Wouldn’t it be great if you could choose from the largest selection and lowest prices when buying a home—and everything was in place for when you were ready to move?
That is the fantasy. The website issue is that predicting when home prices will drop and the number of properties for sale (or inventory) will rise is difficult. Even if you could, you’d have to be in the right place at the proper time in your life’s cycle and financial circumstances.
We’ll walk you through typical housing market patterns and show you how to measure your own financial readiness to help you feel confident about identifying the optimal time to buy your house. That way, you’ll be prepared to make one of the most important purchases of your life.
When Is the Best Time to Purchase a Home?
If we go by the book, the ideal months to buy a property are August and September, when home prices are lower and inventory is still plenty. But keep in mind that no one can accurately foresee real estate trends. So don’t allow the month determine whether or not you buy a house; only your financial circumstances can actually determine the best time for you.
Use our free mortgage calculator to figure out how much house you can afford.
That so, the greatest moment to buy a house in 2019 was probably around September, when existing home prices fell by $7,000 and inventory fell by only 10,000 properties. Buyers who waited until October only saw a $1,000 drop in home prices and a 50,000-home drop in inventory! 1
When is the best time to buy a home?
Winter is often when home prices are at their lowest. The lowest median home price of the year, $249,000, was recorded in January. After growing for the entire year, prices plummeted by $9,000 between December 2019 and January 2020! So put on your warm woolen mittens if the optimum time to buy for you means receiving the best price.
Keep in mind that real estate usually goes into hibernation during the winter months, with fewer houses for sale during the busy holiday season (not to mention some regions have the cold and snow to deal with). Last year, the number of properties for sale dropped the most from November to December, dropping by 250,000 homes!
Low inventory may make it more difficult to find a home with all of the amenities you desire. But, hey, who needs a jacuzzi in their master bathroom anyway?
When do the majority of homes hit the market?
The majority of homes are put on the market in the spring. From March to April of this year, the number of properties for sale in the United States increased by 160,000, the fastest increase of the year. That number continued to rise each month, reaching 1.92 million house listings in June, the highest of the year! If you need a jacuzzi and an outdoor fire pit, spring is the time to shop.
On the flipside, spring is also the busiest season for property hunting, so competition and prices are likely to be at their peak. Home prices jumped $11,000 from April to May last year, reaching $285,000 in June, the highest point of the year. However, if you have the financial means, it’s often worthwhile to browse when there are so many properties to pick from.
Is Buying a House During a Recession a Good Idea?
A recession isn’t always a good or bad time to buy a home—it all depends on your own financial circumstances. The economy stops growing during a recession because there is less purchasing and selling activity. Instead of gradually improving, the economy contracts for around six months, with the negative impacts of this slump lasting much longer.
If you’re at risk of losing your job during a recession or your finances are out of whack, now is not the time to buy a home. However, if your income is steady and you’re on top of your finances, purchasing a home during a recession could net you a great deal, as prices are often lower.
But, really, the best time to buy is up to you.
For those in the back, I’ll say it again: you can try timing your home purchase just perfectly to get the best selection or the best price. The greatest time to buy, though, is when your finances are in order.
The following are the most telling signals that you’re ready to buy a home:
You are debt-free and have a sizable emergency reserve. Student debts (51 percent), credit card debt (45 percent), and vehicle loans are the top three expenses that prevent people from saving for a home purchase (38 percent ). 3 Dump the debt, and you’ll have more money to put toward your home adventure!
Your mortgage payment will not exceed 25% of your take-home salary. This 25% maximum includes principle, interest, property taxes, homeowner’s insurance, and private mortgage insurance if your down payment is less than 20%. (PMI). Remember to include in homeowners association (HOA) costs if your new house is part of one.
You’ve set aside a 10%–20% down payment. Taking up a mortgage with a little or no down payment will result in you spending a lot more in interest and fees, and you will be in debt for decades. Sure, slowing down to save for a larger down payment is unpopular. In the long term, though, it will save you from a lifetime of stress and financial disputes.
You understand how to select the best mortgage. A 15-year fixed-rate conventional loan has the lowest overall cost. Be wary of mortgage packages with fancy names like ARM, FHA, VA, USDA, and even a 30-year loan. They’re meant to assist people who aren’t financially ready to buy a house obtain one anyway—and then spend a lot of money for it in the form of extra interest and fees over the next few decades.
You can afford home ownership. In a typical year, most homeowners perform approximately seven home maintenance projects, totaling $1,100.4 in costs. Unfortunately, your landlord is no longer available to assist you. Also, because moving into a larger space usually involves a higher utility bill, make sure you account for these costs.
You intend to stay for a while. All of the money and effort you put into buying a house will almost certainly be outweighed by the small amount of value you gain from living there for a short period. However, if you love your city and intend to stay for at least a few years, purchasing a home is a wise investment!
If each of those things describes you, congratulations! Now may be the perfect moment to buy a home. Get started by obtaining preapproval for the appropriate mortgage.
With the help of an agent, determine the best time to buy a home.
Work with an experienced real estate agent who knows your market like the back of their hand if you want expert advice on whether now is the best time to buy. Try our free Endorsed Local Providers (ELP) program for a quick and easy method to find the best agents in your region. We only recommend agents that share our commitment to helping you achieve your financial goals.