Is now a good time to buy a home?

Don't focus on falling prices, focus on long-term goals
By Dian HymerInman News
Last year, the home sale market began to slow, causing many buyers to postpone buying hoping that prices would drop. In fact, in some areas and in some segments of the market, prices have declined. However, in high-demand markets like San Francisco, Austin and Seattle, prices increased compared to a year ago, particularly for upper-end properties. Mass psychology influences home-buying patterns. For example, when buyers decide that it is not a good time to buy due to fear of falling prices or rising interest rates, this notion tends to become a self-fulfilling prophesy. When the volumes of home sales drop, buyers tend to hold back. When sales heat up, buyers perceive this as a good sign. They feel they must buy immediately before home prices rise and they are priced out of the market. Buyers tend to follow the herd, which is counterintuitive. It would seem that the best time to buy would be when there isn't competition from other buyers -- that it, in a slow market. However, most buyers feel more comfortable buying when all their friends are buying. The comfort of the crowd validates that their decision is a good one. Home sale markets are cyclical. There are up markets, down markets, and stable or balanced markets. In an ideal world, you would buy at the end of a down cycle, just before the housing market picks up again. But, it's impossible to time the real estate market.