The state of the economy, interest rates and market cycle all play a role in the final price of your dream home, but it’s not always easy to tell whether now is a good time to become a homeowner. First time homebuyers are typically nervous about entering the homebuying market because they simply can’t tell the difference between a buyer’s market or a seller’s market.
Housing prices are generally low and interest rates may be lower than normal in a buyer’s market. ‘For Sale’ signs might populate different neighborhoods as sellers lower their asking prices just to sell a home.
It is hard to find an attractive home deal in a seller’s market. Lotteries are setup that allow exclusive buyers to bid on certain homes. You might hear some people saying that the market is in ‘crisis mode’ during a seller’s market.
Buying a home in the right market cycle can give you more value for a home compared to its purchase price. The only problem is “cycle phases are much easier to pinpoint long after the fact”, according to Barron’s ‘Smart Consumer’s Guide to Home Buying’. They further explain that “if you know what to look for, it’s easier to figure out the state of the market.” Look for these market indicators to guide you in the timing of your home purchase:
As mentioned, ‘For Sale’ signs are everywhere in a buyer’s market. At this time, sellers are giving incentives, such as concessions and discounts, to sell their properties quickly. There would also be an increase in the number of foreclosures and high-priced, quality homes will be sold for lower-than-average prices.
In a seller’s market, you can expect to see: very few ‘For Sale’ signs around the neighborhood; relatively high prices and competitive selling tactics within the same neighborhood; people ‘flipping’ homes where they buy a home and renovate it to sell it in a very short period of time; news stories that point out how unaffordable it is to buy a home; lots of rental complexes being converted into condominiums.
The best time to buy a home is during the buyer’s market when sellers are more eager to sell their properties and give out discounts. A good indicator to buy a home is when ads of homes with price cuts, discounts and other extra incentives start to circulate. You might be tempted to buy the first home you see or the lowest priced home but it is still important to work with a professional agent. Get a professional agent, especially if this is your first home purchase, to guide you in choosing the best home that would fit your needs.
Buying your first home can be challenging and you’re likely to have lots of questions about the entire process. Educating yourself about the market, looking for indicators of favorable market conditions and working with a professional can help you get started on your search and provide you with the best possible options in your neighborhood of choice.
When looking for Minnesota homes for sale, the internet is an invaluable resource. New homebuyers can use the MN MLS to view active listings of homes and real estate throughout the state.
