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The best time to buy a house is always when you and your family are ready. However, there are times throughout the year when homes sell for less and buyers receive favorable financing terms. On the flip side, there are times of the year when sellers can demand high prices from buyers and negotiate the best selling terms for themselves.
What is the best time of year to buy a house in 2023? This article discusses the best time to buy a house based on historical trends and some questions you should ask yourself before making any purchase decisions.
The Real Estate Cycle
Real estate is a highly cyclical industry. This means that the market fluctuates over time in predictable patterns that savvy real estate professionals use to their advantage. Knowing the best time of year to buy a house gives buyers an advantage and can make it more likely they’ll get their offer accepted over plenty of others.
The real estate cycle can refer to short-term or long-term patterns. For example, the macroeconomic conditions that change every decade or so heavily impact the real estate market. The economy is constantly going through recession, depression, recovery, and expansion cycles, and the real estate market tends to move with the changing macroeconomic environment.
Additionally, the real estate cycle has predictable patterns throughout the year. Some patterns show the difference between housing prices in different seasons so potential home buyers can shop when prices are low and the cost of borrowing decreases in certain months.
Pros of homeownership
Being a homeowner comes with many different benefits. However, now isn’t always the right time to buy for many people. Below are some of the most common benefits you’ll experience if you buy a house today.
- Investing in an appreciating asset. Real estate is an appreciating asset that tends to increase in value over time. Other assets like cars, boats, and luxury watches don’t hold their value very well and decrease in value the longer you possess them. Home appreciation can allow you to do many things–such as cash-out refinancing and applying for loan programs that help grow your real estate investing business.
- Building equity. In simple terms, equity is the value of your financial interest in a property. One way to look at equity is the difference between the home’s fair market value and your existing mortgage. Equity is valuable because you can use it to acquire more properties or save for retirement. Reverse mortgages aren’t as common today, but they depend on the homeowner having substantial equity in their home to qualify.
- Non-monetary benefits. The benefits of owning a home aren’t just monetary. Homeownership is said to be the American Dream and allows homeowners to put down roots in their community and raise a family. Even if you don’t have kids or are an empty nester, owning a home is a great option that can positively impact your life.
When is the best time to buy a house?
Buying a house is a personal decision that shouldn’t be taken lightly. It typically requires you to sign an agreement to make monthly payments to your lender for up to thirty years.
While most people don’t stay in their house for their entire loan term, buying a house is still a big decision. Knowing the best time of year to buy a house is a great way to get the best deal on a home today.
Buying a house in the summer
Summer tends to be the time when home prices are highest. The summer months are the warmest time of the year and home-buying activity picks up during this time.
Buying in the summer also gives homeowners more options to choose from. Housing inventory is typically highest in the summer, which means buyers can shop around for homes and decide on the one that fits them best.
However, since prices and housing inventory are at their highest, buying in the summer means more competition among buyers. You should expect to put several offers in on homes before getting your offer accepted since competition is so high during the summer.
Buying a house in the fall
The stiff competition in the summer may be enough to deter potential buyers who didn’t get their offers accepted. This means that buying in the fall is the next best time to buy a house and can be a great opportunity for new homeowners.
The fall brings the possibility of price cuts for homes that didn’t sell during the summer and offers less competition among buyers. Buying a house in the fall also gives you more time to shop to ensure you’re not making a hasty decision like you may need to make in the summer.
Additionally, sellers who couldn’t sell in the summer or those who just listed their homes may want to close before the year ends and are highly motivated. This is ideal for buyers who wish to get a home for a reasonable price and close before the new year.
Buying a house in the winter
Like in the fall, sellers in the winter tend to be highly motivated and want to sell their property as soon as possible. Homes listed in the winter may sit on the market for longer, which gives potential homeowners the ability to buy the house for less than the asking price.
Winter tends to be the time when competition is the least among home buyers. Less competition means you won’t have to compete the same way you would with buyers in the summer. Lower competition in winter means you can take your time when shopping for homes.
Buying a house in the spring
The final time to buy a home is in the spring. The spring housing market starts to pick up in April and lasts until June each year. Spring often brings mild temperatures and entices potential homeowners to come outside and shop for homes. The start of the warm season can create a frenzy of homeowners who put in offers above the asking price and waive contingencies.
Spring is usually not the best time to buy a house due to increased competition. However, those looking for a home in the spring will find that prices are lower than the summer but higher than winter, making it possible to find a great deal while shopping for homes in the spring.
Things to do before buying a home
There are many different things to do before you decide to buy a home in today’s market, such as:
- Get pre-approved. One of the most important parts of buying a home is finding out what you can afford before making any offers. Getting preapproved with a local mortgage lender is the best way to ensure you’ll get approved for the mortgage if your offer is accepted.
- Save for a down payment. Depending on your loan program, you’ll likely need to make a down payment of 3 percent or more. This means a $500,000 home requires a down payment of at least $15,000.
- Don’t get discouraged. Buying a home in today’s market can be frustrating and time-consuming. However, finding the right home is about being patient and jumping on any opportunities that present themselves.
Questions to ask before buying a house
It’s important to ask yourself and your realtor questions before buying a house so you have an understanding of the real estate process and what to expect moving forward. Below are some of the top questions to ask before buying a house today.
- Why do I want to buy a house now?
- Am I in the position to buy a house?
- Is my monthly income enough to cover the mortgage payment?
- Do I have enough money for a down payment?
- Does my real estate agent have experience in this neighborhood?
Difficulties of Homeownership
Homeownership isn’t for everyone. Depending on your circumstances, it may make more sense to rent if interest rates are high. Below are a few disadvantages that come with homeownership.
- Challenging to move quickly. Owning a home and putting down roots means moving out of your home quickly can be difficult. You’ll likely need to find a buyer for your home before you move, which can sometimes take weeks or months. Those who want the freedom to get up and go may not benefit from owning a home.
- Short-term real estate fluctuations. While real estate tends to increase over time, it’s important to know that the short-term volatility of the housing market can be significant and cause your investment to drop in value. You’ll need a long-term approach to homeownership if you want to see your home appreciate.
- Interest rates. Your interest rate determines the rate at which you pay back the lender who issued your mortgage. High interest rates mean higher monthly payments, which may make homeownership too expensive for many people.
Is now a good time to buy a house? The best time to buy a house is when you’re ready. However, life circumstances can often get in the way. Buying in the winter is the best for those looking for a deal, while spring and summer give buyers the most options but come with the highest competition.
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