With the current housing market’s record-low inventory and all-time-high price tags, waiting for more favorable conditions would seem like the smart move for homebuyers. However, historical data and current trends suggest, however, that shoppers who sign early this winter are likely to get a better deal.
According to an article published by Mortgage News Daily analyzing the past 7 years of home sales, buyers paid a premium of 1.5% above average market value in the month of December with costs rising steadily each month and reaching a peak premium of 6.9% in June. To put that in terms of actual dollars, a home valued at $200,000 could end up costing about $16,000 more by June.
Although, basing purchase decisions on past trends is tricky, especially in a market that has been less than normal for months. COVID-19’s unique impact on home sales should also be considered. After pent up demand from spring lockdowns boosted summer and fall sales, supply is low and the homebuilding business is booming. October’s new home construction beat expectations by about 5%, but those new homes won’t be move-in-ready until the warmer months. A wealth of fresh supply that might otherwise drive prices down could be effectively cancelled out by seasonal demand.
Even if home prices were to stabilize, higher mortgage rates may also increase the total cost of homeownership in 2021. As the economy recovers from the pandemic recession, rates are likely to progress upwards.
With mortgage rates still relatively low, price-conscious homebuyers may want to consider purchasing this winter. Shoppers who are willing to brave the cold are likely to save more in the long run. Contact us for more information or to get pre-approved today!