As yet another year comes to a close, you are looking forward to the holidays and to the prospect of sticking to your new resolution. You’re probably thinking more about which gifts to buy and what plans to make than you are about purchasing real estate, which isn’t a surprise.
But, your priorities would likely change if you knew five key facts about end-of-the-year home purchases because these are big time motivators, not only for the financial benefits, but for the prospect of being in a new home, a great gift indeed.
Timing the Real Estate Market
One of the biggest misconceptions people have about investing is timing the market. The truth is, there’s no crystal ball to read and predict with precise accuracy what will occur in the future and at what time. This phenomenon, however, isn’t necessarily true when it comes to real estate.
“Sellers tend to avoid the end of the year due to the short days, wintry weather and conventional wisdom that says buyers are otherwise occupied. But those who do choose to sell at year-end are often under pressure and highly motivated to cut a deal.” —Bankrate.com
During the winter months, particularly in December, sellers put their homes on the market most often in response to a life change. Events like job relocation, divorce, inheritance, and others are generally the reasons for selling a home at a time when people are most focused on the holidays and thinking about next year’s prospects. This presents a prime opportunity for buyers.
Five Reasons to Buy a Home Before Year’s End
Some homeowners wait to put their home on the market because of the inclement weather brought on by winter. Here in Orlando, shoveling snow and scraping ice aren’t a concern and daylight lasts longer. These conditions make it possible to sell and savvy buyers can take advantage of these great benefits by purchasing and closing before year’s end:
- Interest rates are still very low, but that will change. Financial experts and economists are predicting the Federal Reserve will continue to ease-off on its quantitative easing, which will cause interest rates to steadily rise. Waiting is a surefire way to spend thousands more over the life of your mortgage.
- Home prices are affordable, but will rise in the coming months. If you take notice, home values are rising, which means selling prices are likewise rising. As the housing market continues to recover, home prices will go up, especially in areas that are so desirable.
- You can take advantage of tax benefits. If you close on your home before the end of the year, you’ll be able to deduct interest costs, points, mortgage interest, and property taxes.
- Sellers are typically motivated at this time. As mentioned above, sellers are generally motivated because of a life change. In addition, they are motivated to take advantage of the same tax benefits by selling now, buying another property, and close before the year ends.
- Builders will be eager to do business. Developers in new construction will also be motivated to sell, cutting deals to get those transactions on this year’s record books.
Another reason to buy now is to lock-in your monthly housing payment, which typically increases year-over-year in rentals. It also has the added benefit of building equity, something that will be quite handy in the future.