Many potential home buyers wonder if the current housing market means they should buy a home. However, they should be asking if it’s a good time for them to buy a home. While it’s important to keep an eye on the lows and highs of a market, new home buyers should also make a decision based on what they are comfortable with financially.
Is Buying A Home in California Expensive?
Homeownership has been on the rise since 2008. Currently, about 70% of Americans own a home. Surprisingly, homeownership has increased by about 5% during the coronavirus pandemic. This is because home buyers are much more confident with current low interest rates.
Of course, half of the battle with buying a home in California is deciding if you can afford one! Currently, California is the most equity-rich state in the country, meaning homeowners usually see the values of their homes increase over time. This makes buying a home in California sooner than later more advantageous for a person who can afford to do so.
Generally, owning a home is never a poor financial decision. Many find that they can turn a profit eventually with a home purchase. Part of the challenge of making sure you’re making the best investment is timing it right with your financial situation and making sure you can afford to wait as it grows.
Let’s talk about market timing and when it’s a good time to buy property.
What Is a Buyer’s Market?
If you’re looking to get the best deal on a home, you’ll most likely have a better opportunity during times the real estate industry refers to as a buyer’s market. A buyer’s market is when there are many homes for sale with less demand for them. These conditions happen during economic downturns such as recessions, causing homes to sit in the market for longer than usual before selling. With low demand, sellers find themselves in a more difficult position and may be more willing to negotiate and accept a lower offer.
However, deals aren’t as abundant in a buyer’s market as they may seem on the surface because of how the Federal Reserve handles interest rates for home loans.
Best Interests Rates for Buying a Home
The Federal Reserve will adjust interest rates to balance the supply and demand in the market. When home prices rise, we tend to see interest rates stay low to make homes more affordable. When home prices drop, we see interest rates increase to make selling a home more sustainable. Because of these practices, many homebuyers tend to pay similar prices, whether it’s a buyer’s market or not! If you buy a cheaper house with a high rate or a more expensive home with a low-interest rate, a homeowner might end up paying the same amount for their property over time.
So, Is Now the Time to Buy a Home?
It might seem cliché to hear “it’s always a good time to buy a home” from a realtor. However, we say this often because we genuinely find it to be true! Unlike money, real estate appreciates over time and is inflation-proof. Even if a person bought a home at the peak of the market between 2005 and 2006, that home’s value would have still appreciated today. This shows that even those who buy a home outside of a buyer’s market are safe with time. No one can predict the top or bottom of the housing market. So, the best thing a person can do is buy a home when the timing is right for them.
Owning a home can help you do the following:
- It helps build your equity.
- It helps to produce extra savings.
- Ensures that you're paying for something that benefits your future—something paying rent doesn't do!
You can find a deal in any market. If you can purchase a home below its market value, that’s always a good buy! You instantly gained equity, which is what everyone wants to do. However, if you can afford to buy a home with a mortgage payment that is comfortable for you with a fantastic interest rate, that too would still be a great time to buy a new home!
When Is Buying a Home a Bad Decision?
Over the years, I’ve noticed that many clients try to time their home purchase a little too perfectly. As they focus on predict the market’s peak or low, they end up hindering the process and waiting too long to get into the market.
I always try to remind people that the greatest athletes don’t make careers by waiting on the sidelines for the best moment to shine—they’re always working toward progress. If you can comfortably afford to get in the market and have a chance to obtain a home and build equity, it’s a good time to buy! However, the keyword here is definitely “comfortably”—the only time I would consider buying a home the wrong decision is if a buyer can't comfortably afford the payments.
In other words, let your finances be one of the key indicators of your ability to buy a home. If you aren’t confident with your finances, I encourage you to save money. Building your savings before a home purchase will help you decrease your monthly payment and make it more manageable. It’s a good time to buy a home when you can afford monthly payments. If you're comfortable with your down payment and the monthly payments it will enable, it’s time to get into the market!
Buy Your Home with the Help of a Professional
Additionally, don't hesitate to reach out to a realtor or lender for guidance toward homeownership. Doing so will help you create a financial roadmap for homeownership. It’ll teach you how to build equity and enable you to upgrade your home if you want to do so in the future. If done right, your second home can be larger, nicer, and have the same payments thanks to the money you saved and the equity you built with your first home!
Give me a call right now at (661) 888-4493 to discover if now is the right time for you to buy a home. I’d be thrilled to help you make this important decision the right way!