(This article was originally published in NextMove, our weekly newsletter on the housing market. Sign up for it using the box below.)
If you buy a home in December, you should get to put a giant red bow on it, like in car commercials.
It’s been a weird year for prospective homebuyers. The housing market started out red hot, with the nearly record-low rates of 2021, but that changed quickly as inflation, the war in Ukraine and other economic shocks pushed mortgage rates to highs not seen in 20 years.
And while mortgage rates have recently backed off from their peak of 7%, they’re still high. Prices remain steep, but they’re starting to come down, too – a sign that a home might be a bit more affordable than it was around Halloween, though still more expensive than it was a year ago.
So should you skip the online sales and shop the home listings instead? Here are a few things to consider if you’re buying a home for the holidays.
Stay in your budget. A mortgage is a bit cheaper now than it’s been in recent months, but this isn’t a Black Friday deal. Though you might be able to make the numbers work, you need to look at the totality of the home purchase, which is your monthly payment — the part that comes out of your bank account every month. No matter what’s happening in the broader economy, you need to have confidence you can afford it for years to come.
Keep an eye on supply. Fewer people buy homes at the end of the year. It’s hard enough to manage holiday shopping and visiting in-laws, let alone adding a home inspector and mortgage underwriter into the schedule. At the same time, fewer homeowners are looking to sell, so look out for those who are motivated to be out by the end of the year. Those sellers could be more willing to negotiate.
Be ready… A home is where life happens, so it needs to be the right one. Your ideal home might not be on the market today, but it could become available tomorrow. Have your paperwork in order, know what you can afford and what you want, and be ready to jump at the chance when it appears. If you’ve got the bandwidth to do that between holiday parties, it’ll be worth it.
… but be patient. Don’t buy a house because you’re afraid of what’s next in the housing market. Buy a house because it’s where you want to live. And remember that 2023 is right around the corner.