Best Time to Begin Shopping for Your First Home

 In this hot seller's market, if you're thinking about shopping for your first home, you're probably wondering when the best time is to buy. If you need to move now or in the near future, you're likely asking yourself, "Should I rent or buy a house?" 

When it comes to home buying, does the time of year even matter? The season can affect factors like inventory and price. For example, there's often plenty of homes for sale in the spring, but buyer competition can cause prices to rise. In the winter, inventory is often more limited, but prices may be lower. As moving can be more difficult with snow on the ground, that might play a part too. 

But what's even more significant in determining the right time for purchasing a home is your particular situation, needs, and the broader market conditions. Therefore, it's essential to look at all factors before deciding whether or not to buy your first home.

You're Ready to Take On a Big Financial Commitment

The No. 1 factor in timing is your own personal readiness. No matter what the month or season, you'll need to have plenty of cash for the down payment, closing costs, insurance, taxes, and other expenses. Your credit should be in good shape, ideally with a credit score of at least 700, and you should feel secure in your job with a reliable income. 

It's also vital that you're ready to settle down in a specific area and prepared to handle the maintenance, repairs, and the many other costs of homeownership.

Market Conditions

While the real estate market can fluctuate depending on the season, there are other forces that can influence housing prices, interest rates, and inventory. Mortgage rates typically follow the interest rate set by the Federal Reserve, which is why they dropped when the Fed lowered their rate in response to the pandemic. 

Even if the market flips and home prices drop, it's critical to consider how the interest rates will affect your total costs over the life of the loan. While the purchase price may be low, a high interest rate can quickly offset any savings. With interest rates currently low, homebuyers are taking advantage of the opportunity to save on interest but often pay more than the listing price due to the competition in certain markets. 

Bear in mind that housing market trends can vary depending on location. In popular cities, the inventory tends to be lower and the prices higher.

The Season

As noted, the season usually affects home buying too. 

Winter. The cheapest time of year to buy a house is during the winter. Many sellers suspend listings during the holidays, around Thanksgiving to New Year's Day, but those who don't usually want to sell as quickly as possible. They're more motivated, which translates to an advantage for buyers. Additionally, real estate agents may be more open to negotiating closing costs as they're eager to earn commissions during slow periods. 

Spring. After waiting out the chillier months of the year, both sellers and buyers come out when the weather starts to warm. The grass is green again, flowers are blooming, and homes show better. But, while there is more inventory, there is also more competition. In hot markets, bidding wars aren't uncommon.

Summer. It's still a busy time to buy, but if you can hold off until late summer, it usually starts to slow down with the new school year starting again. In most markets, things will slow down by late August, providing a better opportunity for deals with sellers slashing prices in hopes of moving before fall arrives. 

Fall. When summer is over, sellers become even more motivated. As a result, prices typically start to lower, although there will be less inventory following summer home sales. You'll also have less competition as families want to be settled into their new home before school begins. October can be one of the best months to get the most for your money, as sellers are looking for tax write-offs before the end of the year. 

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