The importance of knowing when it’s time to invest.
You’re not alone if you’re wondering what the best time of year to buy an investment property is. You may discover that the end of the year offers some of the best bargains. Following are some sound reasons to buy an investment property at the year’s end.
1. Fewer homes on the market
Cooler weather tends to slow home buying. Not many sellers want potential buyers slogging through their home coming out of rain or snow. Another factor is that parents with school-age children don’t want to relocate in the middle of the school year. So, with fewer buyers, your risk of competition increases your negotiating power with sellers.
If your serious about buying at the end of the year, start your investment property search while everyone else is waiting for the sun to come out and get a jump on them.
2. Lower sale prices while they last
The continued upsurge in home prices makes buying in sooner rather than later all the more attractive. Although experts predict home value growth to slow at the end of the year, sales activity is expected to remain strong. Home sales have increased by 7% compared to 2020.
Even if you see fewer listings this time of year, many home buyers consider October to December the best time to buy a house because of price reductions. Sellers whose listings have not yet sold tend to be more motivated as the holidays near.
Recent data from the National Association of Realtors (NAR) shows that the median price of existing home sales historically declines during the last three months of the year. But once the new year arrives, prices begin to rise as sellers prepare for the spring selling season.
So is it really better to buy in November and December? There are always two sides to any story.
- Slow selling months of November and December offer buyers an edge
- Real estate agents, mortgage brokers, and home inspectors have more time on their hands, making a transaction more accessible
- Sellers may be under intense personal pressure from health, work, or marital issues that force them to sell at a bad time of year
- End-of-the-year tax deductions if you close before December 31st
- Sellers may think a buyer is desperate by shopping outside the normal selling season
- Air conditioning and landscape watering systems are difficult to accurately check when temperatures begin to cool
- Fewer homes for sale make your options less
- Buying late in the year to close can be difficult due to holidays and winter weather
3. Make time work for you
Pay close attention to the total number of days a home has been on the market, i.e., the “cumulative days on market.” If a property has been lingering on the market for several months, sellers may be more motivated. This gives you a stronger bargaining position to buy.
If saving money is a draw, finding a house in the fall or winter may be the best time of year to get a lower sales price. Why? Because sellers typically see fewer buyers at that time and may be more open to a deal.
4. Sellers who are motivated
Homeowners who opt to sell their homes toward the end of the year probably need to sell. Regardless of why — job relocation, financial reasons, or family issues — these sellers may be open to a lower offer to close faster.
5. Viewing the property in challenging weather
Winter weather is hard on people and houses. Bare trees and brown lawns kill curb appeal. Cold air seeps in through drafty windows and under doors. Cranky furnaces never quite reach the desired temperature. But shopping for properties in inclement weather lets you see houses under stress before you commit to taking on the job of landlord.
6. Mortgage rates are better
The end of the year is the ideal time to lock in the best loan interest rate and save money on interest in the long run.
Rates are expected to rise in 2022, but still remain fairly low. On the high side, the Mortgage Bankers Association predicts rates will hit 4% by 2022’s end. Freddie Mac and the National Association of Realtors also predict that rates will rise steadily through 2022.
If there are fewer customers vying for home loans toward the end of the year, that could translate into better financing terms for you.
While November and December may bring less competition and potentially better deals, today’s rental property investors can access affordable, cash-flowing rental properties—no matter the season.
That’s especially true if you work with an expert like Cousin James Management. We are involved in most aspects of real estate, from buying, renting, property management, and more. Stick with a respected name in the real estate industry — Cousin James Management.
Contact us today and let’s discuss what we can do for you – buy, sell, lease, or manage.