How to time the market to buy a home

Purchasing a home is one of the biggest staples of wealth for most families in America. It’s the largest thing in their life that can create big wealth creation. Here are some things to be aware of if you’ve been on the sidelines and you’re trying to figure out when is really the best time to buy a house…

If we look back to recent years we can always say “Hindsight is 20/20”,  “I should have done that, I should have bought then”. We always look back with the lens into the past to evaluate whatever transpired before. We can’t regress we can only go forward so as a result how do you time the market? Well, the market is going to be constantly changing and evolving regardless of whether you buy a house or sit on the sidelines. You could purchase a house and then values could come down, you can sit on the sidelines, and then housing prices could continue to rise. Both arguments could absolutely play out regardless of what you choose to do or not do.

Knowing this information the best time to purchase a house from an investment standpoint is when there is financial pain in the market. The great investor Warren Buffett once said “I buy when there’s blood in the streets” and those words are actually very true. We experienced financial pain during the housing collapse. We are experiencing it again as it pertains to the Covid-19 coronavirus pandemic. The pandemic has created significant financial pain within the markets and as a result, we’ve seening eye-opening historical mortgage rates. If we look at the last financial crisis housing prices plummeted but interest rates by and large in comparison to 2020 levels have remained relatively high during that time frame.  Whereas in 2020 housing prices continue to rise and interest rates are down driving affordability.

You should consider buying a home when you’re feeling comfortable with the mortgage payment and you’re feeling good about your income and your ability to save within a budget. If the mortgage payment to you and your family is sustainable over the course of time and do it with a five to seven-year time frame or longer, you will do very well for yourself financially. This is combined with your tax deduction, your home equity rising over time as well as the making timely repayments of principal and interest in conjunction with market forces.  Lead your home buying decision with affordability as it pertains to your income, future job, cash, and ability to save.

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