Wondering if the Winter is a Good Time to Buy or Sell a Home?

Is the housing market still seasonal? The market has been so up and down recently that the answer can depend on whom you ask, and the market you're talking about. That said, historically residential real estate sales decline in the winter holiday season and don't pick up until the weather breaks in early spring (March or April). This is the reason that data on home prices, sales numbers, mortgage rates, etc., are "seasonally adjusted."

There are compelling signs, that as 2013 winds to a close, serious home shoppers should ignore this convention and instead turn it to their advantage. Here are key factors that prospective homebuyers might want to consider before putting their quest on winter hiatus.

Mortgage rates have fallen: Primary among the reasons to move now has been the fluctuation in mortgage rates. Rates currently stand at an average of 4.39% for a 30-year-fixed loan and while it might be true that the Federal Reserve has committed for the near term to keep interest rates low by buying bonds, no one knows with any certainty when the amend it's policy. That said, there are other reasons not to delay.

Maximum loan amounts to be reduced: If you're seeking a government-backed mortgage -- as most mortgages are -- you're already restricted to getting a loan that's based on the median home prices in your desired area ($417,000 in most housing markets). And the acting head of the Federal Housing Finance Agency, Edward DeMarco, has announced that these limits will be reduced in 2014. While DeMarco assured the public in October that the change wouldn't be sudden, and that financial markets would have at least six months to adjust, why would you want to wait until then? Home prices have continued to rise through the year, and while prices tend to drop in the winter as sellers who need to sell reduce their prices in attempt to compete for a smaller pool of buyers, inventory levels are low and aren't likely to increase significantly until spring.

Loans might be tougher to qualify for, or at least require more paperwork: Starting in January 2014, in order to get a "qualified mortgage" a loan that's insured by the Federal Housing Administration (FHA), prospective homebuyers will have to make a stronger case for their credit-worthiness. Along with documents spelling out the terms of the loan, mortgage seekers will be supplying proof of current income and assets, credit history, and other debts. And then they'll have to prove that the annual amount of debt they carry is no more than 43% of their annual income. The changes, required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, also mandate that the loans carry a fixed-rate and be paid over a term not longer than 30 years.

Fewer Multiple offers: Speaking of the competition, applications for new mortgages have been declining in recent months, along with consumer confidence. That should improve the chances of those willing to continue their home search, even if it means slogging through the winter weather.

Sellers might be more motivated: Just as it can show a bit more commitment to shop for a home in November and December, the same might be said for sellers, especially those who might be seeking a tax advantage by selling before the year is out, those who have grown impatient after seeing their properties fail to sell during the market's peak season, or those who are relocating for job or other reasons and need to sell.

What better time to see a home?: Sure, it might be a little tough to judge a house's curb appeal through the gloom and slush of late autumn and early winter, not to mention under the holiday lights and tinsel. But what better time to see what a home can stand up to?

It's true that there are some key areas that probably can't be inspected or tested if it's cold or snow is on the ground, such as air conditioning units (which could be damaged if operated at temperatures below 60 degrees) and irrigation systems. On the other hand, it's a prime time to see how the furnace works, how well-insulated the home is, inadequate lighting, and if there are any roof leaks.

As for those areas that cannot be inspected: If you can't wait until the weather warms to have those checked, explore a contingency built into the contract that takes care of any possible repairs, or a good home warranty.

Prospective homebuyers hoping to buy a home in the next four months say the lack of inventory is their biggest challenge, but many believe winter is a good time to buy because sellers are motivated to sell and more willing to negotiate.

The reasons most often cited for buying a home in winter were: A quarter of the winter homebuyers revealed they are in the market now because they were unable to find a home during this last home buying season.
-- 26% said they believe that sellers are more motivated to sell and willing to negotiate.
-- 24% indicated that they think home prices will be better.
-- 24% revealed that they were unable to buy a house during spring or summer.
-- 20% shared that they think there will be less competition between buyers.

While 28% said they were planning to buy a home because they are relocating, 19% were existing homeowners downsizing to a smaller or less expensive home, and 15% were move-up buyers. Nearly 1 in 5 of those surveyed (19%) said they were first-time homebuyers.

Tight inventories and rising home prices continued to hamper home purchases, with sales falling for the second month in a row in October, the National Association of Realtors reported today. There were 2.13 million existing homes for sale at the end of October, NAR said, down 1.8% from September. But at October’s slower pace of sales, it would take five months for all those homes to sell, up from 4.9 months in September. Housing analysts generally consider a six-month supply of existing homes for sale as an even matchup of supply and demand — anything less can indicate that demand has outstripped supply. Although there continue to be “significant supply shortages,” inventories are “stabilizing” compared to the dramatic year-over-year declines seen earlier this year, realtor.com said Tuesday in releasing another report analyzing October listings data.

NAR Chief Economist Lawrence Yun recently forecast that 2014 sales of existing homes will level off and be inline with 2013 sales due to factors including declining affordability, limited inventory and tight mortgage lending standards. NAR is forecasting that when all the numbers are in, 2013 sales of existing homes will finish up 10% from last year, at 5.13 million. But similar gains aren’t expected next year — NAR predicts existing-home sales will hold steady at 5.12 million in 2014.

If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington