I know, I know. We’re only two or three weeks into the fall, so who the heck wants to think about winter? Home buyers, that’s who! And there’s actually a lot to discuss on this topic.
In many respects, winter 2019 could be a great time to buy a home in the U.S. Buyers who make a purchase during the wintry months could enjoy low mortgage rates, less competition, and more negotiating leverage.
Let’s take a closer look at these and other benefits of buying in the winter.
1. Less Competition from Other Home Buyers
The real estate market tends to slow down in the winter. There are several reasons for this. Whether is the most obvious factor that keeps buyers on the sidelines. The holidays are another.
In short, people tend to have a lot of other things on their mind during the winter, besides buying a home. And that’s one reason why winter can be a great time for someone to make a home purchase.
Buyers who enter the market during the last three months of the year tend to encounter less competition from other buyers. So there’s less of a sense of urgency, and less need to rush.
Buyers are also less likely to encounter multiple-offer scenarios and bidding wars during winter, compared to the busier summer months.
This is especially important for those real estate markets where housing supply is limited. And a lot of U.S. cities that fall into that category right now.
In many markets across the country, inventory levels remain lower than usual. That can make it harder for home buyers to find a suitable property that falls within their budget. By starting the house-hunting process in the winter, buyers could have a better chance for success.
2. Sellers Are More Motivated In the Winter
With fewer buyers in the market, sellers tend to be more motivated and flexible near the end of the year. After all, they don’t when the next offer will come along. You have to take what you can get.
Homes that are listed for sale in the winter typically take longer to sell, compared to those listed during the summer months. But don’t take my word for it. Let’s look at the data.
According to the national real estate brokerage Redfin:
- Homes that were listed for sale nationwide during June, July and August of last year spent a median of 38 days on the market before going under contract.
- During December, January and February of last year, the median number of “days on market” was 58.
This is clear evidence that houses tend to sell much faster during the summer months than in winter. It also illustrates why sellers tend to be more motivated, when it comes to price negotiations.
3. Price Reductions Are More Common
This is an extension of point #2 (which is an extension of point #1). Housing demand tends to wane in the winter months. Homes stay on the market longer. Offers are fewer and farther between.
As a result of these overlapping factors, it’s common to see more price reductions in the winter months. This gives home buyers an opportunity to save money when buying a house.
4. Mortgage Rates Are Expected to Remain Low
Mortgage rates have been hovering at historically low rates for the past couple of months. According to the latest survey from Freddie Mac, the average rate for a 30-year fixed mortgage loan was down to 3.57% during the week of October 10. That’s quite a drop from the start of this year, when 30-year mortgages held an average rate of 4.51%.
But what about the winter of 2019? What are rates expected to do over the next few months?
In their latest housing forecast, the economic research team from Freddie Mac predicted that rates would remain within their current range through the end of this year.
To quote their September 2019 Economic and Housing Research Forecast:
“Low treasury yields will keep mortgage rates subdued in the coming quarters. We project the 30-year fixed-rate mortgage to average 3.7% in the fourth quarter of 2019. We project the annual average to be 4.0% in 2019 before declining to 3.8% in 2020.”
Translation: While mortgage rates might climb a bit through the winter of 2019, they are expected to remain below 4% on average. So there’s not much urgency for borrowers on that front.
Home buyers who purchase a home during winter 2019 could use a fixed-rate mortgage to lock in at a low rate. And they could keep that rate for the entire term or “life” of the loan.
Is this a Good Time to Buy in the Atlanta Market?
Getting to the big question on many people’s minds: Is this a good time to buy a home in the Atlanta area?
There are some personal considerations that go beyond the scope of this article. But from a real estate and economic perspective, this could be a great time to buy a home in Atlanta, Georgia.
There are several reasons for this:
1. The local economy is currently strong, with fairly high employment.
2. Thirty-year mortgage rates are expected to remain low going into 2020.
3. Forecasters predict that home prices in the area will continue to climb.
The bottom line is that Atlanta home buyers who postpone their purchases will likely encounter higher housing costs. Home prices have been rising steadily in this housing market for years, and they don’t show any sign of stopping in 2020. So a sense of urgency is probably warranted.
Content provided by Brandon Cornett of The Home Buying Institute. This article contains forecasts issued by third parties not associated with the Home Buying Institute. Housing-related predictions are the equivalent of an educated guess and should be treated as such.