In 2006 our local market began to slow, causing many buyers to postpone buying hoping that prices would drop. This causes an increase in inventory. When supply increases and demand decreases, the market is described as a “buyer’s market”.
In some areas of the country and in some segments of the market, prices have declined. However, in other high demand market predominately in the western part of our country prices have actually increased compared to a year ago, mostly for upper end properties.
Mass psychology influences home-buying patterns. For example, when buyers decide that it is not a good time to buy due to fear of falling prices or rising interest rates, this has a tendancy to create a self-fulfilling prophesy. When the number of home selling drops, buyers tend to hold back. When sales increase again, buyers perceive this as a good time to buyer. In these conditions, buyer feel they should buy immediately before home prices rise, interest rates go up and they can’t afford the home they want.
Buyers tend to follow the herd, which is really very counter productive. In my opinion, the best time to buy would be when there isn’t alot competition from other buyers. Most home buyers feel more comfortable buying when alot of people they know are buying. The comfort of the masses helps validates that their decision is a good one.
Home sales go thru normal cycles. There are up markets, down markets, and flat markets. Ideally, anyone would want to buy at the end of a down cycle, just before the prices pick up again. It’s actually impossible to time the real estate market, by the time the down cycle has passed the market is moving up again.
In a changing market, buyers who are not sure about how long they will be living in an area may be better off rentiHere’s my best advice…Since all housing market experience normal cycles, buying a home can be risky unless you have a long-term perspective in mind. If you decide to buy at the peak of a cycle and sell soon after in a softer market, you’ll could end up selling for less than the price you paid. Most buyers who can stay put and ride out the cycles are in a better position to recoup their investment when they sell, and possibly make a profit.
Good candidates for buying in our current local market are buyers who are ready to invest for the long run and stay put for awhile. This means two things, that they aren’t planning on moving soon and they’re buying a home that suits their long-term needs. There is currently much less competition amoung buyers in our market. My best advice…for the right type of buyer it’s a perfect time to buy!