The state of the economy, interest rates and market cycle all play a role in the final price of your dream home, but it’s not always easy to tell whether now is a good time to become a homeowner. First time homebuyers are typically nervous about entering the homebuying market because they simply can’t tell the difference between a buyer’s market or a seller’s market.
In a buyer’s market, housing prices are very attractive and interest rates may be lower than the average. You may even see more ‘For Sale’ signs in different neighborhoods and sellers may be willing to reduce their prices drastically just to sell the home.
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 on the right market will significantly favor first time homebuyers financially. However, Barron’s ‘Smart Consumer’s Guide to Home Buying’ cautions that “cycle phases are much easier to pinpoint long after the fact.” Nevertheless, you can look for certain signs that indicate the current market phase of the industry.
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.
In a seller’s market, you can expect to see: very few ‘For Sale’ signs around the neighborhood; relatively high prices and competitive selling tactics within the same neighborhood; people ‘flipping’ homes where they buy a home and renovate it to sell it in a very short period of time; news stories that point out how unaffordable it is to buy a home; lots of rental complexes being converted into condominiums.
The best time to buy a home is during the buyer’s market when sellers are more eager to sell their properties and give out discounts. A good indicator to buy a home is when ads of homes with price cuts, discounts and other extra incentives start to circulate. You might be tempted to buy the first home you see or the lowest priced home but it is still important to work with a professional agent. Get a professional agent, especially if this is your first home purchase, to guide you in choosing the best home that would fit your needs.
Homebuyers must have a strategy to help them out in the entire homebuying process. Homebuyers are advised to look for market indicators, work with a professional and do their own research to come up with a plan and choose their best option.
Are you a new homebuyer looking for homes for sale in Minnesota? Searching online using the Minnesota MLS is a great way to find the type of home you’re looking for.
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