How Do I Know When the Best Time to Buy a Home is?
Now, I could give you a cheesy answer like, if you have the ability and the willingness to buy a home, any time is a good time.
But I won’t. Here are the Big Three the experts I have read and those that have mentored me look for:
1. Days on market - A very good indicator of the real estate market’s overall health is how long homes stay on the market before they get sold. In the hot market we had about three years ago, houses were on the market about a week at the longest before they sold. Today, the average days on market per listing is about 65. Remember most listings are only 90 days long and homes get listed multiple times, so that number can be higher. Usually, the longer houses stay on the market, the better a bargain you will get as a buyer.
2. Number of months of inventory - Currently, Sacramento county has about 11 months supply of inventory. This means that if no more houses came on the market, it would take about 11 months for every house to sell if the pace of sales continue to be as it is today. Again, the more inventory there is, the higher the possibility of a buyer’s market.
3. Number of REOs - If there is a large inventory of bank-owned homes, it always pushes prices down. Banks are considered wholesale real estate sellers as opposed to the retail sales of real estate by individual sellers. Consider more “real estate owned” homes on the market a sign of a buyer’s market.
Personally, I also look at HUD owned homes just for fun. In a hot market, HUD will only sell homes to owner-occupied buyers, but in times like today, the homes are also available for sale to investors - a strong indicator of a buyer’s market.
