The economy works in a cycle and each cycle has an effect in the prices of goods. Each industry has a unique ‘market cycle’ generally follows the whole economic trend and real estate is no exception. Most people consider the home and property industry to have two phases: the buyer’s market and the seller’s market. Knowing which market the industry is in can benefit you as a homebuyer.
Houses are generally affordable in a buyer’s market and it’s easy to get a loan since interest rates are lower than average. You may even see numerous ‘For Sale’ signs in front of homes.
It is hard to find an attractive home deal in a seller’s market. Lotteries are setup that allow exclusive buyers to bid on certain homes. You might hear some people saying that the market is in ‘crisis mode’ during a seller’s market.
Buying a home in the right market cycle can give you more value for a home compared to its purchase price. The only problem is “cycle phases are much easier to pinpoint long after the fact”, according to Barron’s ‘Smart Consumer’s Guide to Home Buying’. They further explain that “if you know what to look for, it’s easier to figure out the state of the market.” Look for these market indicators to guide you in the timing of your home purchase:
As mentioned, ‘For Sale’ signs are everywhere in a buyer’s market. At this time, sellers are giving incentives, such as concessions and discounts, to sell their properties quickly. There would also be an increase in the number of foreclosures and high-priced, quality homes will be sold for lower-than-average prices.
When you hear news about how unaffordable homes are, that is an indication that the industry is in a seller’s market. There are very few ‘For Sale’ signs put up and prices of homes are relatively high. Old homes are ‘flipped’, or renovated, and sold for a quick profit. You may also see a lot of rental complexes converted into condominiums.
Obviously, the best time to be a home owner is during a buyer’s market when sellers are anxious to sell their properties at their published price or offer discounts for a quick sale. You can jump into the homebuying market with more confidence when homes are being advertised with drastic price cuts and offering you extra incentives to make an offer. However, it’s still important to work with a professional realtor to find the best home that suits your needs – especially if you will be a first time homeowner.
As with anything, you need to educate yourself about the home buying process for you to make an informed decision. Look for market indicators and work with an expert realtor to time your purchase and get the most out of your budget.
If you’re a new homebuyer looking for homes for sale in MN , the internet is one of the fastest ways to find what you are looking for. The Minnesota MLS Listings allow you to easily search by price and location.
