The Best Time to Buy a House and More Home Buying Tips

Why house hunting in colder weather may be better for your bank account.

This is Part 3 of a 5-part series for first-time home buyers. Missed the first two articles? Catch up here.

When it comes to buying a home, is there ever a “perfect” time? The truth is that determining when to buy a house depends on your unique situation. However, if you’re looking to get the best possible price and save money (perhaps to put toward that in-style farmhouse sink or a custom closet organizing system), consider waiting for the best time of year to buy a house: Fall or winter.

Is there a chill in the air? Start house hunting!

In fact, studies suggest that October is the best month to purchase a house at a discount. On average, buyers have paid up to 2.6% less than the fair market value of homes purchased during that month.1 That means if a house is listed for $200,000, you may be able to get it for $194,800, saving you over $5,000. And research suggests that buying a home in January or February (if it’s still on the market) will cost a buyer 8.45% less than buying the same home in June, July or August.2 For a $200,000 home, that can mean a whopping $16,900 in savings. That may equal extra cash to put toward one of the items on your wish list.

The reason? The housing market and the school system go hand in hand. Since families tend to avoid moving when class is in session, the busiest real estate seasons are during the spring and summer, when children are on vacation or gearing up for it.3

Meanwhile, during fall and winter, the market slows down. As a potential home buyer, you can use this knowledge to your advantage. In general, if a house didn’t sell during the “hot” seasons (temperature and real estate-wise), sellers often remove their listing and put it back on the market in the spring.

Sellers who leave their homes on the market during fall and winter are most likely “really motivated.” If you’ve been binge-watching house hunting shows, you know that means that buyers may be willing to accept a lower offer and you could save more.

There is a drawback to house hunting during the fall and winter, though: The selection of homes can be more limited. In general, the average number of homes for sale starts to dip in September and continues to fall throughout the holidays and new year. Spring’s a time for new life—and new listings. Homes on the market spike by 10% in April.1

Even though fewer homes on the market might make you think the sellers have an advantage, the truth is that with so few buyers in the winter, it actually means that it’s easier for the buyers in terms of competition and seller motivation.

Questions to ask when buying a home

“When is a good time to buy a house?” Although fall and winter are the best time to house hunt, there are factors to consider no matter which time of year you buy. Here’s what to look for when buying a house:

  • Are mortgage rates low? Consider buying when mortgage interest rates (the percentage of interest you’ll have to pay for the life of your home loan) are as low as possible.4 Mortgage rates are constantly going up and down. If rates are falling, it may make sense to wait and get the mortgage at the lowest rate possible. If you find a house you love in a rising rate market, you may want to lock in a rate ASAP. Getting a low rate may help you put away more in savings or even apply extra money to your principal payment each month, which will increase your equity and help you pay off your mortgage faster. Talk to your mortgage lender about the best time to secure the prime rate for your particular case.

  • Is it a seller’s or buyer’s market? Ideally, you want to look for a home in a buyer’s market. That’s when there are more houses for sale than potential buyers5, so sellers may be more willing to negotiate. You might be able to buy an upscale home for a lower cost and be able to save more than you would in a seller’s market (when properties are scarce and bidding wars ensue).

  • Is it better for me to rent or buy? Most people believe that buying a home is a better option than renting because you’re building equity as a homeowner. This is true—as long as you plan to stay in the home for at least 5 years.6 If you move before that time, renting is cheaper, because of the costs associated with buying (like lawyer’s fees, closing costs and interest on your mortgage). And, there’s the down payment to consider. A simple math equation can help you figure out how much you need to save. The longer you rent, the more time you’ll have to save up for that down payment. Plus, there are other long-term costs associated with owning a home, too, (such as property taxes and home repairs) that you don’t have to worry about as a renter.

Like so much of the road to homeownership, whether or not you’re able to focus your home search during a particular time of year may be out of your control. But knowing these home buying tips—and using them if you’re able to—could help you save big. If you buy in fall or winter, you could pay significantly less. Even better, by the time summer rolls around you could be settled into your new home and soaking in the hot tub you added to your back patio with the cash you saved.

In Part 4 of the series, learn the true costs of owning a home and how they’ll impact your finances.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Citations

  1. Max, Sarah. (2016, June 02). When is the best time to buy a new home? | Money. Retrieved September 12, 2017, from http://time.com/money/4213128/best-time-to-buy-home/

  2. Starbuck Crone & Daniel Tonkovich, E., & Tonkovich, D. (2016, September 20). Still house shopping into fall? You didn't miss out on the best prices. Retrieved September 29, 2017, from https://www.nerdwallet.com/blog/mortgages/home-buying-season/

  3. Liu, T. (2016, April 21). Here's why seasonality matters in the housing market. Retrieved September 29, 2017, from https://www.housingwire.com/blogs/1-rewired/post/36855-heres-why-seasonality-matters-in-the-housing-market

  4. Plaehn, Tim. What time of the year are mortgage rates typically at their lowest? (n.d.). Retrieved September 13, 2017, from http://homeguides.sfgate.com/time-year-mortgage-rates-typically-lowest-8852.html

  5. What is a buyer's market vs. seller's market? (n.d.). Retrieved September 13, 2017, from https://www.redfin.com/resources/buyers-market-sellers-market

  6. Anderson, Tom. (2016, May 04). 3 factors to help decide whether to rent or purchase a home. Retrieved September 13, 2017, from https://www.forbes.com/sites/tomanderson/2016/05/04/when-to-rent-and-when-to-buy/#336373952e92

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