Tuesday, January 22, 2019

When Is the Best Time to Buy a Home in 2019?

There are multiple factors that go into the "when to buy a home discussion." The following factors are among the most critical, and should be evaluated first. Full Article

1. Early in the Year

The calendar is a good barometer for the best time to buy a house.  In general, prices are less expensive at the end of the year, especially in December. Primarily, that's because the inventory that's on the market comes from owners who have to sell, and are more willing to negotiate.  That could mean an owner whose company is transferring him or her to another state, and the owner must move fast. Or, the homeowner is hard up for cash, and can't afford to wait until the traditionally busy spring home selling season.

2. When Interest Rates Are Low

In the past few years, the Federal Reserve has sustained a policy of raising interest rates to keep inflation low, and the economy stable.  In early 2019, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0%, depending on the lending institution. Only two years ago, when interest rates were much lower, home buyers could grab a 30-year fixed-rate mortgage for under 4%.

3. When Your Financial Situation Is Optimal

The best time to buy a new home can also be when you're cash flush, your credit score is strong, and you don't have a lot of large debts.

This could be the case in several scenarios:

  • You just finished paying off your student loans, and have extra cash for a home. 
  • You just received a big raise or bonus, and you have more money for a good down payment. 
  • You just got married, and between two spousal incomes, you have more cash for a new home purchase. 
  • You just sold your home of 20 years (for example) and with plenty of cash liquidity in the home, you have plenty of money to buy a new home, without having to resort to a big mortgage. 
  • You just finished paying off your kids' college costs, and have extra cash for a home purchase. 
  • You just received a big family inheritance, and you have the money to buy a home. 

Of course, here are no absolutes in the above cases, as everyone's personal financial situation is unique.  The larger takeaway still holds though - the more money you have on hand, the better time it is to buy a new home without having to depend too much on a large, interest-heavy mortgage loan.

4. When Inventories Are High

Another great time to buy a home is when there are plenty of homes available on the market, and home sellers need to be price competitive to sell their homes and get them off the market.  Usually home inventories are heaviest in the spring and summer selling seasons, where plenty of families put their homes on the market because foot traffic is heavy and because buyers want to move in before Labor Day, and get their kids ready for school.

5. When the Economy Is Doing Well  

It's worth looking at key economic indicators like housing starts and the U.S. unemployment figures when evaluating the best time to buy a home.  Besides the likely fact that since the economy is doing well, you must be doing well, too, there are other factors in play when studying the economy. That's particularly the case with two key indicators:

New construction. When new home construction is strong, there are more homes to buy, and ample supply almost always relieves pressure on home prices. That's a good time to act if you have the cash and are ready to buy a new home.

Income and employment numbers. When consumer sentiment is strong, consumer income is up, and employment is near maximum levels, buyers typically have more cash to buy a new home, and stronger credit that translates into lower mortgage interest payments. That could be a good time to buy a home, too - when you're cash flush.

Buy a Home When It Feels Right for You  Again, there are no hard and fast rules here - just the likely (but not guaranteed) tendencies, time lines and trends that combine to make it a good time to buy a home.  Leverage the factors listed above and see if they don't spark something deep down inside of you, the great American home buyer, and see if you can't get a great deal on the home of your dreams.

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