When is the Best Time to Buy a House?
So, you’re ready to purchase a new house — you’ve done your research, your finances are in order and you’re itching to move. However, when it comes to when you should be putting in your offers, everyone has a different answer, which can prove confusing for first-time buyers and veterans alike. Some say spring, others say fall and even more others may say winter. The truth is, there isn’t really a set-in-stone, perfect time of the year for buying a house, but there are seasonal trends that are worth considering. You’ll want to buy during a period when interest rates are low, which largely depends on the state of the housing market. Additionally, you’ll want to buy when living in a buyer’s market — when aspiring homeowners have the most bargaining power. Unfortunately for buyers, there are a plethora of factors that go into affecting when the ideal time to purchase is. Let’s take a look at some of these elements to help you determine when you should start your house hunt.
The State of the Housing Market
Because you’re already making the consideration to buy a new house, you likely already have your personal financial situation under control. However, the housing market may dictate that actually purchasing one isn’t the wisest decision to make money-wise. In many areas, it’s cheaper to rent a home or apartment than it is to purchase a house. Do research in your area and compare prices of rental properties and homes for sale to see what’s more affordable. If it turns out that renting is cheaper than buying, then right now probably isn’t the best to buy. However, if purchasing a new home is ultimately cheaper than renting, especially in the long term, then you’re good to continue pursuing your dreams of homeownership.
Real estate prices work much like a rollercoaster — sometimes they’re up, sometimes they’re down and other times they’re spiraling through a corkscrew loop-de-loop. If you’re living in an area or time where prices are incredibly low, it would be foolish not to jump on the chance to purchase — especially if in a buyer’s market. In a buyer’s market, the ball is completely in the purchaser’s court. Sellers don’t have a wide range of potential buyers to choose from, meaning gaining concessions and bargaining a lower price is very doable.
Interest rates are much like real estate prices in the sense that they can fluctuate depending on the year. These are dependent on economic conditions, like inflation and the cost of living. Lower rates are better, as they secure you lower monthly mortgage payments. For instance, making payments on a $100,000 loan at a 3 percent interest rate will be noticeably lower than making them on the same loan amount at a 5 percent interest rate. At 3 percent, on a 30-year mortgage, you’d be paying $421.60 per month. At 5 percent on a 30-year mortgage, you’d be paying $536.82 per month — that’s a difference of $115.22 per month! If interest rates are in a state of decline, it’s best to wait out your purchase until they’re at a nice, low point. Of course, that also means that if they’re rising, and you’re in a hurry to buy, you should probably jump on a home sooner rather than later.
Conflicting cries of “Buy in spring!” or “Buy in the fall!” may be puzzling, but there can be some value in listening to this advice. In springtime, you’ll likely be given a wide variety of properties to pick from, although the extent of your options depends on your area. The real estate industry is busiest in the spring, with families waiting to move once more desirable weather rolls around and their children finish up their school years. Some, though, may find the best time of year to be in fall and winter, when there are less homes available but less competition, as well. With less competition, you may be able to bargain for a lower buying price and snag perks to go along with your house, too, like appliances.
In the later months of the year, you also have holidays to think about — and take advantage of. If you can find a seller and agent willing to work with you around days like Christmas or Thanksgiving (when other buyers aren’t likely to be looking), you may be able to secure a good deal thanks to low competition and holiday generosity. Around Christmas, especially, you’ll find sellers in good moods and serious about selling — why else would they have their home on the market over the holidays? Additionally, trends have shown that home prices usually drop to 12-month lows during the last month of the year.
Ultimately, even with all housing market factors considered and whatever time of the year it is, things fall to you, your family and your lifestyle. If you have a life-changing event on the horizon, like the arrival of a new baby, you’ll probably want to hop on the home buying train straight away, as you’ll need room for the little one. Even if you don’t have a kid on the way, but another emergency situation has presented itself (like a relative coming to live with you for whatever reason), it’s understandable that you won’t want to wait for the often-unpredictable housing market to shift gears.
Read up. Figure out, depending on your area, if now is really a good time to buy. Ask experts in the field, like a real estate agent, for their advice. Above all else, reflect on your personal situation before deciding if now’s the time to put in an offer on a property. After all, who’s better to make the decision than yourself?