Whoever told home buyers that it is not possible to time the market is not in on the secrets of real estate cycles. Housing market trends are subject to various pressures, including the rise and fall of mortgage rates, ease of access to credit and legislative initiatives that may impact homeownership. On the local level, movements in the housing market may be affected by changes in the vicinity of the property or the community, weather and seasonal activities. It is important for buyers to identify market conditions that would create buying opportunities at price levels that could ensure the viability of the investment project. There is a best time to buy a house, and it happens to be diametrically opposite to the best time to sell property. In other words, the best time for buying a home is to jump into the market when sellers are under pressure to dispose of their properties in winter.
Non-economic Factors that Impact Housing Trends
The real estate market responds very quickly to economic triggers such as any change in interest rates, whether higher or lower. When it comes time to buy a house, it pays to consider other factors.
Competition
The number of properties available for sale will usually drop as winter sets in because this is a traditionally slow time of the year in home selling. Savvy home owners take their houses off the market to avoid giving a stagnant or a low buyer-appeal impression. Home buyers are wary of properties that have been on the market for a while. During the months of December, January and February, there should be fewer units available for sale because of this. Likewise, buyers tend to put their house hunting activities on hold during the holidays, creating an opportunity for motivated investors.
Price Reductions
It stands to reason that sellers who opt to keep their properties on the market during winter are under pressure to sell. Buyers can identify which of these sellers are under great pressure by looking at price reductions offered during the lean months. Special winter pricing or holiday discounts indicate that the seller is highly motivated.
Why invest in the winter? Investors on the lookout for buying opportunities know that they have the upper hand over sellers who want to exit the market. Home buyers may have bargaining chips that they would not have otherwise during the peak buying season.
Longer Time on the Market
Houses for sale tend to stay on the market longer in the winter because buyers hold off on purchasing decisions, people take time off for the holidays and cold weather is not conducive for house hunting. Sellers who are eager to move on become anxious as each day passes because the carrying costs and maintenance expenses continue to accumulate as long as they own the home.
Why Invest in the Winter
Given the above conditions, it can be argued that the best time to invest in properties would be in the winter as close to the holidays as possible. Experts suggest negotiating for a home on Christmas day when the sense of goodwill is high and in anticipation of a fresh start in the new year. There are also other reasons why winter is a great time to buy investment real estate.
Luxury of Time
There may be fewer properties on the market for investors to choose from, but those that are available are primed to move with reduced pricing and, possibly, other incentives from the seller side. With fewer buyers in the market, you stand a better chance of negotiating and optimizing your position as the rare buyer during the slow winter months. When you know that there are other buyers bidding for the same home, you have to make instant decisions to improve your chances of scoring the winning bid, which is what you run into when you compete for hot properties during the peak buying season.
When sellers are faced with a single bid, they may become more accommodating of your terms and your offer. You can milk the opportunity to get a better price and more concessions from the seller. You will have more time for a thorough exterior inspection, which is important because snow, storm shutters and other elements tend to mask inherent problems in the property.
Holiday Schedules
As an investment property buyer, you will likely not be competing with families and residential buyers for properties that are available for sale during the winter months. Aside from the fact that it is difficult to move during winter, families with school-age children may be unable to change their addresses until the school year ends in May or June. Fewer buyers to compete with immediately improves your negotiating position. Additionally, the holiday season tends to bring out a more compassionate attitude in everyone.
Tax Benefits
As the calendar year closes, sellers may be encouraged to offload their properties to use any tax advantages as they file their returns for the current tax year. Investors may have some advantages if they make capital outlays before the end of the year or even at the start of the new year for those who define their fiscal year differently.
Why Invest in the Spring
The second best time during the year to purchase investment property is at the start of spring specifically on Easter Sunday, if at all possible. The real estate market will start to pick up as the weather improves with supply rising along with demand. There will be more properties to choose from, and home inspections will be easier to accomplish. Fair weather will also make it easier to pinpoint problematic structural and cosmetic issues in houses for sale. However, the competition will pick up as well as families start planning for school district and address changes.
Why invest in real estate in the spring if you can take advantage of the slowdown in housing demand during winter? The simple answer is inventory. There is a dramatic increase in houses for sale in spring as the holidays are over and sellers seek to take advantage of the seasonal increase in demand. Buying opportunities will abound, but as a property investor, be prepared with your cash, financing resources and other paperwork that would make your offer stand out to a seller faced with a number of offers.
Whatever you decide is the best time to buy a house for you, Auction.com is a resource worth watching. The site specializes in bank-owned and foreclosure properties in various markets nationwide. Browse available listings to get a sense of the opportunities that are available to real estate investors.
