Unsplash / Craig Tidball
Is there a best time of year to buy?
Buying a home is often the most important investment of many people’s lives. When you make the decision to purchase a house, it can be tempting to jump in without thinking it through. Resist that temptation.
With a little patience and research, you just might save yourself a ton of time, money, and stress. One way to do so is to purchase your home during optimal times. Read on to learn about the best time of year to buy a house.
Best time for the widest selection
Most sellers put their house on the market during the spring months- March to July. This is because the majority of single resident owners have children. Parents try not to move their children during a school year but do try to prior to the next school year starting.
This leads to an increase in available houses during the spring and summer making it the best time of year to buy a house if you want a large selection to choose from.
Unfortunately, an influx of available houses leads to stiffer competition. The higher the demand, the higher the price, so spring and summer make for terrible times to buy a home in regards to price. Winter, on the other hand, offers the following:
- Less competition: The winter months are often the best time to find a deal. From November to February, competition is low. Most people do not look for homes in the winter months, so you have a much better chance of getting a lower offer accepted.
Particular days of the week are more favorable for buyers, as well. Data shows that putting an offer on a home on either a Monday or Friday tends to yield more favorable results than other days of the week.
- Different reasons to sell: Most sellers who put their homes on the market in the winter do so due to a time-sensitive situation, such as job relocation, so they are often willing to negotiate below the asking price.
- Sellers who are motivated to sell: Additionally, by the end of the year, most available homes have been on the market for six months or longer. The more time on the market, the more eager the seller is to sell the home, which opens the door for deeper negotiations. The biggest downside to this is that you have much more limited options.
The difference in summer and winter prices
Statistics show that homes cost about 8.45 percent less in January and February than in warmer months. This may not seem like a big number, but it can actually make a big difference.
Imagine finding a home in January for $200,000. Borrowing that amount at a 4 percent interest rate brings your mortgage total to $208,000.
That same home could be as high as $216,900 in June, and that is just the home price. If you borrow that amount for your home at a 4 percent mortgage interest rate, your total loan amount becomes $225,576. That “insignificant” 8.45 percent difference in price costs the homebuyer an extra $17,576.
The best time of year to buy a home is when you are ready. The conditions of your personal and financial life need to be optimally lined up in such a way that buying a home will not put you in a bad situation.
Lower asking prices are a great benefit to buying in the winter, but there is another often-overlooked benefit. During such a time, the weather is often more damaging to a home. This means that the home inspection will likely find issues with the home, such as leaky roofs, that it might not find in more pleasant weather.
Best combination of selection and value
What if you want a wide selection and a good deal? August to September is considered the best option for many people. The market is still pretty full of houses. At the same time, sellers are starting to get a little anxious to get the home off of their plates.
You will probably not have as wide of a selection as you would in June or even July. You also will probably not get as good of a deal as you would in December. However, it is considered the “sweet spot” as you can get some of the summer and winter benefits.
Other factors to consider
There are other factors that may change the optimal time to buy, such as the following:
- Weather: Not every state or geographical location experiences the same weather. In places where the warm weather lasts longer, you may have to do a little more research as you probably will not have the same cycle. In places such as Hawaii, where the weather is nice pretty much all year, buyers would need to look into the housing trends of that area.
Doing your own research is wise even if you live in an area with a regular cycle of seasonal weather. Other factors may affect how your local market fluctuates. Websites such as Zillow can help you learn the cycle of your local market more.
- Length of time on the market: If a home has been on the market for a long time, the season may not matter. For instance, if a seller lists a home in March of 2020 and it is still for sale in March of 2021, it may not matter that it is during a popular home-buying season. The seller may be so ready to get rid of it that they accept a much lower offer.
- Mortgage interest rates: Mortgage rates rise and fall much like the market price and demand for homes. When many people are applying for mortgages, mortgage companies often charge higher interest rates- this follows the entire principle of supply and demand.
As mortgage applications come in less frequently, lenders lower their rates to entice buyers. Following this principle, if fewer people are searching for houses in the winter, it is safe to assume that mortgage rates will be lower at that time.
Best days for discounts
In addition to particular months being more favorable for home buyers, it turns out particular days of the week are more favorable, as well. Data shows that putting an offer on a home on either a Monday or Friday tends to yield more favorable results than other days of the week.
“Almost nobody looks at homes on Christmas Day. It doesn’t matter whether you are a Christian nor whether you celebrate that holiday, there are much lower numbers of buyers shopping for a home in December. Buying on or near Christmas Day is a smart move.’ – Elizabeth Weintraub, The Balance
The holiday season
Holidays also bring in some extra discounts for buyers. The day after Christmas and New Year’s Eve see some of the best discounts. A big reason is that most people are thinking about the holidays, not house buying at those times. Therefore, competition is very low.
Some of the benefits people enjoy from house shopping during the holidays are:
- Seller accepts less than the asking price
- Seller may agree to pay closing costs
- Seller often agrees to cover repairs
Summary: Overall best time of year to buy a home
When’s the ultimate best time to buy a home? When you are ready. Your personal and financial life needs to be optimally lined up so buying a home will not hurt you. While there are no guarantees in life, there are some criteria you should meet to give yourself the best chance at success.
- Your income: The time of year is important, but even more important is your income. Experts suggest that your housing costs should not exceed 30 percent of your income. It is important to keep this fact in mind so that you do not put yourself into a hole you cannot dig out of.
- Your debt: 30 percent is a good place to start, but it is not always so cut and dry. For instance, if you are already paying out 90 percent of your income to monthly bills and other debt, you do not have 30 percent left to cover housing costs.
- Your credit: A credit score plays a large part in the mortgage rate you are approved for. Is your credit in good enough standing to get a competitive rate? If not, consider working on your credit a bit before shopping for a home.
How much can you comfortably afford to pay out for housing costs? Comfortably does not mean that you have to eat Ramen noodles every night for the next 30 years. Comfortably means that you can pay your mortage payment while still covering necessities and the lifestyle you plan to live.
Prior to shopping for a home, you should take a good, objective look at your budget. How much can you comfortably afford to pay out for housing costs? Comfortably does not mean that you will have to eat Ramen noodles every night for the next 30 years. Comfortably means that you can pay that amount while still covering necessities and the lifestyle you plan to live.
- Your down payment: Almost every mortgage loan will require a down payment. The more you can pay down on a home, the less you have to borrow. Do you have enough saved for a down payment? Could you save more over the next 6-12 months? You might need to consider holding off until you can save more or looking for a less expensive home.
With some patience and some planning, you can find a home you love at a price you can afford.
A deeper dive- Related reading from the 101:
- What size down payment do I need to buy a house? | Finance 101
A basic guideline to determine how much you should save.
- Want to buy a house? Here’s how to figure out what you can afford | Finance 101
More information to help you stay in your budget.