Whether or not it is a good time to buy a home is a multi-faceted question that depends on where you live, the current state of the economy and local housing market, and a lot of aspects of your personal life (such as life goals and who you are accountable for). Buying a home is a huge decision, and knowing when it’s the right time to buy a home is a difficult question to answer. However, there are many good indicators as to when you should buy a home that can help ease some fears that come with such a big decision and large commitment.
Learning From History
History has a tendency to repeat itself, and there is a lot to learn from the hard lessons our nation has experienced in the past. The 2008 housing crisis left a scar on hundreds of homeowners and renters who suffered the consequences of an overinflated market, and there were patterns that led to that bubble burst that can be noted still today. High demand from investors and inflated house prices that don’t seem to fit the average income in any given area is one of them; according to an article by Huffington Post, the housing crisis is now not only in big, in-demand cities. It’s spreading into smaller cities with populations of under 300,000 people.
Whenever housing costs inflate, it directly impacts the area’s economy. Rising rents are a constant cause of displacement among lower class individuals and families who do not receive cost of living adjustments as a regular increase in wages. Members of the lower middle class who are living paycheck to paycheck cannot afford to buy a home in times of inflated housing costs, which means that it may not be an ideal time to buy a home in cities like Boise, Idaho; Tacoma, Washington; and Jacksonville, Florida, where investors are buying up properties for higher than asking price to flip for profit.
Risks of Buying a Home
While buying a home can be an incredibly exciting endeavor, there are many risks that come with home ownership that should be considered throughout the process. Buying a house is a huge investment for most individuals that may or may not pay off depending on the fluctuations of the housing market. Even if the decision to buy a house is made taking every precaution, the housing market can be incredibly difficult to predict and any homeowner runs the risk of going “underwater” with their mortgage, which can be one of the worst outcomes of buying a home.
When properties go “underwater” their market value sinks below the mortgage that was originally paid for the house. This means the homeowner is left paying for more than the home is worth, which can be tens or even hundreds of thousands of dollars. While this is the main risk that comes with the investment, typically homeowners can wait for the market to fluctuate again and for their home to be worth more than during a low period. If possible, homeowners can also lower their mortgage payment by refinancing when payments becomes too much to handle.
Current Housing Market
The best time to buy a home depends on many variables, one of which is the time of year. Families with children tend to more during the summer months to avoid uprooting their children in the middle of the school year; along with the nice weather, the housing market is typically highest in the summer. New properties pop up throughout the spring months as people prepare to sell their homes, so March through May typically has the most options available if you do not have children to worry about. The prices start to dip in September and reach their lowest in January and February, so these are the best times to shop around if you’re looking for a deal.
The current housing market, as well as career and economic trends, continue to push young, educated adults in from the coast to the metropolitan areas of surrounding states. In areas like the midwest, housing is consistently affordable but wages tend to be low. The lack of affordable housing in smaller metropolitan areas like Boise and Spokane is a testament to the bubble and inflated housing costs that are bound to peak and burst sooner rather than later, but the toll it is taking and will continue to take on the economy is grim.
The best time to buy a house is when you are ready for that commitment, but it’s important to be familiar with the potential risks and the state of the housing market when buying. Although buying a home is a quintessential aspect of the american dream, it’s best to fulfil this dream during a time when your investment is more likely to pay off. Take a note from history and invest in your dream when your bases are covered and prospects are bright.