Time is relative - and it applies to the real estate market as well.
Correct time entry in real estate is not always the same for everyone. Factors such as your financial situation, the influence of broader markets, and economic trends also play significant parts.
For instance, the pandemic contributed to a 15.7% year-over-year drop in housing inventory in the spring of 2020. It was a steep decline in what is supposed to be the busiest time of the year. Nevertheless, real estate is still one of the most resilient industries, and things are looking up this year.
But if it is the right time to buy a house, there are crucial things you need to consider first. Once you sort out these undercurrents, you will have better freedom with the timing.
Here are three factors you need to evaluate first before entering the residential real estate market:
1. Market Conditions
Buying a home is challenging, especially if you lack knowledge about current market conditions. If you're not in a hurry, it's always best to observe the market and only enter if the conditions are favorable.
As much as possible, you need to avoid a seller's market – which usually happens when there is a strong demand for homes, but the inventory is low.
Persistent buyers will face higher prices and fewer choices.
2. Personal Readiness
Before you become a homeowner, you must understand the hidden costs of homeownership. You need to set aside an average of $9,394 every year to cover expenses, such as:
However, you can avoid repair and maintenance costs in the early years of being a homeowner if you get a move-in-ready home. Homes with previous owners or a foreclosed property can present some major disadvantages like the cost of potential repairs.
3. Financial Conditions
Are your financial ducks in a row yet? Here are three crucial factors you need to consider:
While economic conditions can shift an expected real estate trend, specific seasons of the year have a general effect on home buying.
Buying a House in Winter Season
If you are looking for the time of the year with the lowest housing prices, it's always best to buy houses during winter. Buyers are scarce during the holiday season. As a result, sellers who list their homes for sale are usually in a hurry to close a deal.
Since most real estate agents want to complete as many sales as possible during this slow period, they are more open to negotiating commissions and closing costs.
However, there are some caveats that this cold season brings as well. Inventory is also scarce, which means it could be harder to scout for your dream home. Depending on your location, winter weather may impede you from going to open houses. Home inspectors may also have a hard time thoroughly inspecting a snow-covered roof.
If you can accept and somehow overcome these challenges, you're in for a faster closing process and more accessible realtors.
Home Buying in the Spring
Spring comes with its own set of homebuying challenges. The abundance of buyers makes it easy for sellers to place a higher price tag on their houses. Homebuyers are also under the pressure of closing a deal and moving in before the next school year.
Since the weather is mostly clear, sellers can showcase their houses better. The spring sunlight, green lawns, and blooming flowers make a property look even more desirable. The neighborhood is alive and filled with bright colors. Due to this, it is easier to find your dream house because inventory is abundant.
However, competitors also abound, and you might find yourself in a bidding war.
Buying a Home in the Summer
The flurry of activities continues in the summer and the U.S. real estate market peaks during the early days of this season.
The table above shows that the busiest selling months are from May to August. The number of transactions during these months accounts for 40% of home sales for the entire year.
Compared to spring, buyers are now battle-hardened. They are more aggressive in the summer months, offering higher and more substantial bids on the table.
Home prices are also at their peak during this season, particularly before August. If you are not in a big hurry, you can always wait until the end of summer for a great deal.
Entering the Real Estate in Fall
The best time of the year to purchase a home, though, is during the early days of fall. There are still many properties available in the market, and prices are not as high as in other seasons.
Once summer is over, sellers usually lower their prices and are more open to providing a better deal. Real estate agents also have more time to spend with you since they're no longer too busy. As such, it's an excellent season for negotiating an offer.
Since most families have finished settling in their new homes and the school year is about to start, expect fewer buyers during fall. You can get a more favorable deal if you can wait until October when sellers are desperate to make a sale.
The right time to purchase a house is when you are truly ready. While each season has its advantages and drawbacks, you need to create the perfect timing by readying your finances, goals, and personal timeline beforehand.
Don't waste time searching. You can find your dream home at Oberer Homes anytime you're ready.
Planning to buy a second home? Whether you want to rent it out or use it as vacation home, it is best to consider these factors.
Ensure that you don't get the short end of the stick when buying a house. Here are pro tips on how to negotiate for a better deal.