Monday, November 26, 2018 / by Keri McCombs
Have you been searching for a home within the last year or so and have been completely fed up with how hot and competitive the market has been? Or maybe you've been thinking about buying but not sure if this is the right time of year. It’s actually perfect timing!
Well, realistically, most agents will tell you it’s always a good time to buy. I wholeheartedly agree with that - buying a home is one of the most expensive purchases a person will ever make in his or her lifetime, and it's the greatest way to build up personal financial wealth over time. So yes, it really is always a good time to invest in your long-term financial future.
And if you're one of those buyers who has been thinking about getting into the home-buying search soon, or you're so tired of having been home-shopping in this market, right now actually IS the perfect time! Here’s why I say that RIGHT NOW is perfect -
Incoming: Cold Weather Is Here
First and foremost, almost no one wants to buy a home when it's cold and snowy outside. In the Spokane area, we go from summertime, where we are on-the-go from sun up to sundown, enjoying the warm sun and the beautiful outdoors... and then winter comes, and the early sunsets and cold and dreary days have us quickly hibernating. So naturally, about 40-50% of homebuyers drop off the map from November to January. Which means it's the perfect time to be hot on the search! Once January rolls around and tax season hits, buyers start looking again. They've gotten their tax returns and that money is perfect to invest in a new home. The buyers' activity in the market starts to pick up by February, and there aren't enough homes hitting the market quick enough to keep up just yet, which can often lead to multiple offer situations. So if you can find your home before those buyers start to enter the market, you'll be ahead of the game and avoid most of your competition.
Are People Still Selling In The Winter?
Buyers often ask if sellers will still sell their homes in the winter. There will always be homeowners who are ready to sell during winter, for various reasons. And this year, we have a unique factor that's likely to help open up the selection of homes to choose from. For the last year or so, many sellers have held off on listing their homes for sale. Why? Because they then had to find a new home to buy in the same hot, competitive market that was just as frustrating to you. Now that the market is quite so intense, but still favorable to sellers, more are becoming comfortable with listing their homes for sale and being able to find a new home. What this means to you as a buyer: more options coming available that may not have been there in months' past.
What's This I Hear About Interest Rates?
It's true what you've heard - interest rates are going up. Slowly, they’ve been creeping up, after being at historical lows for so many years. We have now passed 5% and very well expect to be at 6% by spring or early summer. Why does this matter? Well, we know it's because you'll spend more money on interest, but how does this impact you in numbers? Let me give you a breakdown:
Let's say your home budget is $275,000 and you've been quoted an interest rate of 5% as of today.
You are thinking about waiting because you're not really sure if you want to move during snowy, cold weather, so you decide to wait until February to start looking again.
Once February hits, you see that there are a lot of homes you love, but they have already accepted an offer, and you make an offer on a few homes, only to be outbid by other buyers.
Given the time searching and being outbid, you don't find the perfect home to buy until April, and by then, interest rates have hit 6% (for the sake of the argument, I'm giving nice rounded numbers).
Given that the market is still competitive and there have been bidding wars, this has caused the home values in your search area to go up by a few thousand dollars, between December and April. So that home that you loved at $275,000 is now selling for $280,000 and had multiple offers on it.
On top of that, with the increased interest rate to 6%, it's now cost you an additional $100 per month on your mortgage payment, or if you want to keep your same monthly payment, you have to decrease your budget to $265,000.
So my point in my example is this: waiting a few more months doesn't necessarily mean you'll find something better or have more to choose from, and it can cost you to wait.
If you're considering buying a home within the next few months, or you have any real estate questions, reach out to me anytime. I'd love to have a conversation with you about what works for your situation! Call me at (509) 844-5843.