Buying a house is a major decision. It has financial implications that will affect you for years to come. So, understandably, everyone wants to find the best deal—both in terms of price and interest rates.
There are many factors that affect the housing market. And in light of current world events occurring due to the spread of COVID-19, it seems home prices and mortgage rates are better than ever, leading some people to take the plunge and sign that contract now, while others hold back, waiting to see if prices drop even more.
Prices can rise and fall unpredictably, but the best times to buy may depend less on the social climate and housing market than you think. Read on to learn more about the factors that affect property prices, and the factors that should affect your decision to buy.
Factors Affecting the Housing Market and Mortgage Rates
When you watch the news, you will often hear about slowdowns in the housing market, or a rise or fall in mortgage rates, but what actually causes these rates to rise and fall?
Supply and demand have a major effect on mortgage rates. If there are more homes than buyers or more buyers than homes, this could cause a major shift in rates. Additionally, the overall economy, inflation, and financial activity from central banks will all have an impact on rates.
At the start of 2020, mortgage rates were already relatively low. However, these have dropped even more because of growing global uncertainty over the coronavirus pandemic. As the infection rate for COVID-19 is predicted to slow, and normality is set to return within a couple of months, financial markets may take longer to recover. And, while mortgage rates are likely to rise slightly, on the whole, it is expected that they will stay low throughout the year, meaning that any time this year will likely be a great time to buy.
That being said, there is always an element of unpredictability surrounding the housing market, and projections can be overturned. So if you’re ready to buy now, there doesn’t seem to be a downside in seizing this moment of rates that are beautifully low for buyers.
When Is the Best Time of Year to Buy?
Factors as small as the time of year can have an effect on property prices. Spring and early summer months are generally a more popular time to buy, so prices usually rise slightly. But at the end of the summer, sellers are often more likely to cut their prices out of concern that as the year progresses, there won’t be as many buyers. So if you’re waiting until later in the year to buy, it’s a good bet to wait until the summer months are over.
Buyers who are looking for a bargain can often find one on December 26th, as virtually nobody is house hunting so soon after Christmas.
Factor In Personal Circumstances
While current trends in the housing market will almost certainly have an effect on your decision to buy, when taking the long view, your personal circumstances will really dictate the right time to buy in the end. As Riverside realtor Ken Hawkins explains, “When you can afford to buy, that’s usually the right time to buy—or at least to start looking at the offerings that fit your budget. Buying or selling winds up being first and foremost all about you—your current and future plans, prospects and resources.”