The Surprising Truth about January and Real Estate
In the middle of winter, most people are concerned with waxing their skis or devising ways to get another mug of hot cocoa without leaving the couch, but studies show real estate might just be the best thing to fill your time in these chilly months.
It seems a universally held truism of the real estate market that spring and summer are the best times to list your home. Most people, therefore, understand those times as the best opportunities to buy.
Several studies and reports consistently show something surprising, though. January is actually considered one of the best times to jump into the real estate market.
3 Reasons You Want to Buy Real Estate in January
- Less Competition
While it is true there’s less inventory available in January, it’s equally true there’s far less competition for what’s available. January is truly a buyer’s market. In the spring or summer, you’re fighting against two major groups: investors and home buyers. In the winter, less people (in both these groups) are inclined to take on the time-consuming task of finding properties to purchase.As the buyer, you’re simply less likely to run into bidding wars or multiple-bid situations if you’re opting to purchase in January, which can mean significant savings, as well as a greater likelihood of getting the property you want.
- Lower Prices
Simply looking at the data, buying in January is financially the best deal for home buyers. According to NerdWallet, January and February saw home sale prices that were, on average, 8.45 percent lower than prices in June and August. (The study looked at real estate prices from the fifty most populous US metro areas, but the figures are a good representation of generic trends.) January also saw the greatest discrepancy between asking price and sale price, in favor of the buyer. People buying in January got around $7,000 under asking price.For anyone thinking this price difference is nominal, check out median sales prices. The median sale price at closing in January 2019 was $305,400. (The lowest month was actually May 2019, at $303,500, but lower inventory and longer median days on market combine to make January a more favorable month for buyers overall.) The highest month was April 2019, with the median closing price of $337,200. That’s a difference of $31,800! For price-sensitive buyers, purchasing in January can have a significant impact on their mortgage burden.
- More Motivated Sellers
Buying a home in January can be kind on your wallet for another significant reason. Come winter, home sellers tend to be worn out and extremely motivated to sell. If their home has sat on the market all the way through the fall and it’s now creeping into the winter, you, as a potential buyer, have a lot more leverage.When you come to the negotiation table, you can feel emboldened to make a lower offer because you’re not likely to lose out to someone else who’s bidding against you. Remember, the longer a house has been on the market, the more a homeowner is willing to work with you because selling at a lower price could, ultimately, be more lucrative than incurring the carrying costs (mortgage, insurance, taxes, utilities, and more) of holding the house until the following spring or even summer.The median days on the market for a home in January is eighty-seven. That’s the highest across the year. Historically, that means homeowners are going to be the most likely to work with you in January. (February is quite high as well, coming in at eighty-three median days on the market, so you’re likely to see this advantage into February as well.)
Who Should Buy Property in January? Homeowners versus Investors
If price is your primary driving factor when looking for a home, January can present a golden opportunity for you. For all the reasons mentioned above, you could snag a home for a real bargain, so long as you’re willing to put on your snow boots to go to the open house! This means January is a particularly perfect time for buying investment properties.
If you’re looking for a home for you and your family, though, the asking price is still most certainly going to factor into the equation heavily. However, potential home buyers also typically have other things they’re looking for. This can range from wanting a home in a desirable school district to needing a fenced backyard for a dog to requiring a guest bedroom for relatives. For the vast majority of home buyers, the home’s price is always going to be a limiting factor, but people tend to be looking within a price range, and they are generally willing to buy at the top of that range if the house fits all their personal requirements. In these instances, having a lot of inventory on the market is a huge benefit, and January doesn’t historically accommodate buyers in that way.
If, however, you’re an investor and you’re not necessarily looking to purchase that perfect forever home, January can be a time when you get amazing real estate bargains that provide excellent return on investment (ROI). Avoiding bidding wars and dealing with motivated sellers are even more desirable factors when you’re expressly purchasing a home to turn a profit, so investors should officially consider winter buying season!
One extra bonus? If you’re just thinking about getting into real estate investing, the diminished competition—from homeowners and experienced investors alike—gives you the time and space to find the right property and to negotiate without worrying about someone else with more capital poaching your deal.
Whether you’re a first-time home buyer, a new investor, or a seasoned real estate pro, January can present some great opportunities in property. If you’ve been thinking about starting your home hunt this spring, consider beginning a few months earlier. Contact us today. We’d love to discuss how we can help you take advantage of this seasonal buyer’s market!
