Best Time to Buy a House

Trying to decide when to buy a home can be a tough decision. After all, there are a number of factors that go into calculating the best time to buy a house. Here are some of the items to consider as you begin housing hunting.

Economy

While it’s mostly-futile to try and time the market, the reality is that you can get an idea of when it might be a good time to think about completing a home purchase. For example, back in 2008, home prices fell significantly, with the median home price at $180,100. As a result, 2009 or 2010 would have been considered a best time to buy a house.

Hindsight is 20/20, and we can’t go back there. But we can look at what’s going on right now. As of December 2018, the median home price is $253,600, according to the National Association of Realtors (NAR). Home prices have increased in recent years.

Additionally, we’re in an environment of rising interest rates. If you want to lock in something at a lower rate, it might make sense to buy now, before rates go even higher, and then refinance if rates drop in a few years.

However, the economy is rarely completely predictable. If you think that we have a few more years of economic expansion and that rates will rise and home values will continue to go up, buying now might seem like the thing to do. On the other hand, if you think we’re verging on a major economic event in the next two years, the best time to buy a house might be when prices and rates have dropped and you can score a better deal.

Location

Sometimes, it’s less about the wider economy and more about your location. In some places, housing prices don’t swing as widely as in others. For example, I live in Idaho. The housing market crash didn’t depress home prices as much as it did in other areas of the country. The dip came after the rest of the country’s and the recovery came a little later, too. But the overall swing in home prices wasn’t that big–t least outside the capital, Boise. Right now, though, there’s a spike in home prices, with Zillow reporting that home values have grown by nearly 14% in the last year.

Take a look at your local market. What are some of the trends? A site like Zillow or NAR has historical data that allows you to get a feel for local trends. If it’s a seller’s market (like it is in Idaho Falls right now), you might want to wait to see if a shift might occur. On the other hand, if you think it looks like you’re at the beginning of a trend of higher prices in the future, it can make sense to buy and then hope values increase.

Lifestyle Preferences

Deciding the best time to buy a house isn’t always about economy and local pricing trends, though. Sometimes it’s about your lifestyle preferences. Economy and local trends matter more if you plan to leave in the next three to five years, or if you want to flip your home for profit. In these cases, being able to take profits on your home matters. It’s tricky to time it right, though, so you need to be careful.

The matter is different if you plan to stick around for more than five years and put down roots, or if you plan to use the home as a long-term investment property. What you expect to get out of the home determines when it’s the best time to buy a house.

If you plan to start a family, and you have a stable job, and you expect to stay in the house for more than 10 years, it might not matter what’s happening in the economy or with local pricing. You want to advance your lifestyle, and you’ll ride out a housing downturn, so it’s less important to hit the market at just the right time. You might be more concerned that the home is in an area with good schools, or that it’s close to amenities.

The same is true if you plan to live in the house for a couple years and then rent it out. If you know you’ll hang onto the house in an effort to create income for yourself later, the exact trends and market at this point in time don’t matter as much. Instead, you want to make sure the rental market will be a good fit for you when you’re ready to take off and let someone else live in the house.

Can You Afford It?

Your next consideration is whether you can afford it right now. Can you get what you want at a price point that fits inside your budget? Sometimes the best time to buy a house is more about your personal financial situation than what is happening in the economy, or what local pricing trends are doing.

Look at your financial situation. If you had a mortgage, what would it do to your cash flow? Understand the other costs of owning a home. Can you handle the property taxes and insurance? Have you planned for maintenance and repair costs?

Owning a home can be costly, beyond the mortgage payments you make. Research the total cost of buying, and then compare it to what you spend on housing now. In some markets, it costs less to buy, and so, from a cash flow standpoint, you come out ahead by making a purchase.

However, there are areas where it might be more cost-efficient to rent. Depending on your situation, it could make more sense to pay less to rent, and then invest the difference between renting and buying. Run the numbers to see what makes the most sense for you.

Don’t forget, too, that a home can sometimes mean stability. Even if it costs more to buy, you aren’t likely to be forced to move as long as you keep up with the mortgage and tax payments. When you rent, you are, to some degree, stuck with what the landlord does. If they decide to sell the home, you have to move–and incur the costs that come with changing homes.

The Best Time to Buy a House — Combination of Factors

In the end, the best time to buy a house depends on a combination of factors. It starts by understanding what you want to accomplish with the house and then figuring out what is likely to influence your ability to meet your financial and life goals.

While you want to get the best deal and enjoy the lowest interest rate, sometimes your lifestyle goals and requirements don’t mesh with the economic conditions. In those cases, you might find yourself buying, even though pricing conditions or interest rates aren’t ideal. Weigh the lifestyle and financial factors, and decide what’s going to be most advantageous for you at this time.

The best time to buy a house isn’t the same for everyone. You’ll have to consider the factors and make a decision about the best time to buy for yourself.