Is it a good time to buy a house? I HATE that question!
I seriously hate the question “Is now a good time to buy a house?” Let me share with you why.
Admittedly, it’s something that I get asked all the time. However, in my opinion, what people are really asking is, “Should people be buying houses even though the market is so hot? Even though it’s a seller’s market? Even though prices are up?” However, those are really not the right questions to be asking.
What are you really buying?
People want to stir up controversy, get you all excited about something, but ultimately, it’s all a load of crap. Why? Because if you have to decide if you’re going to buy a house, you have to first ask yourself “Are you buying an investment? Or are you going to buy a home?” Those are two totally different things, after all.
An investment is something you can spreadsheet. It gets you an ROI, it has cash flow, it has tax benefits, and all of that good stuff. On the other hand, with a home, you can still get some of those things but ultimately, a home’s returns are not that easy to put into a spreadsheet.
For example, it’s impossible to spreadsheet out the feeling you get when you walk in the front door and love what you see. That feeling when you turn on your lights, cook in your kitchen, or when you have family over or your kids come and go. Whatever your story is, it just cannot be put into numbers that you can analyze and compute.
So by asking that question of “Is now a good time to buy,” what you’re really trying to do is distill it down to like, “Are people crazy for overpaying? Why are they overpaying?” That’s the problem.
“Is it a good time FOR ME to buy a house?”
What’s the solution then? How can we actually break this down in a way that helps us ask a more intelligent question?
How about adding one simple word — ME? Ask yourself instead: Is it a good time FOR ME to buy a house? Just adding that one simple word makes all the difference. The first question is very broad but the second one is very personal.
So whenever I talk to someone, whenever I open up a buyer consultation, my first question is always “How can I help you? What do I need to know about your situation and the goals you have?” Ultimately, we get into their budget, we get into how many bedrooms they want, what kind of location they’re looking for, what they definitely don’t want, etc. That’s all really, really important because what we’re building is an understanding of what they’re trying to accomplish.
All the questions you need to answer
Now, if someone comes to me and says, “Is now good time for me to buy?” I’m going to ask them about their budget, their constraints, what they want, what they don’t want and ultimately what they want the home to do for them. Once they have all their answers, then we’ll say, “Is that available? Does that exist? Can we go back 30 days and actually find what you’re looking for inside of your price range?”
If we can, then YES, it’s a good time to buy. On the other hand, if it’s not, if we can’t, then NO. Simply, it’s not a good time to buy FOR YOU. So what should you be doing instead? I suggest two things:
Number one, you should always focus on yourself.
Start with whatever is the most important aspect of buying a house for you is. Is it how much you paid for it? Is it the size, the layout, the location, the curb appeal, the kitchen?
Whatever that is, think of how it fits into your life because you are not the market, you are you. You are the person who is going to wake up and go to sleep in that property every single day. You are the one who matters in that situation. Therefore, it’s also you who should get clear on your list. Get clear on what you want the house to do for you, on how you want it to make you feel.
Once these things are clear to you, that emotional response is going to tell you a lot about whether a given house is worth it, and if it’s a good time or a bad time to buy.
Number two, you need to do some comps.
Second, once you’ve identified those things that are really important for you and have figured out what that all means to you, you should go back and look at what has sold for the price point you want. Look at houses that have the features, the size, the location, and the attributes that you’re looking for. Once you’ve done this, you can then decide “Is what I want available? Does it exist? Am I willing to pay enough for it?” Ask yourself “Am I overshooting? Do I need to spend quite this much to get what I want?”
Also, this is where having access to the MLS or a really good real estate agent will be helpful because they’ll be able to curate a list for you that you can’t pull together from Zillow or Redfin very easily. Although if you really spend time on it, you surely could. However, having an agent who knows how to pull those comps effectively and knows what boundary’s not to cross is really really critical for that. But really, go back and do research. Go back 30, 60, 90 days and find out if a property that would have been perfect for you really exists. Most importantly, check if that property you want fits within your budget.
One more thing to think about before you decide if it’s a good time to buy a house
Lastly, think about this: after breaking down the monthly payment and looking at some of your alternatives, do you really want the feeling that you’re going to get for the dollars you’re trading?”
Now, this is one area where I see most people miss. They either 1) totally fantasize about the property and don’t think about the finances until they’ve moved in and start paying, or 2) they’re looking at ONLY the numbers and not thinking about the way it’s going to make them feel.
Both cases prohibit them from actually succeeding. If you want to succeed, you need to be somewhere in the middle. If you want to succeed, you need to ask yourself if the amount you’re paying– the monthly payment, interest, taxes, insurance– is worth the feeling you’re getting? Do you feel as if you’re getting enough value for the money you’re spending? In addition, do all the things that go into this house make you feel the way you want to feel? Try to dig deeper, find your answers to these questions before you decide if it really is a good time or not for you to buy your home.
So, there you have it. That’s why I hate the question, “Is it a good time to buy?” If you’re going to ask yourself that question, you may not be able to find a good time at all. After all, you’re never going to time the market perfectly. You’re also most likely never going to sell at the peak nor buy at the very bottom. So getting that out of the way, we get to focus on what really matters to YOU and forget all the noise.
I hope my blog on “Is it a good time for YOU to buy a house?” has helped you.
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