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More and more people are looking to buy a house. This is an exciting time for many, as the housing market has become so hot that some buyers are finding themselves in over their heads trying to compete with those who have been waiting years for this moment.
The greatest time to purchase a house is usually at the start of the year. However, the economics of home buying is influenced by a number of variables. The most important factor is accessible financing rates, which influence purchasing power and the number of properties for sale in a certain location, often known as inventory.
Furthermore, the overall status of the economy may have a substantial impact on pricing and demand, making some years better than others for potential purchasers.
The best months to buy a house
The cheapest months to buy a house are often January and February. When the seller is willing to bargain and the pool of bidders is tiny, you have the ideal storm. I find that the purchasing process moves more smoothly and quickly around this time, as many brokers, lenders, and inspectors are anxious to “get back to work” after the holidays.
In my 21 years of selling real estate, I’ve discovered that February is one of my most profitable months. This is unquestionably due to the fact that more properties were sold in January. Rain, wind, and storms will not deter interested buyers from seeing a house where there is less competition. Houses bought in January and February generally cost 9 percent to 13 percent less than those acquired in June and August, according to NerdWallet.
Worst month to buy a house
While warm weather and sunlight are wonderful ways to enjoy the outdoors and escape dark days, they also cause a homebuying frenzy with fierce competition. The splendor of spring and the home buying process are inextricably linked. Many sellers have been advised to take their homes off the market during the winter months.
This is partly due to the activity of the holidays, but it’s also because houses don’t display as well as they used to owing to trees and flowers falling dormant. As a consequence, depending on availability, buyer competition for the remaining properties on the market may be fierce, making the homebuying process demanding for all involved.
In California, for example, there is an abnormally low inventory of houses for sale. Multiple bids and a surge in housing prices have resulted from the basic economics of supply and demand. Purchasers are up against 15 to 20 other buyers and are forced to pay substantially more than the asking price for a house. For the buyer, this procedure may be disappointing and emotionally draining. It is our goal to keep the buyer engaged and excited about the process of finding a house.
Pro tip: Maintaining communication between the buyer and the realtor is critical for keeping motivated when offers are rejected. The process of shopping for another house and drafting another offer can leave agents and the buyers they represent exhausted. A good agent will remain by their client’s side and encourage them to “stick it out.” They should, however, be practical and let a buyer know if they will need to make some alterations or sacrifices in order to complete the transaction.
Indicators of a Good Buying Opportunity
When it comes to identifying the optimum time to purchase a house in a particular market, a local real estate agent may be a valuable resource. When it comes to choosing the optimal time to purchase real estate in your location, there are a few clues you may look for.
Housing Affordability and Interest Rates in Your Area
Whether you’re shopping for your permanent home or an investment property, you’ll almost certainly require financing. “What do you want your house payment to be?” I ask prospective buyers when they come to me to purchase a property, regardless of the year or season. “How much money do you have to put down?” and “How much money do you have to put down?” These questions give you a better understanding of what a buyer’s affordability looks like.
Before a buyer begins looking for a new house, many lenders will analyze their credit and inform them what sales price they qualify for. The conditions for loans are different if you’re searching for an investment property, such as a rental or a fix-and-flip. Obtaining a quotation from a bridge loan provider, such as LendingHome, might assist you in better understanding your prospective buying power in this instance.
Median Days on the Market
A higher number of days on the market gives the buyer additional bargaining power. In this case, the seller knows that the listing may be stale or outdated, making it less appealing. This is an ideal moment for a buyer to make a low-ball offer and the seller to bear the risk that no further offers will be made.
Number of Homes on the Market
Buyers seeking the greatest discounts should keep an eye out for an increase in the number of properties on the market, as this provides them with more options and enables them to negotiate the sales price. The seller will also be more receptive to fixes that may not have been considered in a more competitive market.
Season of the Year
Seasonality refers to a given time of year in real estate, and its influence varies by place. During peak season, for example, selling activity in the Midwest and Northeast is substantially higher than in any other part of the country. For example, sales in the slow season account for 60% of sales in the peak season in the Midwest, compared to 71% in the West.
The school year and the holidays are two of the most common seasons in real estate. Buyers will choose September to May as the school year, with June to August being the busiest month for house sales. Buyers want to take advantage of this opportunity to relocate and put their children into a new school with little disturbance. The months of November, December, and January make up the holiday season.
Slower months, such as Thanksgiving and Christmas, might be an excellent time for a buyer to buy a house. This is because a seller eager to sell and bargain is likely to display their house over the holidays, perhaps upsetting their festivities. They may also be more likely to consider a reduced offer since a buyer who is prepared to withstand the conditions such as rain and snow is serious about buying a house.
What if I told you that the slowest month for real estate sales, according to the National Association of Realtors, is January, followed by November, December, and February. When compared to sales activity during the peak season, the number of sales during these slower months is often just 68 percent of what real estate agents may anticipate seeing.
Type of Market
A balanced market is defined as one with a six-month supply of available properties. We determine the absorption rate as real estate agents, which is an estimate of how long it will take for all of the houses on the market to be sold based on the current number of properties on the market. We are in a balanced market when there are enough houses for buyers to purchase and sellers to sell.
We as a culture like putting labels on everything. “Is this a buyer’s or seller’s market?” a shopper will often inquire. When there are a lot of properties to pick from, it’s called a buyer’s market. There is a property for sale for every buyer. When inventory is low, a seller’s market exists, meaning there are more buyers wanting to buy than properties available for sale.
Housing bubbles may form when the market gets imbalanced. When the market is frenzied, for example, inventory is limited and demand is strong, forcing prices to rapidly rise. This has always been referred to as a “false sensation of inflation” by me. Unfortunately, before the “bubble” bursts, property values can only rise so far. You will get more in touch with what is coming in the market if you pay attention to these trends.
Trends in Rentals
When keeping a careful eye on the property market, it’s equally crucial to keep an eye on the rental market. Rents may also rise as a result of a shortage of rental inventory and increased demand for rentals.
When it comes to rentals, the distinction is that if the market shifts—which may happen quickly—the tenant under a lease will continue to pay the agreed-upon price. Renters may find themselves paying more rent than they would if they were paying a mortgage. Our current low-interest-rate environment is a wonderful illustration of this predicament. As a Realtor who sees business prospects, I’ve gone out to my renter customers and informed them that now is the best time to buy a property.
Was it a Good Year to Buy a Home in 2022?
In terms of affordability, 2020 was a favorable year to purchase property since mortgage rates were at or around 3%. This meant that purchasers might spend up to $30,000 more on a home than in previous years while still staying within their budget. This increased purchasing power, however, was accompanied by increased buyer competition, since home availability was similarly scarce, particularly during COVID’s difficult period.
According to Realtor Magazine, the epidemic is causing more young Americans under the age of 35 to hurry to become homeowners. According to U.S. Census Bureau statistics, Americans in that group owned 40.2 percent of homes in the third quarter, up from 37.5 percent a year earlier. According to the National Association of Realtors, in September 2020, first-time homebuyers accounted for 31% of all home sales. According to the National Association of Realtors, homeownership rates increased in all four main U.S. regions in the third quarter.
Home prices have risen due to a shortage of supply and growing demand. While 2020 provided a fantastic chance to obtain more houses for your money, it also forced the bulk of purchasers to have enough cash on hand and the flexibility to remove their appraisal contingency in order to have their bids approved.
Even back then, it wasn’t easy. For example, I sell houses in California’s Central Valley, where properties get 15 to 20 bids and sell for much more than the asking price. In this circumstance, I have purchasers who have put offers on four to five houses and have yet to get a response. I urge these purchasers to “stick it out,” and I serve as their cheerleader, telling them that perseverance pays off.
Is 2022 going to be a better or worse year?
I’m often asked this question, and my normal response is, “If I knew if 2022 would be a better or worse year to purchase a property, I’d be on my book tour.”
This response elicits a chuckle, but I feel it just expresses the obvious. We don’t have a crystal ball or tea leaves to foresee the future as real estate salespeople. As real estate brokers, most of us are speculating on the future market’s results based on previous market data.
HousingWire, on the other hand, expects interest rates to remain low, ranging from 2.8 percent to 3.1 percent. With low rates, a buyer’s purchasing power increases, allowing them to acquire a property at a larger price while still staying within their budget. There is also hope that additional residences will become available on the market.
The increased inventory may come from one of two places. It is expected that new house building will continue to increase the number of homes available. In addition, investors in California are hoping that the rental property embargo would be removed, enabling landlords to give notice to their tenants and sell their homes.
Conclusion
My attitude has always been that buying a property is always a smart decision. Is there a moment when things are better than others? Sure. However, since we don’t live in a vacuum and the stars may not always align in our favor, it’s always a good idea to begin your house-hunting trip with the goal of establishing financial stability. Some of us will overpay, while others will receive a good bargain.
When looking for a house to live in, we must keep in mind that this is our refuge and safe haven. Your private residence or palace should not be considered your exclusive investment. Top financial advisors urge us to diversify our investments and that purchasing a house is just one component of the financial security equation. When you step into your house and lock the door behind you at the end of the day, you should feel immense pride and satisfaction knowing that you have realized the American ideal of homeownership.
