When Is It a Bad Time to Buy Real Estate?

When Is It a Bad Time to Buy Real Estate?

By Shawn The Realtor Guy from Portland, Oregon

Welcome back to my blog! I’m Shawn, a realtor based in Portland, Oregon, with over a decade of experience selling real estate since 2008. You’ve probably heard the old adages: “It’s always a good time to buy real estate!” or “Location, location, location!” While real estate can indeed be a fantastic investment, there are times when hitting the pause button might be the smarter move. Today, I’m breaking down the key scenarios when it’s not a good time to buy real estate, based on my years in the industry and market insights. Let’s dive in!

1. When the Market Is Overheating

One of the biggest red flags is when the real estate market is appreciating at an unsustainable rate. If home prices in your area are skyrocketing—say, more than 15% per year—it’s time to pump the brakes. Rapid appreciation like this often signals a bubble, and buying at the peak could leave you underwater if prices correct.

Take Austin, Texas, between 2020 and 2022 as a prime example. During this period, home prices surged by a jaw-dropping 57% in just two years, with median prices hitting around $290 per square foot at their peak. That kind of growth is simply not sustainable. If you bought a $500,000 home in Austin in 2021 and needed to sell today, you could be looking at a 20% loss—that’s about $100,000 gone.

Why is this a problem? When prices shoot up like a rocket, they often come crashing back down. If you buy during a frenzy and need to sell soon after, you might have to bring cash to the closing table to cover the difference. I’ve seen this happen, and it’s not pretty. In fact, if you bought at the 2021 peak in Austin, it could take 7–8 years of normal 4% annual appreciation just to break even.

Pro Tip: Look for a steady, linear appreciation rate of around 4–5% per year, which typically aligns with inflation. If the market is spiking way above that, it’s a sign to wait.

2. When You’re Locked Into a Low Mortgage Rate

Here’s a silver lining: if you bought during a hot market but secured a fantastic mortgage rate (say, around 3%), and you don’t need to sell, you’re probably in good shape. Why? Because real estate is a long game. If you can hold onto the property, rent it out, or live in it for the long haul, those low rates can keep your costs manageable, and you might even cash flow if you rent it out.

The key here is optionality. If you have the flexibility to rent out your property, get a roommate, or stay put for 20 years, a hot market purchase isn’t the end of the world. But if you’re forced to sell in a down market, you’re in trouble. So, always consider your exit strategy before buying.

3. When Your Life Is in Transition

Beyond market conditions, your personal circumstances play a huge role in whether it’s a good time to buy. Here are a few situations where you should think twice:

• Expecting a Job Transfer: If you know a job transfer is on the horizon, buying a home might not make sense. Moving soon after purchasing could force you to sell in a less-than-ideal market or deal with the hassle of managing a property from afar.
• New Job, New Uncertainty: Just started a new job? Congrats! But hold off on buying for at least the first year. You want to make sure the job is stable and a good fit before committing to a mortgage.
• Moving to a New City: If you’ve just relocated to a brand-new city, renting for 3–6 months is usually the smarter move. Why? You need time to learn the lay of the land—school districts, neighborhoods, commute times, and lifestyle fit. I learned this the hard way before I became a realtor. I bought a house in a hurry in an unfamiliar city and ended up with a property that didn’t suit my needs. Don’t make the same mistake!

Buying in a rush without knowing the area can lead to purchasing the wrong house, which is a costly and stressful mistake. Take your time to explore and make an informed decision.

Final Thoughts: Timing Matters, But So Does Strategy

Real estate is a powerful wealth-building tool, but timing and strategy are everything. Avoid buying when the market is overheated (think double-digit multi-annual price spikes), and be cautious if your personal circumstances—like a job change or move to a new city—suggest uncertainty. On the flip side, if you can hold onto a property long-term and have options like renting it out, even a less-than-ideal purchase can work out.

If you’re in the Portland, Oregon market and have questions about whether now’s the right time to buy, feel free to give me a call! 503-515-4499. I’d love to help you navigate the local market with confidence.

Thanks for reading! If you found this helpful, drop a like, share with a friend, and subscribe for more real estate insights. Got a topic you’d like me to cover? Let me know in the comments below. Until next time, happy house hunting!

Shawn The Realtor Guy
Portland, Oregon