There are many signs to watch for when looking for the best time to purchase a home or property. Keep your eyes on the classifieds in the local newspaper. Many sellers will list their home without a real estate agent or broker in order to save on closing costs. Also, check the legal notices for properties going into foreclosure. These notices will give the address of the property. It may be possible to arrange a private sale with the owner, avoiding the process of foreclosure. Some of these properties may be eligible for a short sale which is making arrangements with the lender to accept a price lower than the balance due on the mortgage. Many Open House signs in a neighbourhood indicate many sellers anxious to find a buyer. Check with local real estate agents for the number of houses on the market, and the length of time they have been listed. When there are many properties on the market, sellers are anxious to find buyers.
When interest rates begin to rise, some buyers will stay out of the market, making a favourable purchase more likely. Prices fall as interest rates rise. Another rule of thumb when considering whether to buy in your market is to compare rents for similar properties. What would the house you are looking at rent for? If the potential annual rent is more than 6% of the purchase price, it is not a good buy.
When considering whether now is a good time to invest in real estate, take into account whether the market where you live has stabilized. If prices are still going down, you may find yourself owing more on the property you have just purchased than the market value a year or two from now. That would mean that unless you intend on holding on to the property for a long time, you might be trapped in a home with no equity. It would be impossible to refinance for repairs or renovations, or to lock in a lower mortgage rate.
Builders of new subdivisions have overstock now, as prices have slumped. There may be good buys in new construction. Be cautious and ask whether there is a new home warranty on the house. As prices fall, builders may be tempted to cut corners on construction to minimize their losses.
If you find the property you like with long-term potential, and you have pre-arranged a mortgage that you can afford, it is a good time to buy. Have a home inspection done, and take into account what repairs and maintenance will cost over the next few years. If you can comfortably make all the payments for mortgage, insurance, taxes, and maintenance, and you believe that the property meets your needs, it is a good time to buy.
If the economy begins to inflate, the dollars you will be using to pay off the mortgage will be deflated dollars and you will be ahead in the long run. That means that you will be building equity in your property, as long as housing prices do not fall through the floor. Before investing in real estate, researching key areas of growth will help ensure you do not make a bad investment.