When is the best time to buy a house? We hear this question a lot from prospective buyers but truthfully, it’s not the easiest to answer. For starters, there are multiple factors to consider and a few different ways of looking at it. For instance, many buyers simply want to know which season is historically the best to buy a house but for some it’s questions about their life stage and financial situation that determines when to buy. Sometimes they’re asking how the housing market is performing and if now is he right time to buy a house.
These are all things to consider and great questions to ask as you get ready to buy a house, and we’ll do our best to provide some answers here. Keep reading.
Does home ownership make sense for you right now?
Before deciding when to buy a house, you should consider your life stage and future outlook. Are you financially secure enough to afford the home, and do you see your situation remaining stable down the road? We all want to own a house but it’s important to be realistic financially because this is likely one of the biggest purchases you’ll make in your life.
It’s not just the purchase price of the home you need to plan for as you’ll have closing costs, land transfer tax, property tax, and mortgage interest or other fees to pay for. It’s also important to incorporate home maintenance costs too. Review your monthly expenses, factor in all additional costs of home ownership and compare that to your income to calculate where your budget nets out.
You’ll need to consider more than just your finances as well. Family and career are important too because these aspects will definitely help determine if you’re ready to buy a home. Are you planning on growing your family, or is it likely you’ll need to relocate for work in the next couple years?
It’s best to have a solid plan before making a purchase. Take stock of your life, understand what you’re looking to get out of your home, and then go from there. Speaking with a real estate agent or financial advisor is recommended to help you ask the right questions and make a plan that works.
Is buying real estate seasonal?
Historically, real estate cycles have proven to be seasonal. The market is busier at certain times during the year which impacts the price and availability of properties. Understanding real estate seasonal trends will help you decide when to buy.
There are a few factors that cause changes in the real estate market such as the weather, school schedules and the location you’re looking at.
The weather effect
It makes sense that nicer weather makes buying a home easier, so the real estate market tends to pick up come springtime and stay active until early fall.
As it gets colder, both availability (supply) and prices (demand) start to drop. Seasonal influences on the housing market are more prevalent in areas with colder winter weather because it’s physically difficult to show homes at this time of year. The days are shorter and it’s often not nice outside so people lean towards staying cozy indoors. Also, marketing a home during winter conditions means photography, home reno or repairs and open house showings all become more difficult.
You’ll often have sellers that take their homes off the market for the winter months and re-list in the spring to maximize their home’s price potential. Spring and summer are typically a seller’s market while winter is a buyer’s market.
Patient home buyers can often snag a great deal towards the end of September as this will be when the market may start to cool down. There is likely still a selection of homes for sale and many sellers will feel pressure to close a sale before the winter slow season hits.
One of the main reasons people buy, sell or switch homes is school for their kids. The school season can really affect the supply and demand cycle of the real estate market because moving is much easier when the kids aren’t in school and most parents want to be settled in their new home before the new school year begins.
Depending on where you’re looking to buy or sell, the seasonal real estate cycles may be different. If winter temperatures and weather aren’t an issue in your area, you may see less of a market slowdown through October to February.
Likewise, the tourist popularity of your area can also play a role. This is most noticeable in vacation areas where real estate gets busiest during tourist season because that’s when homes will get the most exposure.
When to buy a house for the best price
In Toronto, demand is typically slower from mid-October to February. December and January are the best months because not only is the weather likely at it’s worst, but people are also busy with the holidays. That means you’ll face the least amount of competition and the lowest chance of being caught up in a bidding war when making an offer on a property you like.
Come spring, demand increases and competition heats up often resulting in more demand until after September when things begin to cool down again. May is often the busiest and most expensive month for home shopping as the weather is nice, but not overwhelmingly hot, school will be getting out soon and there’s lots of time left to finish moving before fall.
Generally, when others aren’t buying, that’s the best time to get a great deal.
Check out this chart from the Toronto Regional Real Estate Board comparing the average resale home price by month over the last three years.
The chart confirms that December, January, February and March traditionally have the lowest home prices of the year.
When to buy for the biggest selection of homes
Often finding the right home is more important than saving money on the purchase price. This means home shopping while the market is at it’s liveliest might be best, as you’ll have access to the largest selection of homes for sale.
Most sellers prefer to sell during the busy season because that’s when they have the best opportunity to get their home sold quickly and with less negotiations. More buyers also means more competition for homes and biddings wars happen often, allowing sellers to realize the highest return on their sale.
As buyers, the spring, summer and early fall housing market typically has the most homes for sale, but you’ll also be buying during the most competitive time of the year.
What is the best date to buy a house?
All factors considered, if you’re trying to nail down the “best overall” date to buy a house you’d probably have to consider early fall – namely mid-September to mid-October. Data found on realtor.com shows the week of September 22nd as the best time to buy a house, with competition down 26% compared to the rest of the year. This date range often provides affordable pricing, lower competition, and a good amount of homes still on the market.
From a pure cost perspective, purchasing a property over the winter holidays offers the best time to find the cheapest price on a home.
Don’t overcomplicate your choice of when to buy
Everyone wants the best house for the best price, but unfortunately that’s not always how it works out. The real estate market fluctuates and making the perfect purchase is almost impossible. We recommend focusing on finding a great home that meets all your needs and wants instead of trying to time the market. Don’t be afraid to make an offer when you find the right one – regardless of what the market is doing.
How has COVID-19 affected housing sales?
COVID-19 has caused a lot of concern over people’s abilities to maintain a stable income and support their families, with heightened uncertainty for what will happen after the pandemic. Despite this, there have still been real estate records broken across the country, especially throughout the Greater Toronto Area, in Greater Vancouver and Montreal. While many prospective homeowners have shelved their buying plans for the time being, other buyers are seeing an opportunity to become first-time homeowners or move to homes outside the major cities.
Condo sales and apartment rentals however have fallen, as buyers are flooding to single-family housing instead. Condo listings are slow to sell, and prices have dropped with sales seeing a decrease of 8.5% compared to 2019. Rentals are also down as the demand has fallen drastically. That’s largely because for the time being, immigration has been drastically cut or halted, students aren’t physically going to school, and travel is non-existent for Airbnb operators.
Conclusion: Should you buy a house now?
At the end of the day, real estate is very local. We can generalize about seasons and market trends but the best time to buy in one area might not be the same in another. A lot also comes down to finding a home that fits and one you want to make an offer on. Ending up in the right home is usually more important than securing a low-price purchase.
Some important things to consider:
- Buying in the fall or winter will often allow you to save on the purchase cost of a home.
- Spring and summertime offer the largest volume of homes for sale on the market, but competition will also be high.
- Late September is often the best time to buy overall (selection and price).
- Around the holidays in December and January are traditionally the best times to seal a low cost deal.
- Make sure you are financially ready to buy because home ownership is a big investment.
- Evaluate your lifestyle and figure out if now is the best time for you to look at purchasing a home.