Many ask the question, “When is the best time to purchase real estate?” In short, the question is rather subjective and depends on several factors. It depends on your finances, your needs, and your time frame in purchasing a property. So instead, take a look at it from a different perspective and ask... “when is the best time for ME to purchase a property?”
There are a few factors to consider, they all tie in to one another or are restricted by the other, but nonetheless are important to break down.
What you expect home prices to be in the future, will greatly affect when you look to purchase a property.
If you are looking to hold a property for a short period of time, it will save you (and may even make you) some money. The strategy here is to be meticulous about when you purchase or sell a property. On the other hand, if your outlook is further into the future, you could be more flexible about when entering the market and the property you ultimately choose.
Your desired outcome and expectations of the future will certainly shape your decision in buying a home. So ask yourself; “where do you see yourself in the next 5, 10, 15- years?”, “How much do you want to make on a sale?”, and “Can you afford unexpected costs for repairs and maintenance?”
PURPOSE OF PURCHASE
We always hear people mentioning the need to “get into real estate” but you need to remember to have a purpose in mind for making a purchase. Slightly tied into the first point on expectations, you have to understand what investment vehicle you are in, to know what to expect or desire in the future.
Some reasons people might purchase real estate as a hedge against inflation, tax-loss harvesting, active income- or everyones dream- passive income.
For some it may not make sense to purchase a single family home and would be better off purchasing a multi-family home or maybe even a small apartment complex.
Money, money, money! It can be the only factor preventing you from taking advantage of an opportunity. If you are not in the position to purchase a property or stack on some debt, you are on the sidelines. That’s completely fine! Take the time to save up and educate yourself on loan options, home pricing trends, etc. so you can capture the opportunity when it presents itself in the future.
For those who have the capital to buy real estate, the best thing to do is figure out the type of property you want and when the best time is to purchase a property. After that get a pre-approval and contact me so we can find the perfect property to fit your strategy.
One of the main indicators of where real estate prices are headed are jobs. High job market leads to higher volume of transactions, leading to higher prices and vice versa.
At the moment we have seen a dip in home prices, but considering we are living during “unprecedented” times, some might think home prices have not gone down enough. I believe we haven’t reached the lowest point and, in fact, prices will continue to drop (depending on location of course). For now, there are a few reasons we are continuing to see reasonably encouraging prices. To name a few, lower interest rates (near all time lows) are allowing and incentivizing people to borrow more. Many are living off of supplemental income (such as EDD) or other means of government support (such as PPP) due to COVID-19, so there is not the outpour of foreclosures and homes up for sale as has been anticipated by many at the beginning of quarantine. In addition, many still remember the last recession and the strong bounce back, and then there are those who were waiting for any dip in real estate prices to get back into the market or those who have been saving and are waiting to jump at the right opportunity. With so much uncertainty in the world and a Presidential Election coming up, people continue to purchase real estate to protect their money... (hence a very strong July home sales report).
Ever since we entered quarantine with many people out of work and in most cases still getting paid (PPP/EDD) it seems that a lot of our world is on pause. Once things get back to “normal” and EDD funds run out, I believe that we will see a drop in real estate prices.There will be ,of course, like any market, pockets of strength, but a lot more people will be out of work, and combined with inflation, many will be sidelined. Collectively speaking people are starting to believe that there will be a drop in prices soon, and this fear can lead to a self fulfilling prophecy, all leading to lower volume and prices.
This of course is all my opinion and could be wrong and am not advising anyone to purchase or sell a property after reading this, but based on history, current data, and current actions of our country and state, I am led to be very confident in my analysis.
If you have any questions or would like to collaborate to buy or sell a property, feel free to call or text me at 707-480-9383 or email me at firstname.lastname@example.org!