When is the best time to buy a house is a question I’m often asked. I’ve heard it said that “timing is everything”, so it stands to reason that timing matters when buying a house, right? Well, while timing DOES matter, there’s more to it than that. So today I’ll be digging deeper into timing the market and then, towards the end, I’ll be sharing what REALLY matters when determining the best time to buy a house.

For our purposes today, “when is the best time to buy a house” refers to the financial component of a house purchase. Timing the real estate market is a very difficult task, and doing so requires consideration of several factors. For instance, it’s almost always best to BUY in a BUYER’S Market. A buyer’s market is simply the time when housing supply exceeds demand.

Simply put, if there are more homes on the market available to buyers than are willing to buy them, then pressure is placed on sellers to sell and buyers have more negotiating power. Prices tend to drop and conditions, such as length of inspection periods, seller concessions, and willingness to make repairs, all tend to favor buyers.

One problem with attempting to buy a house in a buyer’s market is that this often occurs during economic recessions or job market declines. So, while there tends to be more homes available, there are sometimes less buyers ABLE to buy them. If you want to buy a house because it’s a buyer’s market but you don’t have a job, it’s highly unlikely that you’re buying a house.

Although he wasn’t referring specifically to the real estate market, Warren Buffet once inferred that the best time to buy was when everyone else was selling, and the best time to sell was when everyone else was buying. He was referring to fear and greed in an economic sense. So if you’re the lucky one with a job when nobody else does, maybe THAT’S THE TIME when you should be buying.

Homebuyers sometimes believe that the best time to buy a house is when interest rates are low; however, interest rate swings can be significant, but there could be many years between these swings. Waiting years for low rates to arise can be problematic as the gains waiting are often lost to rising home prices. In the early 80’s many bought homes with over 18% interest, but then refinanced a few years later into much lower interest rates. Looking back, these buyers were big winners as the high rates put pressure on the # of sales, giving buyers an advantage, and then refinancing gave them the best of both worlds.

Certain times of the year tend to be generally better times to buy a house than others. For instance, April through August has shown to be a time when homes sell for more than during winter months. It’s often a simple issue of many families moving in between school years, so demand is heightened during this period. As such, buying a home in the winter may statistically be a better time to buy from a supply and demand perspective.

But this generality is not all inclusive. In some states, like Florida, which has a massive number of retirees, the impact of the summer break for school has a lesser impact than it may have in other states. A Florida Realtors article noted that certain months of the year brought a premium price for sellers. May had the highest prices of the year, with May 27^th having the highest selling prices.

February and April followed, while November, September, and October had the most moderate prices for buyers. One study by Realtor.com indicated that October 1^st through the 7^th was the best time of the year to buy a home on a national scale. In colder climates, like in the far north and Canada, deep in the heart of winter may be the best time buy if you don’t mind the snow falling on your kitchen table and shoveling snow between each load to the truck.

So thus far we’ve spoken of seasonality and the best time to buy a house from a calendar’s perspective; but your financial picture can have a far greater impact on the best time to buy a house. Buying a house when you have a poor credit score can be potentially financially devastating. Let me take a second to digress.

Consider you walk into a used car dealership with GOOD credit. They’ll be happy to see you and may even be willing to negotiate a far better deal than is on that sticker. But let’s suppose you walk in with POOR credit. Well, they’ll still find a way to “help you out” by getting you wheels. But there may be ZERO price negotiation, and it may come at an interest rate of 20% for 10 years.

Maybe I’m exaggerating here, but you get the idea. The point is that if you have poor credit, it could cost you significantly more to borrow money. I’m not just talking about another $25 per month either, it could be several hundred dollars per month. Plus, you may need a much larger down payment, which could cost you several years of saving up for that down payment.

I’m a local Realtor® with connections all across the country, so if you’ve got real estate needs anywhere at all, just pick up the phone and give us a call.

I could go on all day about the consequences of buying a house with poor credit, but if you’ve got a “not so good’ credit score, it may NOT be the best time for you to buy a house. I once had a friend that spent his days watching the financial markets and day trading stocks. He was super sharp. He had a master’s degree in some sort of financial investing, and this was his FULL-TIME job. I suspect he made a ton of money over the long haul, but when I asked him about it one day, he said that his goal was to avoid losing money every day, Warren Buffet’s golden rule, but that a large portion of days he still lost at least some money.

That was a sobering statement from a guy that I considered a professional day trader. So if this guy, a FULL-TIME professional with a DEGREE in this stuff lost so often, how should you and I expect to WIN by timing the real estate market when most of us will only buy a house 3 or 4 times in our entire lives? The answer is, we shouldn’t. Trying to time the market is usually a fool’s task.

I have never met a single person that has been able to profitably time the real estate market for an extended period of time.  However, I know many people that have created massive wealth by buying and holding real estate. As such, you should buy a house when it is the best time for YOU and hold the home for long haul.

From a historical perspective, real estate gains an average of around 4% year over year. Those that purchase homes for short terms flipping often get burned. Yes, many flippers buy homes, make repairs or upgrades, and can make a good profit doing so, but it’s usually THEIR LABOR that is the catalyst for their gains. The best time to buy a house is when you have a need to buy a house.

Ensure your financial house is in order, take your time, and make a wise decision not based on emotion. Although there are certainly years when the real estate market is down, buying and holding over a period of a minimum of 4 to 5 years gives you a significant hedge against these downturns IF one occurs during your home ownership.

Consider those that purchased a house back in the run-up prior to the Great Recession, say in 2005, 2006, or even early 2007. How do you think they fared from their purchases? Well, if they didn’t sell DURING the Great Recession, they did just fine. They only lost money on their real estate if they SOLD during that period.

Published on October 08. 2024 / no comments.