When is the Best Time to Buy a House?

It’s hard to believe that 2021 is right around the corner, but with a new year approaching, many people wonder if there’s a perfect or best time to buy a house. Although there is an answer to this question, it’s one of those things that may not be the same for everyone. So if one of your New Year’s resolutions is to finally be a first-time homeowner (or upgrade your home), then read on to discover when to make a move.

Money, Money, Market

If you’re asking this question, then you’re probably trying to save money. By determining the best time to purchase a home, you’re searching for deals, discounts, and when the market is right. These factors are part of the reason why the answer can change for each person individually. 

Because the housing market can fluctuate, there is no exact day when you should send in that offer. But you can monitor the market to decide if the factors are in your favor. Here’s what to look for:

• Demand vs. Inventory
  • If you loved Economics in school, then you’ll surely understand supply and demand. When the supply is higher, the demand drops a bit, and a house price might decrease. On the other hand, when supply is smaller, demand is higher, and prices could increase.
    
    
• Average Prices
  • When checking average home prices in your preferred neighborhood/district/city, watch for dips. When prices first start to decrease, that means demand is too high to sustain higher prices. But once those prices go down and eager buyers snatch up those homes, costs will rise again, and inventory will be lower.

Late Summer, Early Fall

If we had to pinpoint an exact date, it would be in that sweet spot mentioned above: when inventory is still high, housing prices start to fall. If you’re hoping to be a first-time homeowner, this is the time to act. Although each year will be different, there is a slight trend that’s important to know as we enter the new year. Most likely, the market will start to fall in your favor after the summer housing rush. ​

January - March

The start of the year is not the ideal time to buy a house. Inventory is usually at its lowest point at the end of a calendar year and through the following spring. The end of the year is tax wrap-up season. This year, as people start to anticipate Tax Day 2021, they aren’t looking to add any complications to their financial situation. And with colder weather, it’s more challenging to attract the attention you want to your home.

April - July

Let’s pretend that we’re looking at next year. (Keep in mind that 2020 and subsequent years may show different trends.) As temperatures rise and Tax Day 2021 passes (phew!), people will start preparing to sell their homes. Buyers who receive tax returns are ready to invest, and open houses are a lot easier in drier, warmer weather. Hence, early summer tends to be the busiest season and when most people list their homes. May, June, and July tend to be the months with the most extensive inventory. Now is an excellent time to start browsing for homes.

August - October

But remember: Just because inventory is high doesn’t mean prices have started to drop yet. The stock needs to reach its peak, which tends to be late June or sometime in July. Once that peak passes, the supply is too high to warrant high prices, and costs will decrease. This is the sweet spot. So if you’re asking when is the best time to buy a house, this is it.

November - December

Similar to the start of the year, November and December are when inventory drops to the point where house prices increase again. If you’re in the market for a new home at this time, consider waiting until the following year to do so. However, because it’s the last couple of months of the year, it’s worth a look because some sellers may reduce prices before the tax year ends. And this year, many are anticipating Tax Day 2021 in just a few months.

Is There a “Best” Time to Buy a House?

As you watch the market trends, you’ll know when to pounce on that dream home. If next year follows a similar path, it’s best to wait until late summer or early fall or inquire about houses at the end of the calendar year. But no housing trend truly matters if you cannot afford to be a first-time homeowner or upgrade your home. ​

Your Financial Situation

Before you mark August 1st on your calendar, take a moment to consider your financial situation. The real best time to buy a house will be when you can afford it. There are a few steps that can help you determine when you’re ready:

1. Set a Budget — First, what is your budget? If you need help determining what you can and can’t afford, you can ask a financial planner or advisor. They will help you set a goal that fits into your financial situation.
   
   
2. Start Saving Now — As soon as you can start saving money, do it. Set up a savings account and automate transfers every couple of weeks. When you have a budget and savings goals, then you’ll know when you’re ready to buy a house.
   
   
3. Look for Assistance — There are plenty of government programs that help people purchase homes. Maybe you’re a first-time homeowner or in your third house. Either way, you can find assistance that offers low-interest loans, discounts on down payments, and grants.

First-Time Homebuyer Programs

At our CPA firm, we help first-time homeowners through a program called the MCC tax credit. This is a federal program monitored by each state individually. When it comes to first-time homebuyer programs, this is one of the best. And although it mostly serves those purchasing their first house, other groups can still qualify for the benefits. 

For the MCC tax credit, you’ll need to file all paperwork before you purchase your home. More importantly, you’ll need to work under the regulations of your state. For example, if you reside in Texas, you’ll file paperwork under the TDHCA MCC program (Texas Department of Housing and Community Affairs). But the TDHCA MCC is only for those in Texas. If you live here in Pennsylvania, you’ll work with the PHFA (Pennsylvania Housing Finance Agency) and need to request a PHFA 1098 form (more on that below). 

Although our CPA firm is in Pennsylvania, we work with individuals across the country and even abroad. If you have any questions about this program or any of the necessary forms, please ask! Some of the paperwork you’ll need to file Form 8396 with your taxes. To obtain the required information, make sure you receive your Mortgage Interest Statement. In Pennsylvania, you’ll receive the PHFA 1098, which gives you the amount of interest you paid on your mortgage loan. (This information is how the state determines how much you’ll receive with the MCC tax credit.)

Don’t Forget to Enjoy the Process

Buying a new house can be stressful. Especially when you read all about these TDHCA MCC and PHFA 1098 and 8396… There’s a reason why there are professionals out there to help you. Find an excellent lender, a supportive real estate agent, and a helpful CPA firm. They’ll assist you through the entire process that you can also enjoy this time in your life.

​To help save money, research first-time homebuyer programs and other state programs for anyone looking to purchase a new house. Allow this time to be exciting. And if you need any help from us, don’t hesitate to reach out!