8 Financial Reasons To Buy a House in January, According to Experts
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Angela Mae
6 min read
Ostensibly, you can buy a house at any point, provided you’re ready to do so and can comfortably afford the monthly payments. However, if you’re thinking about purchasing property, you might want to consider doing so in January. Many real estate experts agree that winter is a great time of year to buy a house given that supply and demand slightly skew in favor of the buyer, not necessarily the seller.
Learn More: How To Start Investing In Real Estate – Even If You’re Not Rich
Not only do some sellers list their homes for lower prices in January, but you might also have more negotiating power if you choose to buy a home during this time due to the number of homes for sale versus the number of homes sold in the winter. If you’re financing your purchase, this could mean a smaller, more affordable loan — or at least one with more room to negotiate.
Even if you’re paying for the property in cash, you could still get a great deal. So, if you’re ready to buy a home, here are the top financial reasons for doing it in January, according to real estate experts.
Sellers Might Be More Willing To Negotiate
“Buying a home in January could be a wise financial move,” said Erin Hybart a real estate agent with the ReErin.com blog. “With sellers eager to close quickly, they might be more open to your terms.”
There’s also usually less competition selling in the winter, so homeowners who are in a hurry to offload their homes might be willing to negotiate with you on things like closing costs, home repairs and other contingencies.
This does depend on where you’re buying a home in winter, though. Certain housing markets will be highly competitive in the winter, especially if weather conditions don’t play a role in people’s desire to buy such as in warmer climates that Florida, Arizona, California or North Carolina real estate markets can offer.
While it depends on the market, homes might be listed at lower prices, or have lower median sales prices in general, compared to what you would get at other times of the year. One possible reason for this is the reduced real estate activity for both buying and selling that comes in the winter months.
“By entering the market in January, buyers may avoid the heightened competition expected later in the year,” said Nick Narodny, the founder and former CEO of Aalto, an online alternative to a traditional buy-side real estate agent.
Lowered competition can cut down on bidding wars, which tend to inflate prices. Not only that but fewer buyers on the market could mean finding sellers who are more willing to drop their prices even further.
“January can be a great time to purchase a home because there is generally less competition for buyers,” agreed Marisa Simonetti, a real estate professional with the Simonetti Real Estate Team.
“This can translate to sellers potentially accepting a more competitive offer if their home has been sitting on the market for 30-plus days.”
Competition is lower around this time of the year because people are getting back from holiday or families with kids are busy with school.
Buying in Winter Could Reveal Hidden (and Expensive) Issues
If you shop around for homes during the spring or summer, chances are you’re going to see them at their best. But when you check out homes in January, you can get a clearer picture of the property and how it does in potentially severe weather conditions.
This allows you to make a more informed decision and can help you avoid unforeseen expenses. Keep an eye out for issues like limited natural lighting, high energy costs and water damage, Narodny suggested. All of these things can add up and affect the total cost of your potential home.
Moving Costs May Be Cheaper
If you’re planning to hire professional movers to help you transition into your new home, you might get a better deal in winter.
“Many moving companies also decrease their rates in the winter to accommodate reduced demand, offering anytime buyers the opportunity to move more quickly and save extra money,” said Nick Boniakowski, the general manager of agent and online real estate partnerships at Opendoor.
Lenders Often Have More Funding Available
The start of the year is when a lot of financial institutions — home lenders included — tend to start over with their loan budget. This could mean more incentives or financial assistance for you as a potential homebuyer.
“Lenders start fresh with their loan funds, which could make getting extras like down payment assistance a bit easier,” said Hybart
Provided you qualify for these incentives or programs, you could save thousands of dollars on the overall cost of financing a home.
Year-End Bonuses Can Help With Upfront Costs
Buying a house is expensive; but, if your job gives you year-end bonuses, you can use those to help offset the costs.
“Many companies give out year-end bonuses in December, which means that January can be the perfect time to use that extra cash for a down payment on a new house,” said Kelli Salter, real estate agent and founder at Anchor Real Estate.
“This bonus money can also help with closing costs and other fees associated with buying a home.”
Quicker Closing Times Could Save You Money
“With fewer buyers and sellers in the market during January, there is a potential for faster closings,” Salter said. “This can be beneficial for both parties, as buyers can move into their new home sooner and sellers can proceed with their plans to buy a new property or move on to other opportunities.”
Shorter closing times can be especially useful if you’re paying rent while trying to buy a home. Any delays in the closing process could require you to spend more money on rent while you wait.
January Brings Tax Deductions
If you buy a home in January, you could take advantage of tax deductions for the entire year. This can lower how much you have to pay overall.
According to Salter, common tax deductions include property taxes, mortgage interest rates and certain closing costs. Considering these charges can add thousands of dollars to your purchase, any tax benefits could be of significant help.
Final Take To GO
The bottom line is that purchasing a home in January could be a great option if you’re already financially prepared. This is not to say it’s not still a major commitment, so do your research into the markets you’re interested in before making any decisions even if your timeline is flexible.
If you’re not completely sure whether now’s the right time to buy, you might want to hold off for now.
