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Wednesday, 29 January 2020
Agent Resource Center
Agent Resource Center

Best Time To Buy A Home & At What Price

Written by Posted On Monday, 15 April 2019 15:44

Knowing When To Buy a Home and at What Price

There is a very real cost associated with buying and selling a home, just as there is with renting an apartment. Many younger individuals and couples struggle with the decision regarding when to buy a home as well as what type of home to buy given these factors.

Building Equity

The main argument against renting an apartment is that a renter is not building equity in a home. Over time, real estate tends to increase in value due to inflation and renovations, although there is a very real risk that housing prices can bubble and drop precipitously in some areas.

The increase in the value of housing inventory (in Boston, for example) makes investing in real estate a wise decision as it prevents the escalating cost of renting a home over time. However, buying a home does take quite a bit of liquid assets to execute. And investing in a home could prevent someone from investing in other assets.

Having an asset that you can dispose of when you sell a home also provides some financial support in old age. Understanding when and where to purchase a home is important and can impact the decision-making process and return on home investments.

Funds Needed to Buy a home

When buying a home, purchasers will need to make a down payment on the home and have funds to cover some significant immediate costs. It is recommended to be able to have 20% of the purchase price of the home as a down payment in order to avoid mortgage insurance. Which is an added cost of owning a home that does not add to the equity in the home and should be avoided when possible

In addition to the down payment amount, a buyer will need to have funds available to cover the closing costs associated with the home purchase. These include fees and charges that are specific to the state where the home is located and can add a significant amount onto the mortgage loan taken.

Contact a mortgage lender for a good estimate of the closing costs to understand the costs. In addition, be prepared to have funds available for a full year of home insurance and additional funds set aside for any repairs that are needed on the home. Keeping a reserve for those unknown items that can pop up at any time.

The Starter Home vs. The Forever Home

Due to limited funds, many new homeowners will seek out a starter home that is in need of repairs and and a little TLC to be presentable. Other people will instead save up a significant amount of money to invest in a forever home. No one strategy is the right strategy, the answer for the best option will depend on your individual circumstances. Here are some of the factors that can impact your decision.

 

Factors That May Lead a Home Buyer to Buy a Starter Home:

  • Low current interest rates on mortgages
  • Low home prices
  • Excess cash funds
  • The end of an apartment lease or a significant increase in rents
  • Rapidly improving neighborhood and good opportunity on home purchases
  • Your ability to renovate the home yourself or at low cost

Factors That May Lead a Home Buyer to Buy a Forever Home:

  • High current interest rates
  • A perceived view that current home prices are higher than typical
  • Desired to live in a specific community or school district
  • Established neighborhood with high cost of entry
  • Limited current available cash
  •  

Finding the right home can be challenging. Balancing out the opportunity that a starter home can offer with the challenge associated with renovating is important, but also keep in mind the closing costs associated with buying and selling a home as well as the disruption in your life that switching homes can have. If you are thinking about renovations, you will see a difference 

When buying your first home, the timing is important.  Real estate sales increase and decrease in the same months every year.  There is a buying and selling season all the way down to statistically the best time to list your home for sale. 

Balancing out these factors with your overall life plan can be difficult but understanding when the market provides opportunities for you can make the return on a home purchase more opportunistic.

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Dean Cacioppo

Dean Cacioppo Credentials

Dean has worked as a real estate agent, real estate instructor and has years of experience working on the technology side for major Real Estate Brokers, Agents and MLS’s.  Dean has sat on the Board of Directors for multiple MLS’s including being elected to President.  Years of serving on a number of MLS Committees for multiple boards, served on the Strategic Planning Committee for Louisiana REALTORS and participated in many task forces and committees for the benefit of all Real Estate Agents in Louisiana.

Work in Real Estate Technology

Dean has provided live training on technology, direct IT and Technological Support to thousands of Real Estate Agents for over 16 years.  With years of being the go-to guy on technology strategy, training and support for Brokers and MLS’s across the country, you can now have direct access to Dean for your personal technology needs. 

Real Estate is extremely competitive on the web and we specialize in Real Estate Websites and Digitial Marketing for Realtors, Search Engine Optimization for Real Estate and Social Media Marketing for Real Estate.  Please don’t be confused, we are happy to work in all business verticals and have quite a bit of experience in a variety of markets.

For 2019, we have seen an expoetional increase in the ability to generate leads from local SEO for the real estate industry.  This has Google My Business taking a larger share of buyers and sellers looking for real estate online.  We understand that there is a real estate sales cycle that determines how "ready to act" the lead is.  Leads that are aquired for search phrases such as "Realtor around me" or "top realtor in my city" have a much better chance of converting than the indevidual searching for a generic real estate term.  

 

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