Let's face it, the real estate market, in general, slows down this time of year. Listings become a bit more scarce; the pool of buyers tends to wane as the holidays near, and the weather turns less than favorable. But why? Are there good reasons that sellers wait until spring to list their homes? Is there any evidence that waiting to purchase in a spring market will generate more buying opportunities or better results? I want to tackle this topic because I believe that most people in the market are uninformed. 

 

Let's look at selling a home in the off-peak season. One of the biggest misnomers in the real estate industry is that selling in the off-peak season will significantly decrease the "odds of selling." Sellers believe that putting their home on the market this time of year will not produce the number of buyers they want and allow the listing to become stagnant. If you look at the chart below, as an example, you will see something interesting.  On average, the month with the highest odds of selling compared to the month with the lowest odds is only three percent different. So why do we wait until spring to list? There is less competition in the fall and winter months; interest rates are typically lower, allowing buyers more borrowing power.

You can have success listing your home in the off-peak season for sure. Understanding the market for buyers, however, can pay the most significant dividends. Let me show you that by cultivating a sense of urgency as a buyer, you can save thousands both now and long term.

 

Let's look at reasons to buy now instead of waiting.

• Economic factors the point o action now- With the economy continuing to improve, grow, and expand, there is a window of opportunity to secure a better deal before consumers have more income to push housing prices up further. 

• Cyclical nature of real estate- Real estate runs in cycles over periods of years. The market will go up and down, but over time, it increases. We had a down cycle from 2007 – 2011. We are clearly in an up-cycle currently. Because of that, there is safety in the marketplace for buyers in our cycle.

• Value of homeownership- There is real value in homeownership, both in the short and long run. For most people, 80% of their retirement income will be funded through the real estate they own. To miss or delay in establishing such an essential tool in wealth could be a grave error for you and your family.

• The satisfaction of homeownership- The American dream of homeownership where you can enjoy your home and have pride in ownership is still part of success. Being one of the 65% of Americans that own their own home opens doors and opportunities that are not available to renters. There is nothing like the pride of homeownership.

• Tax benefits of ownership- There is a significant tax benefit to homeownership. The ability to utilize more than the basic write-offs on your taxes moves you to a whole new level in lowering the taxes you pay.

• Interest rate advantages of today- The interest rate or the cost to borrow money is at an unbelievably low level historically. When I first started my real estate career 16 years ago, interest rates were roughly 6%. The difference in that compared to where rates are now is massive in terms of qualifying for a specific loan amount, the payment made, and the time it takes to note pay down the note. Taking advantage of these low rates will save you multiplied thousands over the life of the loan.

• Equity build-up through mortgage pay down- One of the benefits of long-term homeownership is the building of wealth called equity through paying your mortgage each month. You can work towards paying the home off and not having that monthly burden, or you can leverage the equity you build to invest in other real estate products. Investing is my niche, and I'd be happy to show you how you can leverage your equity to grow your wealth.

• Supply and Demand: Supply exceeds Demand = motivated sellers with significant choices, and great prices / Demand exceeds supply = motivated buyers who must be aggressive to win offers. Because we have a high demand for homes, the seller has more control of the market than most buyers like. We have fewer homes with more people who want to buy. While that might seem like a negative to buyers, it does show a healthy marketplace that has more safety for the buyer. The reason why is appreciation happens when demand is higher than supply. By becoming an active buyer and purchasing a property, you will gain the appreciation over time rather than paying the seller in the future for it.

• Inflation protection- For all of us, the increase in price for gas, food, clothing, and electricity is caused by inflation. Real estate is one of the best hedges to inflation because its value tends to go up in alignment with inflation.

• Ownership costs dropping below rental costs- Due to the nature of living in a college town, rental demand is skyrocketing. This means that becoming a homeowner will significantly affect your wealth position. Rising rents raise home values (tongue twister). As the demand for rental units increases, the value of any home goes up because of the potential for more rental income if purchased for that specific purpose. That's why a townhome I bought in Blacksburg in January of 2018 for $160,000 is now worth $240,000. As rents rise, so does the value of the real estate used to supply those rents. Mortgaging a home is less expensive per month than owning that same home. 

• Forced savings- I know for me, something like a home that forces me to save is positive. Because I am paying down on my mortgage every month, it’s forcing me to pay toward something that is financially beneficial.

• Affordability of homes- When we look back at this moment in time, say five years or ten years from now, are you going to have regrets? Are you going to say, “I wish I had”?

Don't let the cold months keep you from home shopping. The benefits of buying this time of the year are real, and the savings could be substantial. 

In a robust spring/summer/fall market, buying hot properties could have you paying 5% over list price just to be competitive. When the competition lessons, you may pay full price but ask for 2-3% in concessions to pay for closing costs or other upgrades. That's a 7-8% reduction in price by acting now instead of waiting. 

Knowledge is power and could lead to money. Real, actual savings put in your pocket.

I'd love to offer my expertise and help you find the home you're looking for.

Good luck!

~Brian