When it comes to buying a home, who you hire matters. A realtor that will bring value to the table is who you want working for you. They will tell you if the market is the correct time for you.
One of the most important things to consider is the timing of your purchase. Although the right time to buy a house is when you’re both financially and emotionally ready, there are other factors you will need to take into account.
The market is always correct for someone. The question is – is now the right time for you?
It’s impossible to time mortgage rates and home values perfectly, but as long as you gather information, keep a close eye on market conditions, and reevaluate your goals, you’ll be able to find a nice home that’s right for you.
To help you determine the best time to buy a home, here are a few tips to keep in mind:
Types of real estate markets
The first step is to determine what type of real estate market exists in the area where you’re planning to buy a house. While there may be different changes and variations, real estate markets generally fall into three categories:
- Buyer’s market – A market with more inventory or homes available for sale than buyers is known as a buyer’s market. Since prospective home buyers have a wide selection of homes to choose form, not all homes will sell. Generally speaking, markets that have six months or more of inventory available are considered buyer’s markets. It’s also important to keep in mind that in buyer’s markets, fewer buyers typically mean fewer sales, which can impact median prices.
- Seller’s market – A seller’s market has more prospective homebuyers than available homes for sale. Since there’s a limited selection for buyers to choose from, it’s likely all homes on the market will sell. Seller’s markets typically have less than six months’ worth of inventory.
- Neutral market – A neutral real estate market is balanced, with affordable interest rates and a more or less equal amount of homebuyers and sellers. Neither side outweighs the other, and the market does not experience any jarring changes. Available inventory in a neutral market is about four months, give or take. Although finding a good deal on a great home is possible in a neutral market, there are no clear factors that can give an advantage to buyers over sellers, and vice versa.
Aiming for a buyer’s market is the right move
If you’re in the market for a new home and can afford to wait for ideal market conditions, a buyer’s market is the best type to target.
Sellers will be more willing to consider offers because they know (or should know) that they might not receive another offer should they refuse your purchase offer. And when there are fewer homes selling, prices generally drop as well.
Buyers also have more room to negotiate additional demands from sellers, such as asking them to cover the closing costs or pay for pest inspections, home warranty, or roof certifications. In case the home requires major repairs or updates, sellers usually credit the buyer for repairs recommended by a professional home inspector. Buyers can also request early possession, extended inspection periods, or later closing deadlines, which are terms that are often automatically rejected in seller’s markets.
How do you know if it’s a buyer’s or seller’s market?
The real estate market changes according to the season. There are often more homes available during the summer (June to August) compared to other times of the year. This means summer months are usually buyer’s markets, while winter months are seller’s markets. Again, keep in mind that this is only a general rule – whether you’re looking at a buyer’s or seller’s market will depend on the area.
A good way to find out if an area is a buyer’s or seller’s market is to get information on its inventory or the number of homes currently for sale. Your agent will be able to provide you with this information and offer valuable insight on your local market, which can help you determine the right time to buy.
The best time to buy a home
As you can see, there’s really no tried and tested way to determine the best time to buy a home. Yet by analyzing your current financial situation, setting goals for your future, and examining the state of the real estate market, you’ll be able to make a well-informed decision on when you should buy a home.
Ultimately, a home purchase isn’t just a financial investment. Owning a home allows you to set down roots and establish new traditions. It can be a worthwhile purchase – as long as you approach each step strategically.
Looking for the perfect home in Los Angeles, Malibu, Beverly Hills or other sought-after communities? Get in touch with me today at 310.401.0901, or send me an email at James(at)JamesWeekley(dotted)com