The prospect of real estate is exciting because a new home means a new life, new opportunities, and new possibilities. As dreamy as it sounds, it is important to snap back into reality to face the facts: buying real estate is a big investment and the best outcomes can only happen when you weigh all of your options carefully. Figuring out when to buy is one of the most important pieces to consider.
Gear Up For Autumn
After the summer heat wears off, start ramping up your home search. According to Realtor.com, the best time to buy a home is the first week of fall. The company analyzed 2 years’ worth of online page views, median list price, percent of list prices reduced, median days on the market, number of new listings, and number of active listings, and out of that, the data from 41 out of the 53 housing markets they studied said early fall is best. (1) The reason? There is less competition, more price reductions, and a bigger home inventory available. In other words, this is the time where there are more homes to choose from, fewer buyers jockeying, and more opportunities to score better deals. It is a win all around, as long as you can plan and prepare ahead of time.
If you want to take advantage of this information, before you go home searching, make sure to complete a few steps first: get pre-qualified by a bank you trust, know your budget, find a Realtor that understands your goals, make a list of must-haves for your future home, and research areas you desire to live in.
Keep Your Ear To The Ground
As we saw in the 2008 housing market bubble, (2) the real estate market can have drastic highs and drastic lows. When the bubble burst, homes lost an average of 30% in value. Recessions are hard to predict, even for the experts. This is why it is important to stay alert and aware of the current market trends and patterns. You can look to Zillow and Redfin for more information, but since real estate can vary greatly between neighborhoods, it is best to contact a local real estate agent. If it looks like real estate values are rising at an unsustainable rate, then hold off on buying a home. If it looks like interest rates and the market are keeping steady, then it may be time to start searching. Be vigilant and go with your gut.
What Will Work For YOU?
Regardless of what is happening in the market, go with what makes the most sense for your household budget. Always make sure you know exactly how much home you can afford. As tempting as it is to jump the gun for the American dream of homeownership, it is important to know your numbers and be smart with your money. The general consensus among financial advisors is to buy a home where the projected monthly payments will be no more than 28% of your gross monthly income and no more than 36% of your total debt. (3)
How big of a down payment you can put down is another determining factor as it will determine how big your mortgage payments will be and whether or not you will need to pay for PMI (private mortgage insurance) as well. In addition to your principal and interest payments, it is essential that you are comfortable with the annual real estate taxes for the areas that are of interest to you. Remember, you will pay a higher real estate tax bill for new construction, sometimes significantly more.
Get all of this in order before making any rash decisions based on emotions to prevent buyer’s remorse and long-term financial hardship.
Enlist Expert Help
Buying real estate is a rewarding journey that has a lot of twists and turns and can get murky. This is why it’s important to gain as much knowledge as you possibly can. The fastest and most effective way to figure out what is right for you is to enlist the help of financial professionals who can assist you along your way.
We at HBA Wealth would be more than happy to help. Contact us at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com to schedule a meeting today!
About Haydel, Biel & Associates
Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.
The commentary on this blog/website reflects the personal opinions, viewpoints and analyses of the Haydel Biel & Associates employees providing such comments, and should not be regarded as a description of advisory services provided by Haydel Biel & Associates or performance returns of any Haydel Biel & Associates Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Haydel Biel & Associates manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
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(1) https://www.cnbc.com/2019/09/21/when-is-the-best-time-to-buy-a-home.html
(2) https://www.investopedia.com/articles/economics/09/subprime-market-2008.asp
(3) https://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx