The state of the economy, interest rates and market cycle all play a role in the final price of your dream home, but it’s not always easy to tell whether now is a good time to become a homeowner. First time homebuyers are typically nervous about entering the homebuying market because they simply can’t tell the difference between a buyer’s market or a seller’s market.

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 in the right market cycle can give you more value for a home compared to its purchase price. The only problem is “cycle phases are much easier to pinpoint long after the fact”, according to Barron’s ‘Smart Consumer’s Guide to Home Buying’. They further explain that “if you know what to look for, it’s easier to figure out the state of the market.” Look for these market indicators to guide you in the timing of your home purchase:

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.

When you hear news about how unaffordable homes are, that is an indication that the industry is in a seller’s market. There are very few ‘For Sale’ signs put up and prices of homes are relatively high. Old homes are ‘flipped’, or renovated, and sold for a quick profit. You may also see a lot of rental complexes converted into condominiums.

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.

Homebuyers searching for MN houses for sale can go online and search for houses by price, location and neighborhood by using the Minnesota MLS to find houses throughout the state.