Shopping for a Home in January
With the start of any new year, buying a new home might be the furthest resolution on people’s minds. But it might, in fact, be a very smart way to start off the year right.
For one thing, as a Buyer, you will have little to no competition for houses on the market, even though the inventory will be lower than the most popular time – spring.
Another reason to buy?
Low mortgage rates. As December and January are traditionally a lull time of year in the housing market, smart Buyers can get a deal if they put in a little effort to research their options.
Lenders and agents might compete a little harder for a Buyer’s business. Shopping for homes in the winter months also gives a Buyer a unique vantage point of a property.
For example, let’s say you’re buying a house with six percent closing cost and a 30-year mortgage with a 3.25 percent interest rate. If your house costs $500,000 as opposed to $550,000, the total cost of your mortgage will fall by over $80,000. You’ll feel the benefits of buying low for decades to come.
Because real estate is a “supply and demand” industry, good deals can be found when no one else is looking. Therefore, some of the best deals happen during the coldest months of the winter, especially around the holidays.
Timing is important because there are certain times of the year when you’ll pay more for a home and other times when it’s more advantageous to buy.
Home sales tend to peak in the summer months (June and July) and prices usually peak just before May. Purchasing a home during the colder winter months will usually get you a better price – sales tend to slow down making Sellers more willing to negotiate.
If you’re looking to buy a bank foreclosure, many banks are eager to get the loans off their books before the close of the year, so even better deals can be found because of their increased motivation to sell.
And Sellers are motivated. Although the holiday season can be a hectic time to show and sell a house, there are distinct advantages to staging and showing their home at this time of year — they have a chance to show their home at its very best, adorned with warmth and cheer.
Also, these are likely the homes that for whatever reason didn’t go during the peak season. Sellers will want to get the deal closed, especially for tax purposes. It’s the end of the year and Sellers want to tie up loose ends.
This is an advantage for Buyers, especially if there are points to negotiate.
As a Buyer, your Solutions agent will have more time to focus on you, as opposed to other times of the year when they might be juggling more clients. It’s a great time to get something under contract so you can move in by early spring.
Could a Buyer miss something while buying in the dead of winter?
Buying in winter may be the ultimate test for a home since all the big systems such as heating, plumbing and the roof and gutters are put to the test in the cold.
Some of the curb appeal may be gone, but fixing the landscaping is a lot less expensive than finding out months later that your boiler doesn’t work.
Is Spring really better?
Real estate and building experts say that an emphasis on the spring home buying season has its roots in practical reasons and also in some enduring misperceptions about the marketplace.
For one thing, in spring, people who have been cooped up over the winter are ready to get out and sample the sunshine. And for many, a potential address change at that time fits nicely with the school calendar.
Fall and winter bring out the serious Buyers. They are buying with a purpose – whether they’re getting divorced or just realized they’re having a new baby or they’re getting a job transfer. There’s a reason for that move.
It only takes one house that a Buyer likes, and it can come up at any time of the year.
But if you have buying or selling in your mind for spring, an important factor to consider is that in real estate, “spring” doesn’t necessarily coincide with what it says on the calendar.
Spring starts in January in the real estate world.
People who have been waiting for the holiday to be over start heading out to look. The season then ramps up to about mid-May, which is when most people are listing for sale, and that continues pretty strongly through the summer. Listings then traditionally tail off in summer.
What’s Your Moving Timetable?
One way to set a personal real estate timetable is to decide when you want to be in (or out of) a house, and work backward from there. The amount of time it takes from contract to closing table can vary regionally, but a month is now considered reasonable, sooner if a Buyer has cash.
But Buyers have to add on to that the amount of time it takes to find the house in the first place – it can take one day or several months.
Sellers have also seen a change in how quickly their house will sell – with fewer houses in the inventory, they can either have a contract in a day or two, depending on whether they are priced correctly, as opposed to a typical 90-120 days.
If you aim to move into a newly built home, planning backward from a move-in date is even more critical.
You have a few timelines to consider. If you’re buying a quick move-in or “spec” home – a new home that has been partially or fully completed by the builder – the time from contract to move-in might fit that one-month (or slightly longer) span.
If you’re designing and building a home from scratch with a production or large-volume builder, factor in a time frame of between four to six months, depending on the weather.
In the custom-home process, finding the right a lot may take anywhere from a day to several months. And then there’s the matter of interviewing builders, which is a highly personal decision and coming up with a design, a process that can take from five weeks to several months.
The Best Time to Build
Builders can’t pour flat concrete until it gets warm. But they can pour a basement floor because they can tent it and suspend heaters in the basement.
Many Buyers automatically presume construction needs to begin in spring, but builders say starting in winter can be advantageous because the biggest detriment to construction is rain. They can work in snow, but heavy rain stops most in their tracks.
So, get out there and give January a try and you might just find your dream home!