Home Buying Advice - Should You Try and Time the Market

Why you may not want to try and time the market when buying your home.

Should You Try and Time the Market

OK so everyone knows that if the buy at the bottom of the property business cycle you stand to make a lot of money when the market recovers. But is it has easy has that, how do you know when the market has bottomed out. There are several reasons why you should not try and do this:

  • Generally interest rates are higher when the market is slow. Therefore it will cost you more in mortgage payments. Having said this you can always re-mortgage when rates lower.
  • If you already own your own home then you will have to sell it and in a depressed market you will get less than in a good market. Therefore there is no real advantage
  • How do you know you will get a cheaper home. For example if the current price for a home is $200,000 and you try and time the market. The home over the next few years goes up to $300,000 and then the market weakens and the home price drops to $240,000. So what have you gained, you have gone several years without your own home and still finish up paying more than you would have done in the first place. These are the risks you take.

So the bottom line is unless you are an investor or a first time buyer do not worry much about trying to time the market.

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