Experts: Don’t wait until spring 2020 to buy a home. Buy in fall 2019
By Erik J. Martin, The Mortgage Reports
Autumn is here. Kids are back at school, football season is starting up, and the weather is cooling off.
But one thing that could heat up is your chance to claim a great deal on a new home.
Current market conditions are favorable toward buyers in many areas. Experts say it’s wise to start shopping now and take advantage of this window, before the holidays and cold weather hit.
If you want to capitalize on the fall market, the time is ripe. Research your options, check out several different homes for sale, get pre-approved, and shop around carefully for a mortgage.
With the right planning, you could land your desired home for less and be moved in before 2020.
House-hunting in autumn reduces competition
Autumn can be a great time of the year to search for and purchase a home.
For one, there’s often less competition from other buyers between September and December. That’s because many buyers and sellers like to get their real estate business done before the start of the school year. That period has now passed.
Cooler weather also gives you an edge when house hunting. Potential buyers tend to favor warmer months, when they don’t have to brave the cold, snow, sleet, or ice while shopping. Now that ideal weather is on the wane, fewer folks are eager to attend open houses or private showings.
Fall sellers feel pressure to lower prices and close sales
Fall often produces more urgent sellers. Consider that most sellers list their homes in the spring and summer. People who missed that window and are listing now may face pressure: Sell soon before winter arrives and most buyers go into hibernation.
Sellers who listed in the spring or summer but still haven’t sold are feeling the squeeze, too. They’re likely willing to lower prices to unload their properties — and autumn buyers stand to benefit.
“Also, corporate sellers, banks, investors and others often seek to close out their books before the end of the fiscal year. They may price much more aggressively now than earlier in the year,” says Bruce Ailion, Realtor and property attorney.
Average home prices are predicted to rise by $9,000 next year
All told, fall home buyers often see lower prices than those who buy in spring or summer.
“Prices tend to decline between September and November,” says Gay Cororaton, senior economist and director of housing and commercial research for the National Association of Realtors (NAR).
“The NAR expects the median price of existing homes to increase by 3 percent in 2020, from $269,600 to $278,500.” — Gay Cororaton, Senior Economist, NAR
“It helps to look at historical data since January 1999 through July 2019,” she says. “This shows that the average month-over-month change in median existing home sales prices changes throughout the year.”
In the fall and winter, prices tend to drop by about one percent, Cororaton says. In the spring and summer they can rise by as much as two and a half percent.
In addition, Cororaton says the NAR expects the median price of existing homes to increase by 3 percent in 2020 — from $269,600 to $278,500. So if you wait until next year to buy, you’ll probably pay more for a home.
This year, fall home buyers could lock in record-low interest rates
Lastly, there’s a reason why fall of 2019 is particularly favorable for buyers: Lower mortgage interest rates. Rates are currently at or near three-year lows. And they’re expected to stay low through the autumn.
“The distinct advantage to this fall is that rates are back near historic lows. Plus, the housing market has been steady throughout 2019 as far as prices,” Ralph DiBugnara, president of Home Qualified, says. “That means the house you wanted to be in in 2018 or the first half of 2019 will be cheaper now thanks to the downturn in interest rates.”
If you’re on the fence
That’s not to say you couldn’t get a better deal next year on a home. As Cororaton pointed out, if history is an indicator, prices tend to drop through the winter until turning up again in the spring.
“Also, a lot of economic strategists are calling for a downturn in the market or recession. That could cause some reduction in home prices over the next 12 months,” adds DiBugnara.
Then again, interest rates could rise again next year.
“So even if there is a price reduction in 2020, it may not mean your mortgage payment will be less if rates rise,” DiBugnara says.
There’s another drawback to waiting to purchase, too.
“If there is continued pervasive anticipation of an economic slowdown in 2020, builders may cut back on new home construction,” Cororaton notes. In other words, the housing supply may be thinner next year, which could drive up prices.
Decide whether this fall is the right time for you to buy
Okay, you think: I’m convinced — I’m bound to find a great deal, so I’ll count on buying a home in the fall.
Just remember that finding the best deal on your new home depends not only on seasonality, but also on your location, budget, and rates you’re able to qualify for.
“In many markets, many homes still get multiple offers [in the fall],” says Ailion. “Don’t overpay, but don’t get discouraged. Keep looking out for the right home at the right price for you.”
See if you qualify for this fall’s low rates
Keep an eye on the housing market this fall to see whether you can benefit from seasonal price cuts and today’s low mortgage rates.