The home buying process is exciting! It’s a new beginning and a chance to turn a space into your own. But know that buying a house (and subsequently moving) is one of the greatest life changes a person can endure. Even happy times can bring high stress. According to the Holmes-Rahe Stress Inventory, changing one’s residence, while low on the list, still adds points to the overall mix of stressors that can affect a person’s well-being.
With this knowledge, the first concern a buyer should have when timing their next move is their own calendar and life plan. The first thing you should “Google” is your own life. Then, after gauging yours and your immediate family’s best interests, consider market forces when timing your move.
The best time of year to buy a house is the time that the move will go most smoothly for you while getting you the best deal possible. For most people, this means a range of several months exist that would be ideal for relocating. Others have the luxury of moving any time of year. Once you have a time frame nailed down, look into the market indicators that could help you craft an ideal approach to the timing and negotiation of your home purchase.
Market Indicator #1: Most Common Time of Year
According to the National Association of Realtors (NAR), “Seasonality plays an important role in the housing market.”* The most common month to close on a housing transaction is June. This is likely the least stressful time for most people to move but is also the time where demand is highest. Thus, buyers are more likely to find greater supply and less competition for inventory if they wait for winter.
The data reported here is national, so consult with your Realtor about trends in your local market.
Market Indicator #2: What will interest rates do if I wait?
The United States Federal Reserve Bank (The Fed) is generally transparent about its intent to raise or lower the key interest rate. They stop short of disclosing exact timing and percentages until the actual event. It’s common for buyers to ask, “Will rates change if I wait a month?” The best person to ask is your loan officer. If you want to track the federal funds rate, check out https://www.federalreserve.gov/monetarypolicy/openmarket.htm. Eight times a year The Fed engages in press events where they either change the rate or talk about why it’s not time to change the rate.
Market Indicator #3: Will inventory increase or decrease in a later season?
The NAR tracks inventory data. Realtors keep an eye on this market indicator to determine whether housing inventory is trending up or down based on previous months’ data. Year-over-year comparisons for a given month are also useful in determining whether housing demand is likely to outpace inventory in the upcoming quarter. Over the past year, demand has increased while supply has decreased, resulting in a seller’s market. Will this trend continue? No one can predict the future, but Realtors generally anticipate that the housing and building supply shortage will continue to cause an upward trend in prices into 2022.
Market Indicator #4: How does the real estate landscape look today compared to this time last year?
Year-over-year comparisons are useful for other data in addition to inventory supply. Home prices, percent of list price obtained, and new housing starts are all helpful to Realtors and their buyers as they decide on the right time to enter their local housing market.
Of course, this list of indicators is not exhaustive. Many factors could affect inventory, demand, and loan programs. Talk with an experienced Realtor and loan professional as early as possible in your home search. Know your reasons for buying a house and how the transition will affect your year. Proper research and timing will help ease the stress of your next move.
*https://www.nar.realtor/blogs/economists-outlook/seasonality-in-the-housing-market