When Should You Buy a Home?

There are times when the economy is strong and people feel confident about their financial future. As a result, they spend money. People tend to buy things that make them comfortable—Including houses.

But, when the economy slows down, companies lay off employees and consumers are more careful about where they spend money. As a result, the economy decelerates. If it slows enough, we have a recession.

During such a time, fewer people are buying homes. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond being in a comfortable home, employees get relocated, couples divorce, and even some find themselves unable to make their mortgage payments due to layoffs or cuts in pay.

The Law of Supply and Demand then Rules. When the supply of available homes is greater than the supply of buyers, home appreciation may slow and prices may even fall.

If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will rebound. As a result, home prices will appreciate.

Keep in mind that the one problem when you try to time your purchase is that no one can accurately predict the future. At some times the economy puts you in a “Catch 22.” Interest rates may fall to try to stimulate the economy. With the lower rates, you can buy a larger, more expensive home. But, if your income is down due to less overtime, bonuses, or commissions, you may not feel comfortable increasing your monthly housing expenses. In times like this, many homeowners tend to stay in their homes and refinance, either lowering their payments or consolidating bills. But, if you are comfortable with your income—definitely buy!