to meet your demands and every need. Sellers will normally make all necessary repairs, give concessions and frequently will lower their prices to establish a sale. But a lot of buyers feel uncomfortable purchasing a house in a buyer's market since the news is so gloomy. Sales are down, homes aren't selling, values are consistently dropping and that makes buyers hesitant to make any moves.
A neutral market:
A neutral market is when the supply of homes and number of buyers are pretty much equal. Basically neither side is touching the ground because the weight on each side is identical.
In a neutral market, there's typically no huge urgency to buy a home because there are a ton houses to choose from; however sellers are usually not going to discount a price because there are also plenty of buyers competing for those same houses.
Well when is a Good Time for Homebuying then?
A good time for homebuying is when a buyer can afford to purchase a house, the market isn't fickle and affordable financing is available most of the time. If a mortgage payment would be just just about as easy to make as your rental payment, it could be an excellent time to buy a home .
Longevity weighs as well; nonetheless. Take a close look at the potential profit to be made prior to buying a home. If you are able to assure yourself selling that house a few yrs later and earning a profit, then it is probably a great time to buy a home.
If you need to hold that house for a number of years prior to perhaps making a profit or at the least covering your costs of sale, then you should ask yourself if you plan to stick around for those number of years.
· It is quite possible the tax write-off alone will make homebuying the right decision for you.
· The convenience of being closer to work may make homebuying right for you.
· The comfort of residing close to friends and families just could make homebuying right for you and your family.
Most people in today's world purchase a house because they want to own their own home, not because they plan and wish to make a profit. Nonetheless it's still a good idea to have at least an exit strategy.