Is Now a Good Time to Buy a Home?
Throughout much of the country home prices are plummeting, providing good deals for potential home buyers. Yet, in many places home sales are the lowest they have been in years. Why is this? Humans are pack animals and tend to look to others when deciding what to do. People are hesitant to buy homes when no one else seems to be doing it. Concerns about further depreciation have also kept many people from purchasing homes. However, by recognizing the opportunities the current market presents prospective buyers can break away from the pack and take advantage of good deals.

Buying during a slow housing market is advantageous for many reasons:

  • Sellers often set their asking prices lower than the prices of similar houses that sold months before. Sellers are also often more willing to offer other allowances, such as paying for closing costs, leaving appliances, and doing repairs.
  • Sellers are more likely to accept offers for less than the asking prices, unlike during a hot housing market, where you may have to offer more than the asking price to get a house.
  • Because it is less likely for homes in a slow market to get multiple offers you have more time to search before deciding whether or not to make an offer. You do not have to make a hasty offer on a house you are not sure about because you are concerned someone else will make an offer on it first.
  • There tends to be an increased availability of foreclosed properties, which are usually priced low.

Further depreciation
One of the reasons that many people avoid purchasing a home in a slow housing market is because they are worried the value of the home will depreciate further. No one wants to purchase a $250,000 home, only to have it be worth $240,000 a month later. Unfortunately, while you can usually tell if a market is slow or not, you cannot tell when the bottom will hit. People who wait for the rock bottom prices often actually wait too long and purchase when prices are on the rise. If you are planning to stay in the house for several years further depreciation does not need to be a major concern. You are getting a better deal than many people who have bought before you, and long-term the value of your house will in all likelihood rise.

When to avoid buying
While the current housing market presents a good opportunity for many buyers, buying is not necessarily the best choice for everyone. If you only plan to have your house for a year or two before selling it may be best to wait, since it is possible that short-term home prices will depreciate further. Regardless of the condition of the housing market, it is never a good idea to buy a home if you cannot afford the mortgage payments.

To learn more about purchasing a home visit our Unlocking the Door to Homeownership mini-site.