How To Buy Your First Home During The Right Market Conditions

Prices of homes are generally influenced by economic variables including interest rates and market cycles. As a homebuyer, knowing the difference between a buyer's market and a seller's market could mean the difference between spending more for a home and saving thousands of dollars.

In a buyer's market, housing prices are very attractive and interest rates may be lower than the average. You may even see more 'For Sale' signs in different neighborhoods and sellers may be willing to reduce their prices drastically just to sell the home.

In a seller's market, it may be very difficult to find attractive prices on homes. You may hear about lotteries that allow certain buyers to bid on exclusive homes, and the housing market may be in 'crisis' mode.

Buying a home on the right market will significantly favor first time homebuyers financially. However, Barron's 'Smart Consumer's Guide to Home Buying' cautions that "cycle phases are much easier to pinpoint long after the fact." Nevertheless, you can look for certain signs that indicate the current market phase of the industry.

Home prices are relatively lower in a buyer's market. There is an increase in foreclosures and auctions for repossessed homes are setup left and right. Many sellers put up a 'For sale' sign and give out price cuts, discounts and other incentives.

Expect to see very few 'For Sale' signs in a seller's market. Prices of homes are relatively high and sellers within the same neighborhood employ competitive selling tactics. There are a lot of people who 'flip' homes; buying and renovating a home and quickly selling it. Many rental complexes are also converted into condos during this cycle.

The best time to buy a home is during the buyer's market when sellers are more eager to sell their properties and give out discounts. A good indicator to buy a home is when ads of homes with price cuts, discounts and other extra incentives start to circulate. You might be tempted to buy the first home you see or the lowest priced home but it is still important to work with a professional agent. Get a professional agent, especially if this is your first home purchase, to guide you in choosing the best home that would fit your needs.

Buying your first home can be challenging and you're likely to have lots of questions about the entire process. Educating yourself about the market, looking for indicators of favorable market conditions and working with a professional can help you get started on your search and provide you with the best possible options in your neighborhood of choice.

Looking for Minnesota houses for sale? A great resource for searching properties online is the Minnesota MLS, which allows you to search by price, neighborhood and many other important criteria.