A little-known fact among first-time homebuyers? The real estate market in the United States behaves much like the weather.
“It always cools off significantly in late fall, reaching its low point around New Year’s, before gradually heating up as spring approaches,” said Jeff Tucker, economist for Zillow.
This market pattern means benefits for winter home shoppers. Here’s why.
1. Less competition
As the temperature drops and everyone jets off to warmer destinations, there are fewer buyers to compete with.
Zillow found that home listings posted in the second half of December end up selling for 1.1% less than expected. It’s the biggest discount of the year, said Tucker. Early January is the second best time to shop: The average discount on sale prices is 0.8%.
Tucker explained that most families time their move based on their children’s summer break. If you wait until the warmer months to buy, you could pay as much as 7.1% more, according to a report from ATTOM Data Solutions.
2. Motivated sellers
If someone lists their property in the winter, it’s often because they need or want to move soon.
“Those who are selling are usually highly motivated and under pressure to unload their home,” said Ralph DiBugnara, president of Home Qualified, a web series focused on trends and issues in the real estate industry.
You’ll likely have more bargaining power with the seller if you buy in the winter.
“Most sellers listing in the winter months either have a sense of urgency because of work and relocation or are still on the market from the fall. The last two scenarios spell negotiability for buyers,” said George Case, realtor with Warburg Realty.
3. Faster closings
Fewer real estate transactions in the winter months also impact mortgage companies, providing yet another potential benefit for the buyer.
“As mortgage companies see a slowdown of 25% to 30% during the holiday seasons, you will be able to close your loan on a potential new home much faster as wait times are much shorter during,” said DiBugnara.
Learn more about mortgages here.
In addition to a cheaper mortgage, winter buyers may more easily secure a moving company and negotiate cheaper prices (especially since moving comes with many hidden costs).
“Movers are less expensive in the winter as they’re not that busy,” said Martin Eiden, an associate broker with Compass Realty.
4. Tax savings
If you buy a home before the year comes to a close, you may qualify for new tax benefits.
“The holidays are your last chance to buy that home and use it as a write off on your taxes for 2019,” said DiBugnara. “You’re able to deduct any mortgage interest, taxes and points charged for your mortgage on your tax returns.”
Here are homeowner tax deductions you need to know.
Drawbacks to winter home shopping
There are certainly plenty of upsides to braving the cold to buy a home. But it may not be the most ideal time for shoppers with certain must-haves, as buyers will likely have fewer options on the market. Real estate agents often encourage sellers to wait until spring to list their home, said Tucker.
“There are slimmer pickings for buyers in winter,” he said. “This can be more of a problem for buyers targeting very specific home types in small areas. There may simply be no homes available in that area to fit their family.”
Visiting homes in the freezing cold and winter slush may not be the buying process you dreamed of. But these challenges come with a silver lining.
“On the bright side it means you get to see how homes handle inclement weather. Just pack plenty of tarps for moving day,” said Tucker.
Ready to move? Here’s how to budget.
Image: DPproductions
