Is there a best time to buy? A best month, best year or best time for you? The answer is Yes and No. In this article we will look at the perfect-timing factors that will either make for a better or worse time to buy. Essentially timing will influence the supply/demand equation. A higher supply and low demand will give you negotiating power. A low supply and high demand will push prices up.
Factors to consider when buying a house
Here are some timing tips that will influence real-estate pricing:
- Seasonality
- Financial considerations
- Market conditions – The Repo Rate
- The time of the year
- Property location
- Market factors & natural disasters
- Personal factors
- Moving considerations
Seasonality
Historical data does suggest there is more buying activity in Spring and Summer. But as we have seen recently, we have had a massive influx of stock and buyers in this winter period, post Covid-19. Sellers may tend to lower their price points in Autumn and Winter but it all depends on the markets and external factors at the time.
Whenever you choose to buy your home, use your imagination to visualise whether this home and your lifestyle here will still suit you in the other seasons.
Financial Considerations
With the prime rate now at 7.25%, its lowest level since 1973, what do the Financial Experts Say?
When national interest rates are lower you can afford more. Lower interest rates mean you can qualify for a bigger loan. At the same time, you are now competing with more people who can afford more, and this higher demand can reduce your capacity to negotiate.
At the same time, you may now be able to afford bigger, better and more expensive in a less competitive top end buyer’s market.
The job market and economic “mood” will also determine the level of demand in the housing market. Ideally you want to buy when there are plenty of houses available and fewer buyers who qualify for finance and/or can afford to buy.
Market conditions – The Repo Rate
If there is any alteration to the repo rate this has a direct influence on the housing market as the home loan interest rate is then revised which may inhibit or increase each consumer’s buying power.
Now it’s the ideal time and market for buying a new home as the prime rate is at its lowest level since 1973.
Time of the year
Data may suggest there is more buying activity in Spring and Summer but there are many factors that can affect this data. As we have seen more recently, due to Covid-19, buyers and sellers are very active now during this winter period.
Sellers do tend to lower their price points in Autumn and Winter. However, if you are able to choose in which season or market you wish to buy, then use your imagination to visualise your home and lifestyle in the other seasons and in adverse economic times. Knowing, in advance, that you can cope in all seasons and all financial situations is a must for any buyer.
Consult your Leadhome real estate agent on which is the best month to get the best price and to get the best variety in available options. As a buyer, trying to determine this yourself is a difficult exercise and dependent on a lot of circumstances such as: the economical situation of the country, season and time of the year, the gradings of the ratings agencies, changes to the repo rate, the imminence of any elections or pandemics like Covid-19.
Whilst spring and summer are typically the best times of the year to buy a home, this winter we have seen an unusual increase in the market of both stock and buyers since the Covid-19 pandemic.
Your Leadhome real estate agent will be knowledgeable on these issues.
Find the best time for you
- Low interest rates will mean you can afford to pay more.
- Winter buying may give you more negotiating power.
- An urgent seller is a house-hunter’s “pot at the end of the rainbow”.
To take advantage of the best buying opportunity windows, allow yourself plenty of time to use timing techniques to get the best deal. Don’t find yourself in a position where your own personal urgency to relocate or upgrade places you in high demand and low supply market with less choice and no time to afford you more choice.
Property location
Finding a home that is located around the required amenities is the first appealing feature in a buyer’s mind. Buyers are more willing to compromise the moment they find the right area and right price. However, buyers have different needs and what is going to appeal to one, isn’t necessarily going to appeal to another. Therefore safety, valuation of property, culture and proximity to school and work are the major factors.
Market factors
There are many external market factors that can influence timing for example the most recent Covid-19 pandemic which almost crashed the property market but then saw a massive increase in buyers and properties for sale. Other factors also include the lower interest rates and possible tax incentives.
Economists urge consumers to take a holistic approach. Lower interest rates do not always mean more buyers. Economic factors cannot be looked at in isolation. Sadly, this is already being evidenced during the Covid-19 pandemic. The decline in interest rates would ordinarily increase demand but galloping unemployment trends and a declining GDP are outpacing the low interest-rate benefits for homebuyers. This will, in all probability, increase supply dramatically with fewer people who can qualify for a home loan and/or or afford to upgrade during this time. Similar pricing patterns occur when a region experiences drought, wild-fire activity and/or floods.
You will need to consider all external marketing factors when buying a property.
Personal factors
Consider all your reasons for buying and make sure that they all make sense in your current situation. If you are upscaling or downscaling you may want to make sure that it also fits in with your lifestyle habits or the traveling distance from your child’s school. Each area has its pros and cons. Keep this in mind and talk to a good estate agent who knows his/her areas who can give you the right advice.
A seller, who has already put in an offer to purchase on a new home, will be more anxious to sell quickly and would be more negotiable. These are sensitive and often very personal conversations which are best handled by your estate agent.
Moving considerations
Being aware of the funds at your disposal is important, even before hiring an estate agent. An accurate estimation of your finances will make the process of buying a new property easier.
A primary concern should be calculating how much money you can put towards your new home. Once you have an accurate estimate of the price of moving, you should be able to estimate how much money you can put towards a new property.
The cost of removal services including the agent and conveyancing costs should be accounted for.
When estimating this cost, evaluating the number of possessions you will be moving, whether you will be doing the packing yourself, the location of your house and the distance to your new home – all will affect the eventual price.
The time of the year also needs to be considered as who wants to move during – the rainy season, Christmas season, granny’s visit from overseas, the middle of school exams or the school year and incur the cost of new uniforms…. if at all possible.
Summary
By following these guidelines you should be able to find the property of your dreams and have a quick and stress-free decision making process when it comes to deciding when is the right time to buy a house.
