BuyersThe News July 14, 2021

When Is the Best Time to Buy a House? – Amherst Madison

When Is the Best Time to Buy a House?

If you’re planning to buy a house soon, you probably know already that timing is everything in the real estate market. So when is the best time to buy a house? It’s not just the time of year that matters most when it comes to getting the best deal on a house. Perhaps more important than buying during the right season is buying when your personal finances will get you the ideal rate and terms on a loan. Find out what factors indicate your personal readiness and what market conditions tell you when to buy a house below.

When Is the Best Time of Year to Buy a House?

There are advantages and disadvantages to buying a house at any time of the year. In winter, there are fewer houses on the market because people prefer to be home for the holidays and to save the moving projects for warmer weather. With less competition for houses during the winter, home prices are lower. However, if you wait until springtime to buy, there will be more homes to choose from — albeit with a lot more competition, which drives prices up.

In reality, you can find a great home during any time of year. Oftentimes, homebuyers overestimate the importance of what time of year to buy while underestimating the importance of other factors, such as broader market conditions and personal readiness. 

What Personal Factors Dictate the Best Time to Buy a House?

Perhaps the most important factor to consider in timing the purchase of a home is your personal finances. Even if inventory is plentiful and housing prices are low in your area, you won’t get a good deal on a mortgage loan if you have lots of debt, limited savings, or a low credit score.

The best time to buy a house is when you have obtained a steady income, established an excellent credit history through consistently responsible borrowing, and set plenty of money aside to cover a down payment and closing costs. You will qualify for the best interest rates and avoid the added cost of private mortgage insurance if you can provide a substantial down payment. 

We recommend that you aim for the following:

  • A 36% debt-to-income ratio (only 36% of your income goes to debt repayments)
  • At least a 580 credit score (620+ is more ideal)
  • 25% of your total house budget in savings ($75,000 for a $300,000 home)

Should I Buy a House in 2021?

Given the COVID-19 pandemic, many people are wondering, “Is now a good time to buy a house?” The pandemic has created unique circumstances that have made now a very convenient, yet challenging time for people to buy. 

In times of crisis, the Federal Reserve slashes interest rates to make it easier for us to get the things we need. Rates are at a historic low, and they will likely stay this low for several years. This works to your benefit, as you will likely have lower monthly mortgage payments and therefore be able to afford a nicer house. If your employer has you working from home, you also have more choice in where you live, which opens up a lot of options.

Is 2021 a Buyer’s Market or a Seller’s Market?

The downside to all of this is that these low rates have encouraged more people to buy houses, creating a competitive and cutthroat climate. With increased demand comes price increases and less inventory. In short, reduced rates, high competition, and low inventory have made 2021 an extremely strong seller’s market. But the tide may turn if rates begin to rise again and when those who delayed selling their house during the pandemic put their homes on the market later this year. 

So, is now a good time to buy a house? We think so. Interest rates may not be this low again for a long time. However, you’ll need to move fast and provide your best offer upfront. Read up ahead of time to find out how much you can afford to offer over the asking price. 

Download our buyer’s guide for more information on buying a home in times of high competition.