Buying Investing Real Estates

How to determine the best time to buy a house?

April 13, 2021

Whether you’re buying a house as your new home or as an investment. You want to get a good deal right? But prices are so high right now when will they be cheap again?

When is the best time to buy a house in 2021?
Well, Reliance Real Estate is here to give you some market property insights that will help you know about how to buy low and to sell high. You might be thinking right now how you will do that with property prices at their all-time highs? when will they be low again? These are the questions that are on everyone’s mind. Everybody wants that answer well the answer is laying right out there in broad daylight but to see it? you’re gonna have to challenge your thinking a bit and here’s what we mean, to see good cheap houses will require a shift in mindset from that of a consumer of the economy to that of a producer of the economy that means for most people ignore everything you’ve ever been told about money.

To know the best time to buy a house there are three things that you want to pay attention to:

  1. Interest rates
  2. Payments
  3. Inflation  

Interest rate
This is the fee that you pay for using someone else’s money and that’s really important to understand when investing in real estate because you can get rich using your own money but you can get wealthy using someone else’s and real estate provides the ability to do this like no other investment available to the average person the lower the interest rate the better.

Payments
For the use of other people’s money that’s important as it determines the affordability of a house that’s why the car salesman doesn’t talk too much about it at all. The price of the car that you’re buying but rather the payment you can afford to make each month. People buy houses the exact same way most people want the nicest house they can get for the lowest monthly payment.

Inflation
This is a complicated subject and an underrated aspect of timing the market. Inflation is when the purchasing power of your dollar falls and per the massive amounts of money being printed to fund the unprecedented stimulus programs due to COVID-19 the purchasing power of your dollar is plummeting. Now you won’t feel it right away it takes a minute to kick in but considering we experiencing on average of 2% inflation per year and we have it for the last 100 years and being there was more money printed in 2020 than in the last 100 years you will feel it. But you might not have to wait too long for this to help you find a good deal on your next house.

The Interest rates they’re at all-time lows and you’ll see that they can’t go much lower so if you’re going to borrow money from a bank to buy your next house you might not ever find a lower interest rate than you can find right now. The interest rate establishes your payment. Low-interest rate = Low payment. This translates to the lower the interest rate the more house you can afford or the nicer neighbourhood that you can afford to live in without it impacting your cost of living. If you’re shopping for an income property, this lower payment will increase your monthly positive cash flow getting you even closer to that early retirement. So how interest rates and payments work together that’s pretty common knowledge. But the third element to finding good real estate deals, inflation that’s not so common like I said it’s a complicated topic but for the sake of finding good deals in the real estate market right now

you need to know this about inflation:

  1. It’s a hidden tax that destroys the purchasing power of your dollar. Things don’t necessarily get more expensive over time you just need more of your devalued dollars to buy those same things. 
  2.  When your dollar is devalued it destroys the value of your savings, stocks bonds, cash equity, and thankfully, the value of your debt. You see inflation works against the saver, yet inflation favours the borrower this is what I meant earlier when I said you might have to challenge your thinking and forget much of what you’ve ever learned about money. 

Two per cent might not sound like much but over 100 years that equates to more than a 2,000 decrease in the value of your dollar and you’ll see in just a minute how this has impacted the housing market and how it will help you find a good deal today.

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