When Should Buyers Buy?
When Should Buyers Buy....? NOW
We all know that the market is very soft now, which creates a good time for buyers to make their move. In fact, it is now recognized as a Buyer's Market. What I hear buyers saying is that they want to wait and buy at the bottom of the market.... just like the sellers who wanted to sell at the height of the market. In retrospect, we see that the height of the market was in the Fall of 2005--- before hurricane Wilma. Of course the sellers didn't know that at the time.
So how will the current buyers know when the bottom arrives....they won't! The first indicator will be the rise in prices, and the bottom will have passed. The buyers will have missed the bottom just as the sellers missed the peak.
Consider this -- how long do you plan on living in your new home? If your answer is more than one year, then I recommend that you do not delay your purchasing plans. My reasoning is represented in the following graph:
This chart depicts the relationship between the price $ and time in the market. Buyers want to buy at Point C, but we don't know exactly when that is. We do know however, that we are currently somewhere between Points A and C. I recommend buying now, and here are your advantages:
+ There is a lot of housing inventory for sale now, subsequently resulting in more choices
+ Due to the abundant supply, you have a lot of negotiating power in this current market.
+ Mortgage interest rates are still favorable, even though lending qualifications have become more strict due to the mortgage / sub-prime meltdown. This will make getting a mortgage more difficult for some buyers.
But what if you decide to wait, and then unfortunately miss the bottom --- now you decide you better jump in at Point B. The following are the disadvantages:
- All the other buyers are now out shopping and competition is on the rise.
- The inventory of houses is shrinking and therefore the prices are going up.
- Your negotiating power is diminishing.
- Mortgage rates are unknown.
Again, enter the market now and make your purchase decision. In addition to the advantages listed above, you will also have the intangible benefit of living in your new home thoughout the duration of time from Point A to Point B. Furthermore, you will be poised to catch the upswing and appreciation the market now has to offer.
-- Article and Graph by Adrienne Foland, GRI, ABR, REALTOR
Call me and let's discuss your options --- I'm glad to assist you.
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