Personal FinanceShopping

Best Time To Buy A House

At this point, we’re assuming you’ve weighed all the options and concluded that homeownership is right for you. Maybe you were spending too much on rent? Or you discovered that the condo route is limited. You outgrew the idea of living in a treehouse. It’s time to start shopping for a real home, and you have no idea how to begin. That’s why you’re here, reading this. Hopefully, we can help you navigate the housing market a bit.

Buying a house is one of the most important decisions you’ll make in your adult life. Income, situation, credit score, interest rate, and the availability of affordable homes all need to be taken into account when venturing into the real estate market. Simply put, the timing has to be right. Those who try to do this too soon, or wait too long, end up struggling financially. You don’t want to find yourself in that position.

Don’t rush into it. Buying a house shouldn’t be something you do to keep up with your college classmates. For all you know, they could already be upside down on that American Colonial they bought. Avoid their nightmare scenario by doing your homework before embarking on a house shopping spree. Talk to your bank. Sign up for a real estate class. Acquire some knowledge. Check out the local market. You may even want to employ the services of a local real estate agent who is familiar with the market. There is no denying that insight from an experienced person will make your house-hunting process a lot smoother.

Buying a New House

Before You Begin Buying A House: A Home Buyer Pre-Check

You need to take certain steps prior to searching for a new home to buy. A trip to your local bank or credit union should be at the top of the list. Make sure that you qualify for a mortgage. Mortgage interest rates may significantly impact how much the house costs you in the long run. Also, consider if you would want to use private mortgage insurance. It has its perks, as well as its cons. More so, check whether your credit score is high enough. Do you have sufficient funds in your savings account for a down payment, at least? Financial stability needs to be established prior to homeownership.

The next step is to do some research into market prices for homes in your area. If you aren’t familiar with your neighborhood’s local real estate market, this will be a great time to start. Again, working with real estate professionals could also be helpful at this point.

Your visit to the bank should have given you some indication as to what you can afford. Are there homes for sale in your area that match those parameters? If not, are there other neighborhoods or towns you’re interested in? These answers will determine where to start home shopping. Leave nothing in your home buying process to chance.

How long do you plan to live in this home? Remember, you’ll be locked into a fixed monthly mortgage payment. “Rent Stability” is a term usually associated with rental properties, but homeowners benefit from it also. Your income and your monthly payment are intertwined. If you start making more money, you can afford more houses. Plan accordingly.    

Make a Plan for Home Buying

The Best And Worst Months To Buy A House

Once you understand the why and how of buying a house, make sure you know when to make your home purchase. Historically, there are certain months of the year when you can consistently find better prices. January tops the list. No one buys a house in January, and very few buyers are shopping during the busy holiday season, which invariably means that you will have less competition. Homes available this period most likely would have been in the market for a while.

The longer a realtor or private seller has to hold a listing, the less likely they will be to get into bidding wars with you. That’s what happens in January. The opposite is true in April, the worst month to buy a home. Inventory is typically high in spring, and there are a lot of buyers emerging from their winter hibernation in early summer looking to close on a new house. If you do your home search during this peak season, you will most likely get to spend far above what people who snagged better deals during January paid for similar houses.

Here’s more:

  • The month of December is not a good month to buy your dream home, but the day after Christmas is. No one is house shopping on December 26th, which means that with perfect timing, you should your best price that period. Inventory may be low, and there may even be fewer homes available in active listings, but sellers are eager to move and will offer discounted pricing to the right buyer.
  • Early fall is also a great time to get the best deals when shopping for a new home. It is the beginning of the school year so most families would typically have already purchased and moved into their homes. However, some house will still be available. Sellers will also be earger to sell, and you can get the best deal this period.
  • If you live in a warmer climate, like Florida, seasonal trends may not apply. Pricing stays fairly consistent throughout the year because sellers aren’t concerned about winter slowdowns. Buyer activity doesn’t fluctuate that much either.
  • The best day of the week to buy a house, regardless of month, is Monday. Buyers save up to 2.3% on Monday home purchases. The second-best day of the week for home buyers is Friday. Thursday is the worst. Buyers save less than 1% on Thursdays.

The best and worst month data is based on trends. For hard numbers, analyze the US Existing Home Inventory for the past five years. You’ll see that the number of homes on the market increases from January to July, then declines for the remainder of the year. Homebuyers have fewer options in winter months like October or November, less negotiating power, and more competition than those who shop early in the year. 

Best And Worst Months To Buy A House

Price-Shopping For The Right House

After the financial crash of 2008, median home prices went down, and it became a buyer’s market. Nearly everyone who bought during that period watched their home value increase up to 25% over the next decade. We’re now in a seller’s market, but that could change soon. Our declining economy is likely to drive down property values once again.

Real estate investors thrive during economic downturns. Financial analysts believe that the country is about to go into recession and that mortgage rates would rise with the downturn. For those unfamiliar with the term, it means a slow-down in economic activity. Consumers stop spending, with more buyers choosing to funnel their meager resources towards other areas. Investors and lenders limit activity. Properties, including homes, go up for sale as owners downsize or get foreclosed on. In an economic downturn, the housing supply increases, with fewer people being in a financial situation to buy new homes.

Home prices vary based on market conditions and other economic factors. When there’s limited availability, the price is high. If more homes go up for sale, prices come down. That’s simple supply and demand. Knowing that January is a good month to buy a home is good, but how many homes are on the market? Understanding economic drivers is critical if you want the lowest price.  

Waterfront Home

Searching For The Best Interest Rate To Buy A House

History has shown us that list prices will always come down at some point, but what is the total amount of money you will eventually pay for your new home? Right now, interest rates are at an all-time low. With a good credit score of 760 or more, you can get a 30-year fixed mortgage for 3.301% APR. Your monthly payment for a $200,000 home would be a mere $876.

Based on that, it’s a great time to buy a house, right? Unfortunately, that may not be true. That $200,000 home could be overvalued right now. We’re in a seller’s market with low inventory. What happens when property values start to come down again? The value of your $200,000 house could drop to $170K or $180K. Now you can’t sell without taking a loss. 

Interest rates and property taxes are impactful, especially when you’re making monthly payments for fifteen to thirty years. That said, don’t fall into the trap of thinking you got a good deal because you scored a low-interest rate. The list price of the home is just as important. If it doesn’t reflect the actual uninflated value of the property, don’t buy the house. Wait for prices to come down. 

Best Interest Rate To Buy A House

Be Prepared For Additional Costs 

No one should attempt to get into a house hunt without having cash in reserve for unexpected expenses. Homeownership means that you’re responsible if any unexpected repairs need to be made. Before you start home shopping, ensure that you have some extra money in the bank, a debt-to-income ratio with some wiggle-room after the mortgage payment, and a steady job.

Remember to ask about utilities and taxes when you speak to the seller. There are certain scenarios where you can include some of those expenses in your monthly mortgage payment. It’s also a good idea to speak with the old owners, if possible. Knowing the history of a house can help you budget accordingly for upcoming expenses, like a new roof or furnace. 

Final Thoughts: Best Time To Buy A House

So you’re ready for homeownership, what an exciting time! It can get pricey, though. Make sure you use this guide and learn when the best time to buy a house is so you can get the lowest prices and save. Generally, you get the best deals when fewer home buyers than the average in the real estate markets. This guide has shown you the best times to buy a house, as well as other factors to bear in mind while doing so.

One last thing: the suggestions here are great, but they aren’t foolproof. Specific events could tamper with the timelines we discussed here. Hence, what we have designated to be the best month to buy a home might not turn out to be so. Bear in mind that you may be unable to influence some things. For instance, the global pandemic in 2020 and 2021 affected the real estate market in unprecedented ways.

In any case, once you’ve bought your house, it’s then time to invest in household items! Use our guides to the best time to buy furniture and the best time to buy appliances to spend your money wisely.

Kevin Flynn

Kevin D. Flynn is a former financial professional with over ten years of experience in the financial industry. He has consulted for financial advisors, online sales reps, and fintech startups. Kevin holds a degree in accounting and finance and continues to expand his knowledge by attending classes and seminars. He commits several hours a day to market research so he can stay on top of the latest news and trends in the financial industry. Kevin's experience in the industry has fueled his successful writing career, which he now focuses on full-time. He currently resides in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.

Leave a Reply

Your email address will not be published. Required fields are marked *