Is now a good time to buy?

It seems like every other day I get asked, "is now a good time to buy or should I wait until the real estate market hits the bottom?" Then I ask, "where is the bottom and how will we know when we get there?" What is the the real question being asked here? I think these people are asking "how do I make sure I don't over-pay when my buy my house?"

Let's consider a few things. Unlike the Dow Jones, which is determined by the collective wisdom of all investors and we can literally follow its every fluctuation in real-time on wireless phone or PDA. At any given time, all investors have the same opportunity to buy or sell a stock at the published price determined by the market.

On the other hand, the real estate "market", as reported in the media, using national, regional or even local averages and trends does not directly determine if you can get a good buy or a deal on your next house. That is determined by how motivated the seller is to sell the house you are interested in.

Two years ago, buyers were losing out on buying the home they wanted because they didn't offer enough OVER asking price in a competitive bidding war. Today, with triple the number of homes on the market

How do we find out how motivated a seller is? Make an offer, an aggressive offer. At any given time, there are sellers that must sell. The home you've have your heart set on may be owned by just such a seller.

High Tide Raises All Ships

We've all heard the saying before. In real estate, when the market is hot and home values are going up, usually all home values are going up - even yours. Unfortunately and fortunately when the market turns south, now the value of your home is going down too.

I say unfortunately because nobody likes to see the value of their home go down. However, if you are wanting to sell your home and move to a larger, more expensive home, this falling tide may work in your favor.

Example: Lets say you think your home is worth $300,000, based on your local real estate market over the last 12 months and you've had your eye on a particular model in a new development, priced at $350,000. If your local market has actually cooled in the last 6 months and values have dropped an average 10%, then your home is now only worth $270K. That's $30,000 less than before. Sorry. The good news is that the $350K home you want to buy has probably also dropped in price through builder incentives and rebates an average 10% or $35,000. In this scenario, you just got $5,000 closer to your new home!

Remember, home values are relative. Your home is not in a vacuum. It's value is affected by the same market forces affecting all homes. If you want or need to move, there's never a bad time to by a good home that's fairly priced.