When Is the Best Time To Buy a House?

Homeownership comes with a lot of benefits. For longtime renters, it likely means more stability in your living situation. Not only do you know where you’ll be next year (and the year after that!), you’re also building equity and investing in your future. A recent study of millennial couples found that getting tired of renting was a primary motivator for purchasing a home.  While renting is a perfectly viable option for many, it’s no surprise that 4 in 10 Americans want to own a home. But what’s the first step? When’s the best time to buy a house?

The process of buying a home isn’t necessarily known for being accessible. Even if you’re able to save up enough for a down payment, there are a dozen seemingly hidden costs that can take you by surprise. There’s also—and this is true—a mountain of paperwork.

On top of all that, the housing market can be arcane and confusing for first-time homebuyers. Certain times of year seem better than others, but prices can still skyrocket. As soon as you see a place that looks like the perfect fit, it’s already been grabbed up.

While there are no guarantees in the housing market, there are general trends. Being aware of these trends can help you plan for uncertainty and make the purchase of a lifetime.

By Month? The Best Time To Buy a Home Is Late Summer

Experts generally agree that the best time to buy a house is in late summer (think August or September). The idea is that sellers begin to drop prices so they can sell before winter, but there are still plenty of options on the market. Prices in winter tend to be lower, but you have fewer choices. Likewise, many homes go up for sale in summer, but you’ll be paying more in the long run. Remember—you’re also paying interest on every dollar in your home loan.

However, that means opportunity, too. If you’re lucky enough to find a perfect home during those “suboptimal” times of year, you could end up spending a lot less. Again, after we take interest into account, lower prices overall mean saving for tomorrow as well as today.

By Year? Sooner May Be Better Than Later

Considering how unpredictable the market can be, it’s tempting to bide your time. This can be a smart move—waiting for a buyer’s market could mean benefits years down the road. That being said, now may be better than later for some folks.

It bears repeating: the interest rate on your loan matters almost as much as the price of the home itself. 3.6% and 4% may not seem like a lot, but what about when you’re making a $250,000 purchase that you’ll be paying off for the next 15 or 30 years? Those percentages can add up over time.

2020 saw historically low interest rates, but even those are on the rebound. In December 2020, the average interest rate for a 30-year mortgage was 2.7%. As of the writing of this article in June 2021, they’re back up to about 3%. That’s still a very good interest rate, but with demand surging, they could increase again over the next couple years.

Home prices are also expected to keep going up in key markets. Remember, the trick to equity is that you aren’t just buying for now. Especially if this is a starter home or condo, it’s important to keep future value in mind to get a sense of potential profits when you sell. For instance, home values are rapidly appreciating in certain housing markets. Boise, Idaho is a prime example; homes appreciated at an impressive rate of 29.1% over the last year and a whopping 97.4% over the last five years.

So, if you have the money and resources, then low interest rates and appreciating home values could make 2021 a great time to invest in a house. But that brings us to our next point.

Most Importantly: the Best Time to Buy a House Is When You’re Ready

Ultimately, the most important factor in your ability to buy a home will have to do with the resources you have. The down payment is only the first of many hurdles you’ll need to jump through. There are many fees and additional costs that must be taken into account, from working with an agent to the purchase of essentials like homeowners insurance (let’s not even think about repairs right now).

A home can represent new safety and stability. Part of that means making sure you’re still living within your means. At the end of the day, you can’t control the market, but you can control your own finances.