The Risks of Timing the Market

Let’s first start out by asking, what does a buyer’s market really mean? Being in buyer’s market means very good news for you if you are purchasing a home. It means that this is the best time to buy a home because houses are priced very well since inventory levels are higher than they should be against the number of buyers in the marketplace. Buyers have the negotiating upper hand.

The big irony is that a buyer’s market is the absolute best time to buy a home but buyers are afraid of paying too much and wait for the proverbial bottom to hit. However, in a seller’s market we are buying when prices are over inflated and homes are top dollar. A buyer cannot perfectly time the market or its bottom. No one can. You can look at indicators that will tell you the direction in which the market is going or how far it has fallen, but the only way of knowing that the market has bottomed or peaked is after it has started back up or down. If you are consistently following the market and paying attention, you can buy at the right time and for a good price and most likely, do well over time. People are wise to purchase in a buyer’s market. They know they cannot predict the absolute bottom, but they can see when a market has fallen considerably. They are not trying to predict the bottom but are trying to buy smart. They know it is a matter of planning and not luck. You should ask the question “Has the market dropped enough now to make a good buying decision?”

Buy now or wait?
Buyers who choose to wait “until the prices go down even further” are also gambling that interest rates will hold steady or drop. Even a 10% drop in home prices is immediately nullified by a mere 1% point increase in interest rates on a 30 year mortgage.

Gary Keller, "The Shift"

Interest rates are currently at an all time low, under 5% and there is talk of it going to 4.5% for a 30 year fixed loan. Therefore, you would have the advantage of lower interest rates, as well as competitive home prices.