When is it a Good Time to Buy?

by Lance Kettler

In the real estate market there are a few rules of thumb to determine if it is a good time to buy.  One factor is the current interest rate.  At this moment in time the interest rate is at a near historic low. 

Another factor is supply and demand.  It’s widely acknowledged that if there is more supply than demand that prices will go down or can be negotiated down.  Right now we have a buyer’s market, there are significantly more homes available than there are buyers.  As a consequence, sellers have to work harder and concede more in order to win a buyer’s bid. 

One important factor to potential real estate investors is the rent to own ratio.  If the cost of renting is the same price to purchase or even higher investors usually consider it time to buy. 

In our local market we are seeing the cost of renting quickly approaching the cost to purchase.  And in the REO market the cost to purchase in many cases is already significantly lower than the cost to rent. 

Why is this so important?  If you are renting right now and could be spending the same or less to be building equity then you would be smart to purchase.  If you already own a home and are considering purchasing investment property you want to make sure that you can occupy your rental property.  By owning a mortgage that makes the monthly payment less than the market rental value you are ensuring that you will rent your property and that you will make a profit.

By all criteria now appears to be a good time to buy real estate, while it is an excellent time to purchase REO.