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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.
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