Real NEastate: When will I know the right time to buy?

Q: For several years, I’ve been seeing the prices of homes in the Northeast going down. Last year was supposedly the “best time to buy.” But this year it seems like prices are even lower. When and how will I know when is the right time to buy a home for sure? I don’t want to buy this year if prices will be lower next year.

A: No one can predict the real estate market. Prices may be lower next year. And last year was the best time to buy, until this year. A home’s price isn’t everything you need to consider, however, when making the important decision to buy or not to buy.

Real estate decisions made by residential buyers are mostly based on need and ability. Do you need a home and are you able to swing it financially? Because you won’t know the right time for sure until after that time has passed and the sale prices have gone up and/or the mortgage rates have gone up.

You should know it is currently a “Buyers’ Market” in Northeast Philadelphia. Homes are the most affordable they have ever been. Right now, owning is actually cheaper than renting. Besides the sale prices being the lowest in the last five years in the Northeast, mortgage interest rates are insanely low – less than 4 percent. Ten years ago, the interest rate was more than 7 percent. Twenty years ago, the interest rate was even higher!

Not only does the interest rate affect your wallet, but it also affects your buying power. Translation: With a lower mortgage interest rate, you can buy a better home because you’re not spending all your money paying the interest rate. You can invest your money in the actual house.

Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.