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When is it A “Good Time” to Buy a Home?

As a real estate agent and broker, certainly one of the most frequently asked questions I get, whether from a prospective client, friend or family member, is if now is a “good time” to buy a home. Since Covid and even in the years leading into the pandemic, this question has gained especial urgency.

If you subscribe to my monthly newsletter or follow me on Facebook, you probably know by now that inventory in the housing market, both nationally and locally (in Maine and New Hampshire especially), has been low, driving up demand for homes and increasing property values, making home searches at times a long and stressful process.

My answers to the question about “good timing” for buyers, as you might imagine, varies based on who I’m answering and why they’re asking me. Actually, I love real estate as an investment asset so much, and believe in it so much, that I always say it’s a good time to buy!

Seriously, though, it’s a very common and casual way for someone to ask about the current climate of the housing market, and for these folks making easy conversation, I keep it simple. “It’s a buyer’s market,” I’ll say. Or, “It’s a seller’s market!”

This month I wanted to elaborate more on this very common question and go over my response tor the prospective clients thinking about entering the housing market and finding their dream home – my clients who are really trying to decide whether or not to begin searching for their new home. 

We’ve been in a “Seller’s Market” for a long time now, which might lead folks to believe the timing isn’t right for them.

However, just because it’s a “Seller’s Market,” doesn’t mean it’s a bad time to buy a home. As I said before, it’s always a good time to buy! (Wink, wink).

Talking about entering the housing market, I like to guide my clients into a different line of thinking. When it comes to buying a home, specifically buying your home, market trends should only be a small component of the decision-making process.

The biggest factor is whether or not you’re ready to buy a home. I don’t say this to skirt the underlying problem of buying a home in a Seller’s Market. In competitive markets like what we’re seeing currently, overpaying for your home is expected, and the time and process can be stressful.

(Stressful, maybe, but with an experienced agent, finding your new home is very possible!)

The common concern for buyers in a Seller’s Market is that they’re going to overpay for their home.

Overpaying for your home isn’t the worst thing in the world, though. Homes are appreciating assets, meaning they gain value over time. So, unlike, say, a car, where you’re expecting to lose money at resale, a home’s value will increase year over year. 

If you happen to overpay for your home in 2024 and you decide to sell your property in 2034, chances are you’ll still make money on your home – you might even double your profit!

I don’t mean to suggest there are no risks involved with buying real estate. I only mean to point out that overpaying for a home isn’t necessarily a bad thing. It might mean you’ll have to own your home for longer before seeing the equity, but it still beats paying rent on a place you don’t own.

The other reason I’m skeptical of buyers placing so much emphasis on market trends is that these trends are out of their control. A client can change spending habits or get a new job to change their income and affordability, they can pay off debts to help their credit, and they can compromise and change expectations to fit into a comfortable price range, but they can’t do anything about housing inventory and demand…

If you’re sitting there waiting and waiting for the market to turn or interest rates to lower, you’re missing out on opportunities to start gaining equity…

This is why I advise my clients to think personally and ask: “Is today a good time for me to buy a home?”

Prospective clients should consider their affordable price range, what they’re looking for in a new home, and how long they plan on living in their new home. Answering these questions will help you as a client understand whether or not it’s a “good time” to buy.

Real estate is an appreciating asset and overpaying on a home is OK so long as your monthly mortgage remains affordable. Risking default on your mortgage isn’t worth the potential upside in the long run of homeownership.

If you’re buying a home with the intention of selling it in the short term, you need to know the risks involved with short-term real estate investments, especially if you’re paying a premium on your home today.

Getting a clear picture of your financial situation and goals will prepare you for entering any type of housing market and save you from mishaps.

Of course, market trends are still a factor in decision making, as are interest rates, which can greatly affect the cost of your mortgage and also influence the market itself. 

The market climate can butt against or work to help a client. For example, today’s highly competitive market requires patience and financial discipline for buyers.

Getting too caught up in a dream home and spending beyond your budget is a major concern. If you come to find that your dream home is a little too out of reach for the market, perhaps it isn’t a good time to buy.

You can always back away and take time to reevaluate your needs or see if the market improves.

Knowing the climate will help you determine how to approach buying a home but it shouldn’t determine whether or not you enter it at all. Taking all the personal considerations like the type, size and location of your dream home, your price range and future plans, and adding these considerations to the current housing climate will set you up to know whether or not it is a “good time” to buy.

If you have any questions, or if I can help you in determining whether or not you’re ready to buy in today’s market, shoot me a message!

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Melanie Graham

Melanie Graham