Time to Jump In?
Ultimately, the guiding principle to buying a home is to find a property you want at a price you can afford. For first-time buyers, every drop in price represents another crop of homes that is suddenly available. Buying during a downturn gives you the opportunity to comparison shop and complete your due diligence before making an offer, minimizing buyer's remorse and ensuring you truly want to be in the home you're bidding for.
For move-up buyers, a down market closes the price gap between higher- and lower-end properties, allowing people who want to trade up a valuable opportunity to do so. Prices tend to fall on a percentage-wise rather than absolute basis, which means that while a $500,000 property and a $250,000 property may have both fallen by 10%, the $250,000 property has only fallen by ½ of the amount of the $500,000 property ($25,000 vs. $50,000) on a purely cash basis. move-up buyers can use this period to trade up; when before, the difference in price may have been prohibitive.
Other buyers can also benefit from the downturn; however, buyers should keep in mind that the main purchasing criteria should be lifestyle - buying what one can afford - rather than short-term gain - buying what one expects to receive in the future - during these uncertain times.
The reality is that real estate has historically been a good investment. And while it is true that the flipping opportunities of the past 5 years have now disappeared, strong demographics dictate that those who are patient long-term holders of real estate will ultimately reap the rewards.
Is now the right time to buy for you? I'd love to hear your thoughts.