The most notable indicator is a widening gap between the seller’s asking price and the buyer’s offer price. This difference generally indicates a slowdown in the housing boom. During an active boom, the gap is very small or even non-existent. Other signs of a troubled housing market would be a downward change in the sales price over a longer period of time. This clearly indicates a general decline in buyer confidence. This can easily be used as a measuring tool to help a home buyer make a decision.
Before entering a given geographic area, a buyer should always check weekly home prices in the local newspaper. If there is any downward trend in prices, the buyer should either stay away and wait for a while or look for a different location. On the other hand, if home prices are listed unchanged in the newspaper, or if many properties disappear from the listings on weekdays, it is clearly a sign of an active and booming real estate market. So don’t rush into any decision while looking for a suitable home. Spending enough time researching can save you a lot of money and ensure that you have purchased an asset at the right price and financially viable. This will ensure that the price you paid for your home is much more stable during a market downturn, so you’ll sleep well at night knowing you paid a fair and reasonable price for an asset you call home.
Numerous articles disseminated by all types of media speak of a falling housing market similar to the dot-com bomb of a few years ago. That makes many potential buyers nervous and unsure about when, or even if, to buy. Prefer to wait and see how this trend will play out in the coming months? Better safe than sorry, right? Not necessarily, it really depends on what your main goal is. If you want to make a quick buck and “flip a condo” (buy a place based on pure speculation in the hope of selling it right away at a profit), or buy a second home for investment purposes, then I’d rather wait for a while. But if you want to buy a house for your family to live in and you’ve done your homework to make sure you don’t overpay, I would definitely recommend going ahead with the purchase. Mortgage rates are still low compared to a few years ago, so you may still be able to find a good deal. Just make sure you work with a professional mortgage broker. Big-name brands aren’t necessarily the cheapest options, so shop around. It’s entirely up to the mortgage broker what rates you get, so negotiate for a decent rate.