Is Now the Time to Buy?

There is no doubt that the real estate market has slowed down and is not the hot market we had from 2002 to 2005. The news media is quick to point out that more homes are on the market and that sales are down. Given the current market, is now a good time to buy a home?

"But the market is turning and prices seem to be falling, so why would I buy a home now?" The housing market has changed, prices are leveling and may even decline. But remember that a home should be thought of as not only as an investment. This is the place where you live, rest, and raise your family. It is important that your home be the right home that fits your lifestyle now. If you are currently a homeowner and are looking to upsize, downsize or change towns, consider that even though your home may be worth less than it was last year, chances are that the house you intend to buy is also selling for less. The effect on you is neutral. It does not really matter if you buy and sell in a rising market, a falling market or a stable market. Your house will rise or fall in value with the other houses in the area.

For the first time home buyer it may actually be better to buy in a cooler housing market than a hot market. Why? In the hot real estate market we have had over the last 4 years buyers had to move quickly to get a house before the next buyer got it. There was little time to look at homes, negotiate the best terms and think about whether or not that house was the right one. Sellers were in a very good position, there were lots of buyers and not many homes on the market, so sellers were able to get terms that were favorable to them. The homes they were selling were often in less than perfect condition and buyers were still eager to buy them.

Now that the market has slowed, the buyer is in a much better negotiating position and is more likely to get terms that are in his or her favor. Perhaps the seller will make some needed repairs to the home or will contribute some money to the buyers closing costs. This gives the first time buyer a much better chance of buying the home they want.

Also, the first time buyer has one huge advantage over the homeowner who is trying to buy a home. That advantage is so obvious it often is overlooked by the first time buyer. The advantage they have is they have nothing to sell before they can buy! Consider this: Imagine that you own a home that you wish to sell. Two buyers approach you with an offer to buy your home. Buyer "A" makes a good offer but has a contingency in his offer that he must sell his current home before he purchases your home. Buyer "B" makes a good offer and can buy your home in a month because he has nothing to sell. Which offer do you take? Buyer "A" must sell his house in order to buy yours. Who knows how long that will take? Is his house priced well? What if he gets a buyer who can not complete the sale? There is a lot of risk to accepting Buyer "A"s offer. Chances are you would accept Buyer "B"s offer. And because Buyer "B" represents a lot less risk, you might even accept his offer if the price was lower than Buyer "A"s.

So the buyer with nothing to sell has a lot of advantages over other buyers and this gives them a better negotiating position. So do not let the media scare you from making a needed lifestyle change. There is no fundamental reason to not buy in this market.