When is the right time to buy an apartment or a house? Here are some criteria that allow you to consider the best time to buy real estate based on your personal situation and the current real estate market.
Look for the low point of housing prices
The low point in house prices is not known until long after. It is therefore not possible to be sure of the lowest price point. On the other hand, it is possible to know when the prices of houses and apartments are unrealistic and are overestimated. It is therefore advisable to avoid buying during a real estate bubble. Also, when prices are at their lowest will not necessarily be the best time to buy for your personal situation.
You should not buy a property by default and cut corners on the quality of the property or the location because property prices are too high.
Have a good vision of these medium-term housing needs
A real estate purchase should not be done on impulse. You don’t buy real estate like you buy a book or a DVD. Buying a home is a big investment and always involves a lot of risk. So you have to study carefully when to buy your primary residence.
This is why it is essential for you to have a good vision of your medium-term housing needs (5-10 years). Except during the crazy years of real estate when a home saw its value soar, you have to keep a home for at least 5 years so that the operation of a purchase is more financially interesting than a rental. Even if the future is not foreseeable, you should not therefore commit to the purchase of an apartment or a house if you are likely to be transferred or have to leave this accommodation quickly.
Likewise, you must assess your surface needs based on life events that could happen in the years to come (marriage, arrival of one or more children, departure of one or more children, etc.). You will be able to buy real estate that will suit you in the long term. For example, a young couple who buys a small apartment will not be able to consider having children without moving.
Adequate financing for your purchase
You need to analyze when to buy a primary residence based on the real estate market situation and your personal situation. A good purchase that involves little risk is a purchase with good financing terms.
To buy real estate, You should limit your debt ratio to 33%, or even less depending on your income. It is more interesting to look at your savings to assess how far you can go with your debt ratio. Indeed, by being an owner, you will not pay rent, but you will have charges and additional costs to assume (property tax, maintenance of the house or apartment, community fees, etc.).
The cost of your credit is also highly dependent on the length of your loan. It is recommended to never exceed 20 years on a mortgage (the ideal would be even earlier to respect a maximum of 15 years). Each additional month of credit costs you more and more in loan interest. In summary, the right financial conditions for a good time to buy a house or an apartment include:
– Debt ratio lower than 33%, unless you have significant income allowing you to keep enough left over savings
– Credit term less than or equal to 20 years
Buying a home to rent it out
Buying an apartment or a house to make a rental investment is not studied in the same way as a purchase for housing. Indeed, when buying to rent, the main elements to study are rental profitability and risk. Of course, the lower the purchase price, the more likely the investment is to have an attractive profitability.
Here are the basic criteria to remember before investing in real estate:
– Low purchase price
– Strong rental demand for this type of property
– Interesting purchase even without real estate tax exemption
– Sufficiency in self-financing or close to it
To conclude, the best period or the best moment to buy a house or an apartment will mainly depend on your personal situation and not on the conditions on the real estate market (price, rate, etc.) except in a big period of real estate bubble like in 2008 or in 2011. To increase your knowledge on the subject, you can consult our 12 golden rules for a successful real estate purchase and see if it is better to wait for prices to drop or to buy at low rates.