Playing the Housing Market: Buying vs Selling
Now that you know more about finding a real estate agent, you should begin watching the housing market carefully in the weeks or months before buying your first home to get a feel for whether it is in your favor.
Watching the Housing Market
For the past year, the housing market has been favoring buyers. Soaring market values were short-lived as many people decided they just could not afford to live in certain areas because of the cost of housing, forcing many sellers to lower their prices. While this sounds like good news for you, the housing market can be very fickle. Depending on where you want to live, you may end up having to pay a small fortune for the home of your dreams.
Watching the market, surveying neighborhoods, and finding a good agent will help you in your search.
You don’t need to become a slave to the housing market, but you should keep the following in mind before buying your first home:
* The past market value of the home you are interested in buying
* How much house your budget can get you in different neighborhoods and towns
* Neighborhood value
* How much the home value should increase over time
* Price reductions that may be available
Negotiating a great deal when buying a house does not ensure you will make a huge profit when you sell the home. The housing market will continue to fluctuate. Since this is your first home, you may want to choose something you can pay off quickly and make a larger profit on in the future.
Also, remember that any improvements you make on the home will increase its overall value. Just don’t spend too much money on improvements. Create a home improvement budget and stick with it.
One of the biggest mistakes that first-time homebuyers make is buying a home for a lot less than they budgeted and then making improvements which end up costing more money in the end. If you can find a great deal on a home, use that extra money as a cushion in case you lose your job or are too ill to work. Owning a home is a big responsibility. Knowing how the market is moving and spending your money wisely will help when you are creating a budget, applying for a mortgage, and deciding how much to put down on a home.
Making the Most of The Housing Market
While you should be watching the housing market, there are other areas of interest you should also be watching, such as:
* National interest rates for mortgages
* Building rates in your area
* Number of foreclosures in your area
* Stock market and gasoline prices
National Interest Rates for Mortgages
Even though the housing market may be favorable, interest rates may be increasing. In times when the housing market is in a slump, interest rates tend to rise to retain the natural balance within the economy.
The interest rate you receive will depend on many factors, including:
* Other loans
* Current credit score
* Credit history
* Number of credit cards
* Yearly income
* Owed debts
* Current interest rates
* Type of lender
* Time of year
* Adjustable or fixed rate mortgage
If you see housing prices dropping, you may opt to buy a larger home than you originally considered. While you will be saving money on the price of the home, you may end up paying more each month because interest rates have increased.
New Home Construction in Your Area
If you notice the housing market has caused a decrease in the number of houses being built in your area, then you may end up in a bidding war to buy your first home. When new home construction slows, this can mean several things:
* The area is no longer popular
* The interest in buying a new home has diminished
* Buyers can no longer afford to purchase new homes
* Buyers are opting for older homes that are less expensive to heat and keep cool during the year
Foreclosures in Your Area
When looking for a home, you should consider looking at homes under foreclosure. Be sure you have selected an agent that specializes in foreclosures. Houses in foreclosure are sold “as-is” so you will need to determine if the price plus the cost of repairs are within your budget.
If a bank lists the property for a really low price, they may receive multiple offers in a short period of time. Be familiar with comps in the area so you can make a competitive offer to the bank for the property.
Stock Market and Gasoline Prices
Even if you do not play the stock market game or own a car, you should still pay attention to these areas because they are usually what will dictate housing prices and the cost to heat and cool the home.
When the stock market is doing well, many people will spend their money more freely, which will give way to higher housing prices. But when gasoline prices go up, so will the price to heat and cool a home, which may force homebuyers to reconsider buying until the prices fall again.
This could be a good time to buy a home if you are willing to pay a little more each month in utility costs.
In the End
The impact society can have on the housing market can be huge, and it can also have lasting effects. Buyer’s markets are created when there are more homes available than buyers, while seller’s market occurs when there are more people who want to purchase homes than there are homes for sale. The housing markets fluctuate due to issues mentioned above.
In the end, when you are ready to buy a home, you should make the decision based on what you can afford at that time and how much money you can put down for your new home.
If you can afford to make the move into your new home now, you should not wait too long before finding a house and making an offer. The housing market can change quickly.