Buying a home is one of the most important financial decisions someone can make in their lifetime. When you finally save up enough money for a down payment and organize your finances, you may be tempted to start house hunting immediately. However, this is when you should be asking yourself, “is now a good time to buy a house?”
Right now, experts and homebuyers will tell you that the answer is “yes.” It’s always a smart idea to buy your home when market conditions are favorable. Keep reading to find out why that time might be now.
Is Now A Good Time To Buy A House?
In reality, you’ll never find the “perfect” time to buy a house. Even in a buyer’s market, buying a house can prove challenging based on your specific location and personal circumstances.
However, current data suggests that right now could be a good time to buy a house. Fannie Mae conducted a National Housing Survey, and over 60 percent of renters would buy a house if their leases were terminated today.
There are several reasons why:
Rental rates are projected to increase sharply over the next year.
Mortgage rates likely peaked around Labor Day and are coming back down.
Buyers are gaining back some control; fewer offers are being made per home.
Sellers have decreased their prices after just two weeks of listing.
A recent change in credit scoring added an average of 22 credit points, making home ownership more affordable for many first-time home buyers.
Current Housing Market Conditions
Market conditions are always in flux, creating different groups of winners and losers at any given time. Here are some key factors impacting the market right now and thus your decision to wait or buy:
Interest Rates On The Rise: There was a home buying frenzy in 2021 when interest rates hit historic lows. However, the Federal Reserve is raising rates to combat inflation. If you plan to borrow to buy a house, you never want to hear about higher interest rates. This means the cost of borrowing will increase, and you’ll have higher mortgage payments. However, it’s important to keep context in perspective. This could be your chance to lock in a rate that is still historically lower before they continue to go up for the foreseeable future.
Home Prices On The Rise: Interest rates aren’t the only factor set to go up. Home prices are also projected to increase throughout the next 12 months. However, they are expected to increase at a slower pace relative to 2021, so it could be the right time to buy before you ultimately get priced out.
Rental Rates On The Rise: Mentioned earlier, a recent Fannie Mae survey found that the majority of renters are thinking about buying a house for the first time. This is because rental rates are expected to increase over the next year. Recent changes to credit scoring systems have helped improve the affordability of home buying for many Americans. This could be just the incentive needed to switch over from renting to financing.
Inventory Expected to Increase: Last but not least, home inventory is expected to improve. It will likely remain a seller’s market, but conditions are expected to provide more flexibility for buyers to find the homes they want.
Why You Should Buy A Home In 2022
If you feel pessimistic about the housing market, you’re not alone. Many home buyers feel fazed by how cut-throat the market has felt as of late.
Although it will likely remain a seller’s market for the foreseeable future, certain conditions have improved in 2022. Taking a holistic view of all factors combined, it seems as though right now is the perfect time to act quickly while market conditions are still favorable. If your personal finances are in order, it may be a good idea to research listings in your neighborhood. You may be pleasantly surprised to find some options that you can pounce on before interest rates, rental rates, and home prices all increase in the coming months.
When Is The Best Time To Buy A House?
General historical data show that the best month to buy a house is in either August or September. It’s helpful to look at the real estate cycle as a whole to understand the reason. The real estate market is typically pretty slow in winter. Because of cold and frosty weather, homeowners often wait until spring to prepare their homes for sale. Buyers also don’t feel inspired to attend open houses during hibernation.
The real estate market begins to buzz with activity in the spring and early summer. Homes are listed for sale, demand surges, and prices increase. Patient home buyers often find a sweet spot in the late summer, when prices finally start to come back down. Those who wait until the fall or winter to see if prices continue to drop might run into a problem when there isn’t much inventory left. The cycle tends to repeat itself around the new year. Keep in mind that we are only speaking in general terms. Real estate trends don’t remain consistent year-over-year, so using this information as a general benchmark would be wise.
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What Is The Best Season To Buy A House?
If August and September are the best months to buy a house, then in theory, the best season to buy a house is in the late summer. In reality, you can find the perfect home no matter the time of year. Each season offers unique advantages and disadvantages. It’s best to move forward when you are financially ready while keeping in mind that all you need is some patience and luck.
Let’s break down the real estate experience for each season of the year to better understand the best season to buy a house. While buying a home will depend on numerous factors and moving parts, having a firm understanding of what each season brings grants buyers and sellers the opportunity to leverage their timing with anticipated results.
Buying A House In Spring
Spring is arguably the busiest time of year for the real estate market. As the weather improves, homeowners can make the necessary preparations before listing their homes. In addition, warm weather and the end of the school year lure buyers out to open houses.
As a buyer, spring is an exciting time that offers plenty of inventory. However, expect to encounter competition. Bidding wars are often the culprits that drive prices up.
Families often commit to buying in spring despite stiff competition because they want to settle into their new home before the start of the school year. Starting in the spring also provides some peace of mind. If you’re unable to find something right away, you know that you’ll have all of the summer to keep looking. If you decide to buy in spring, be prepared to make quick decisions and put in aggressive offers.
Buying A House In Summer
As spring rolls into summer, the market continues to see a lot of activity. Buyers are still battling it out for the remaining inventory. Sellers are looking for buyers who can put in a strong offer and can close the deal.
If you’re looking to buy a new home and sell your current home, this can be a great time to execute both deals. There are still plenty of buyers in the marketplace while inventory from the spring is getting eaten up. If you can pull it off, it’s a great time to sell quickly and at a reasonable price. Meanwhile, you’ll need to keep up your stamina to hunt for your new home.
The best time to buy a house is for those who can hold out until the end of summer. The market begins to slow down in August and September, and sellers start to drop their prices. You might feel hesitant to consider a house that has been sitting on the market for a long time. However, it’s always worth exploring. It could be that the house is desirable, and the buyer had their financing fall through at the last minute. Leave no stone unturned because you just might find yourself the best deal of the year.
Buying A House In Fall
Fall is an excellent time to house hunt if you want the lowest price possible. Inventory will be tight, as most deals would have been made in the spring and summer. However, you’re more likely to encounter sellers who are increasingly motivated to sell.
As time inches past the start of the school year, towards the holidays, and the end of the tax year, desperation begins to set in. When you make an offer, you’ll have the upper hand during the negotiation process.
If your main objective is to buy low, even if it means working hard to find a diamond in the rough, fall could be the best time to buy a house. Fall can be a great time to pull the trigger on purchasing a home because prices begin to cool down from the summer’s popularity, and there is higher home inventory than the winter months to come.
Buying A House In Winter
The idea of buying a house in the winter often makes people shiver, pun intended. Inventory is typically at its lowest, and buyers and sellers alike are busy with the holidays. Freezing temperatures make it a less-than-ideal time to house hunt, and sellers don’t have the advantage of showing off the property when everything is in full bloom.
Don’t let this scarcity scare you off. Sellers who are still listed are likely very motivated, meaning you can find significant savings. They might even throw in extra perks and incentives to garner your interest. This is also a slow season for real estate agents. When they’re not as busy, they’ll have more bandwidth for negotiations, including their closing costs and commissions. While the chances of finding a dream home are lower, the listing prices will also be some of the lowest of the year.
Is It The Best Time For You To Buy A House?
At the end of the day, it’s up to you to decide when it’s the best time for you to buy a house. Of course, the definition of personal readiness varies from person to person, but in general, it means that you have good credit and you have your debt in control. Further, you should have saved up enough for a down payment, can comfortably afford your mortgage payments, and have an emergency fund tucked away. If you meet these basic qualifications, it’s a great time to get pre-approved for a mortgage so that you can begin hunting for your dream home.
Questions To Ask When Buying A Home
Now that we’ve explored the best time to buy a home, let’s dive into what other considerations should be accounted for when beginning the real estate process. Choosing the perfect home isn’t as simple as scoping out the property and liking what you see. Buyers and sellers should both be transparent throughout the process, and agents should be able to find answers to any questions that either end of the transaction might have. Some of the most important questions buyers should ask themselves and sellers when buying a home include, but are not limited to:
What is my total budget?
What is causing the seller to list the home?
What will all be included within the sale?
What is the home’s appraised value?
Will any renovations or updates be needed?
How long has the house been on the market?
How much do other homes nearby sell for?
How is the neighborhood?
How much will be expected to pay in closing costs?
Is now a good time to buy a house? While most buyers are quick to pick a season, those that have their pulse on the real estate industry know the best time to buy real estate is different for everyone. The right time to buy a house is anything but universal and entirely depends on one’s own circumstances. That said, each season has become synonymous with its own advantages; make sure you factor them into your buying endeavors.
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