A house purchase is a big decision. For most Americans, it’s the most expensive deal of their lives.
So, it’s crucial to get the location and the timing right. Let’s say you’ve settled on the greater Houston area. When’s the best time to buy?
There’s no clear-cut answer to that, of course. But here are the most essential factors you should consider before putting your signature on the sale contract in the real estate market.
Before you can buy a residence anywhere including Houston TX area housing market, you have to make sure your finances are in order. You should have a steady monthly income to cover the mortgage. As a rule, your annual salary should be roughly a third of the price of the homes in the Houston housing market.
Then you need to make sure you’ve saved enough for the down payment: ideally, one that amounts to 20% of the total mortgage. For a $300,000 house, that would be $60,000. Anything below 20% will probably compel you to pay private mortgage insurance (PMI), which is usually 0.5% to 1% of the total loan amount.
You’ll also want to have a good credit score. The higher your score, the better the interest rate you can expect for your mortgage. Over the course of a 15- or 30-year mortgage, even a 10-point difference in your credit rating can save or cost you many thousands of dollars.
Finally, you should be carrying zero debt. Pay off any car or credit card loans before you buy a house.
If you do that, you’ll not only free up more income to pay for the residence, but you’ll have a better debt-to-income (DTI) ratio, which helps you secure a lower interest rate on your mortgage.
If your financial situation meets all the above criteria, and you are mentally and emotionally prepared to make a big investment, now would be the right time to start looking for a house to buy.
When you shop for homes, check the current mortgage rates. A mortgage rate is simply the amount of interest charged for a home loan.
Usually these are pretty standard across the board. Just do a simple Google search of the housing market and you can find current mortgage rates by loan amount, down payment amount, state, credit score, and mortgage type.
You’ll discover that mortgage rates vary over time. This is because they are closely tied to how well the economy is performing. The inflation rate, the rate of economic growth, and government monetary policy all have an impact, because:
Those are some of the most important economic factors that affect when you may obtain the best mortgage rates. In general, the best time to buy is when nobody else is, because you’ll get better rates and better home prices.
Of course, the real estate market where you buy ought to be good as well. Houston TX area is the fourth largest city in the US, with nearly 1 million housing units.
The Houston Association of Realtors (HAR) reports in the Houston real estate market the single family home sales in 2021 are up 12% from 2020 and 22.2% from 2019. In addition, the city issued the most construction permits (48,208) of any U.S. city for single family home in 2020.
This is partly due to the growing number of jobs in the area. Job growth in 2021 was 4.6% compared to the national average of 3.9%. All of this means that the Houston real estate market is expanding, and home prices are up.
The best time to buy a house is always in the lull before a real estate market boom. But the next best time could be right now: Just keep an eye on the real estate market you’re interested in to decide the best time to buy.
Finally, the best time to buy a house will fluctuate with the season as well. Spring is usually the peak buying season because kids are about to get out of school for the summer and the weather is favorable for home tours, inspections, and moving.
Thus, more sellers put their homes on the real estate market and buyers have a larger selection. Of course, the higher supply of houses also leads to more buyer competition, which means you’ll have to act quickly to make offers, and you’re more likely to get in a bidding war with other buyers.
Home prices start to cool in the summer. The spring craze has ended and the sellers who haven’t unloaded their properties may begin to lower their asking price. For buyers in Houston real estate, this is also a smart time to test how well the A/C works.
By the fall, many homes have been purchased and the relative few that remain might be offered at even lower prices. So real estate prices may be better, but the inventory will likely be less appealing.
Finally, the winter is regarded by many in the real estate industry as a hibernation period. Few try to sell because the weather makes inspections, moving, and repairs more challenging.
Therefore, you’re apt to find the lowest inventory and prices of the year, as well as the least competition, in the winter. Ultimately, the best seasons to buy may largely depend on whether you prefer better prices or greater selection.
It’s wise to assess all the timing factors thoroughly before choosing when to buy a house. But you will have to make a decision eventually.
Some home shoppers succumb to what is known as “analysis paralysis.” of the real estate market. They overthink a house deal so much that they end up failing to make any purchase.
If you do this, you’ll miss multiple opportunities to become a homeowner. You’ll never know for certain how the real estate market may change tomorrow, next month, or next year … but if you pursue the due diligence, you should be able to find a deal that suits your needs now.
And if you’re seeking an investment property, you can relieve some of the anxiety by hiring a property manager to perform the search for you. They can take care of everything from screening tenants to maintenance and repairs to evictions.
If your property is in the greater Houston area or Austin area and you’re in need of a Houston property manager, be sure to contact us today for a free rental analysis. We’d love to hear from you!
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