IS NOW A GOOD TIME TO BUY PROPERTY?

by Victor M Adamus

Yes. It’s a good time to buy property because there is more inventory in the marketplace, the interest rates are low, around 4% for buyers with good credit and many sellers are willing to deal or help with closing costs or defray a few months of monthly condo maintenance fees.


It’s a good time to buy because text book wisdom says “markets are cyclical” and they are. This means if you buy now, you will be buying close to the end of the down cycle before the market picks up again.

That, in my opinion, is the best time to buy residential property. Sellers pricing of properties couldn’t be better. Some closing agents are reporting closing prices 10 to 25% less than appraised value. And buyers who zero in on the foreclosure markets are getting good deals too, but the waiting time to close the transaction could go out three months. That's a long time to wait especially with Sellers who are out there competing with Short Sale prices.  Buying from an owner may even be a much better deal since they are caring for the property.


Having said that, why is the buyer pool always less than the amount of inventory offered in the marketplace when prices for properties are so good? Or when the market is near bottom?

Well, that is what we call the psychology of market conditions. People, for some reason, have a fear of buying when the prices are falling and panic when interest rates rise. They can’t accept the opportunity at hand, and will wait in the hopes it even gets better, but unfortunately, many a buyer waits too long until the increase in interest rates force them out of the marketplace for what we call “their house of choice”.


This reluctance to buy, many experts agree, is impacted by “market shifts”. Changes in the real estate market that can throw buyers off balance. The perfect house is at the price they can afford but then they waited too long to buy it. Customers have told me “I could have bought that house a year ago when it was so much less” . . . or “I didn’t buy because nobody else was buying”.


I have also found that in a slow market buyers who read the market for what it is and are house hunting for a long term investment know instinctively when it’s the right time to buy because of the selection available “for sale”. People, who are ready to put their roots down, find a home priced below the market, one they can afford, jump on the opportunity to get the low price, even if they have to make a few trips to Home Depot.


Maybe they picked a house where they can make improvements to it over time and hopefully turn a profit when it’s their turn to sell three to five years down the road. These are “smart money” buyers. Buyers who buy in a down cycle always maximize their investment. They buy low so when it’s their turn to sell, they sell high.


But for the bubble burst nationwide, homes doubled in value every 3 to 5 years! Back then it was a situation where an owner could take on more debt, like a second mortgage, pay off his credit cards, cars, and any other loans because when he sold the property he/s could always count on the equity to draw down on during retirement.  It’s a whole new ballgame for those folks now but for buyers looking to buy, yes, it’s the best time to get a piece of the rock.