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One problem with
attempting to time your purchase to the business cycle is that no one
can accurately predict the future. Another challenge is that interest
rates are generally higher during a depressed market and income may not
be keeping up. For that reason, fewer people can qualify for a home
purchase than in more prosperous times.
Why You Should Not Wait
Plus, this strategy
generally works best for first-time buyers. People who already have a
home usually need to sell it in order to buy their next one. If a
"move-up" buyer wants to buy a home during a depressed market, that
means they usually have to sell one during the slow market, too. If a
seller wants to sell his home to take advantage of a "hot" market when
prices are fairly high, they generally have to buy their next home
during that same hot market.
It tends to equal out.
Finally, the business
cycle can change over time. Since 1983, we have had two fairly long
expansions with only a slight recession in between each. You would not
want to wait nine years to buy a home, would you? You could miss out on
a substantial amount of appreciation by waiting, and end up paying much
higher prices. |
