We would all love to go back in time and buy a house when housing prices were at the bottom. However, we cannot travel back in time, and no one knows when the bottom is, until it passes. How do you know when a good time to buy a house is? In 2016, prices are rising in most areas of the country, and many markets are higher than they have ever been. Is it still a good time to buy a home with rising prices? I think the decision lies more with the person buying a home, than with the real estate market. You need to look at your goals and why you are buying. Can you afford a home, are you buying an investment, where are you buying? If you are thinking of putting off buying a home, prices might go down again, but I don’t think they will ever be as low as they were during the housing crisis.
Low interest rates make buying a home easier
The biggest reason I think it is still a great time to buy a home, is the incredibly low interest rates that are available. Rates have started to climb higher recently, but then they drop back down again. I remember when we all thought 7 percent was a great rate for a home mortgage. With rates below 5 percent or even 4 percent on most types of loans, there is still incredible opportunity to get low payments.
Rates may go up higher in the near future, but much of that will depend on the economy and how well it does.
Home prices are rising, but there are still opportunities
We have seen an increase in prices over the last few years, across most parts of the country. This has made it tougher to get great deals, but there are still many opportunities out there. Many areas of the country still have prices well below their historical average even with the price increase. If you want to invest in real estate, there is always an opportunity to get a great deal on a home. If you buy below market like I do, then it is tough to lose money when you invest in rental properties. Just because prices are high, it does not mean there is not opportunity. I live in Colorado, with one of the highest appreciating markets in the nation, I have 11 flips right now and 16 rentals that all make me money.
Rental properties are in high demand
Rents are also going up or are staying stable in many markets. While banks have made it harder for investors to get loans, they have also made it harder for owner occupied buyers to get loans as well. Since it is becoming harder to obtain a loan, there are many more renters in the market than ever.
There have also been a lot of people who lost their homes to foreclosure, or sold them as a short sale. The people who lost their home, will not be able to buy for at least three years in most cases. They have become renters and need a place to live. In my market our rental vacancy rate is 1.6 percent, which is an incredibly low number.
The housing bubble has scared a lot of potential buyers into continuing to rent, instead of buy. Many people see prices going up and worry that means another bubble is coming. They continue to rent and will continue to need a place to live as well. I personally do not think we are in another housing bubble.
The sooner you start buying real estate the better off you will be
The sooner you invest in rental properties, or the sooner you buy a house, the sooner you will start paying down your loan. As with almost any investment, the sooner you get started the better off you will be later on. I wish I would have begun buying properties earlier than I did, as I would be in a much better position. As long as you are investing for cash flow you can survive the down falls in the market. The longer you have cash flowing coming in the more wealth you will create.
Why shouldn’t you buy a house?
If you are buying houses as investments, I think you have to buy for cash flow. If your market does not cash flow well, maybe you should not buy, or buy somewhere else. If you are buying as an owner occupant you need to figure out how much home you can afford, if you are willing to do what it takes to get a good deal and how long you will be living in a home. There are some great tax advantages that come with real estate. I don’t think everyone should buy a home, just to buy a home, but it can be a great investment for many. Here is a great article on if you should rent or buy.
It is tough to time any market, because how do you know where the bottom is or where the top is? You may be able to see it clearly two years later, but that does us no good. There are so many economic factors at play it is really tough guess if houses will appreciate or not. I think instead of timing markets, figure out if now is a good time to buy for you. If you learn the best ways to buy a house, and buy below market value you will be in great shape.