The Pros and Cons of Buying a Home During the Holidays

Nov 19, 2021
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As we enter the holiday season, buying a home is not necessarily top of mind for people who are balancing their ongoing commitments with get-togethers with loved ones, shopping for gifts, vacation plans, decorating their homes and more. When it comes to spending on big-ticket items during this time, we often think in terms of major bargains on retail items like electronics, jewelry and appliances. But for those who make good use of it, the holiday season also offers unique opportunities and potential savings in the housing market, even if also calls for added patience and planning. When weighing whether the holidays might be the right time for you to start house hunting, it’s helpful to take these considerations into account:

Benefits of Home Buying During the Holidays

Fewer buyers mean less competition for homes

While Black Friday sales are kicking the retail industry into high gear, the housing market tends to decelerate temporarily amid the bustle of festivities, dropping temperatures and early winter storms. Spending on gifts, food, entertainment and travel, as well as a desire to avoid uprooting kids during the school year, also tend to deter more buyers at this time. As people are shifting into holiday mode, a shrinking pool of buyers means fewer competing bids on homes, which can create a dip in sales prices. In particular, shopping between Thanksgiving and New Year’s can increase your chances of getting the home you want, and at a lower price, as Redfin points out. You may also get better service and attention from you real estate agent, who may be balancing fewer clients during this time. During the peak selling season of March through August, you’re likely to have a wider selection of inventory from which to choose, but you’ll also face greater competition from other buyers during this time, when the seller can be more selective and expect to get a premium for their property.

A more relaxed pace gives you more time to make an informed decision

Less competition can also take much of the stress out of home buying. Buyers often feel pressured to make a quick decision when there are multiple potential buyers bidding on the same home. This is especially the case in intensely competitive markets where homes sell fast, and often at or above asking price. But with fewer buyers during the colder months, you may get more time to carefully consider whether a home is right for you, and make a more thoughtful decision, instead of hastily having your real estate agent prepare counter-offers that could prove less favorable to you. You’ll also be less likely to overlook potentially expensive issues that should be accounted for as a point of negotiation in the sale (e.g., a leaking roof can cost from $300 to tens of thousands of dollars for a full replacement).

Sellers and others are highly motivated and ready to deal around the holidays

Those who put their homes on the market during the holidays often have a pressing need to sell,  which can help provide you, as the buyer, with leverage when negotiating. The homes of those who are actively selling between October and December are “priced to sell,”  as U.S. News & World Report puts it, which can mean discounts for buyers.

Sellers who list their homes in the off-peak season may also be more receptive to accepting an offer based on factors other than the highest offer they receive. For instance, an offer of a more aggressive escrow period might be attractive to a home owner who needs to quickly relocate to start a new job or help a family member. Other sellers may want to settle a divorce fast, or get out of financial peril due to a loss of income or another stressor. And as the real estate investing education company FortuneBuilders, Inc. points out, you may also be able to find a bargain on a foreclosed home during this time, since financial institutions are often eager to get these homes off their books before the end of the calendar year. Also, if you’re looking into buying new construction, NewHomeSource.com notes that builders may also be more flexible in negotiations before the year wraps.

You may be able to save more on the cost of your loan

Historically, mortgage interest rates tend to be favorable for buyers during the holiday season because of reduced demand. However, interest rates fluctuate, so this is not a hard and fast rule. But if you’re considering buying during the holiday season of 2021, rates are still low, so arranging financing could result in a lower monthly payment, and paying less for your home over the life of the loan.

You may be eligible to receive significant tax advantages

Although tax situations vary from person to person, home ownership provides important tax breaks that often amount to several thousands of dollars — if it makes sense for you to itemize your deductions. In general, you can deduct mortgage interest up to a specified amount, certain closing costs, and, as of this writing, up to $10,000 of property taxes you’ve paid at a state and local level from your federal taxes. However, when considering any tax advantages, be sure to get the advice of a qualified professional. Importantly, note that in many cases, you may actually reduce your tax liability more by taking the standard deduction, rather than by itemizing any deductions you may be entitled to take from buying a home.

The Downside to House Hunting During the Holiday Season

Inventory is lower

One of the biggest drawbacks to shopping for a home during the holidays is that your selection will be more limited. There are simply fewer people actively selling their homes during this time as compared with the high season, which occurs between March and late summer. When your options aren’t as numerous, it may take you more time to find the home you want. But again, with fewer people making offers, you may stand a higher chance of getting the home that you want when you do find it, and you’re more apt to pay less for it than you would during the high season.

Inclement weather and shorter days can be an obstacle

Depending on where you live and your schedule, adverse weather conditions and fewer daylight hours can make getting to home showings (and moving) more challenging during the months of November and December. It can be more difficult to see an address and detect a problem with a home in the evening, so you may need to arrange a time to view it over the weekend. BuyOwner.com cautions that this can be challenging (given that people want to spend time with friends and family during this time), but that motivated sellers will make it work for you.

If you’re moving to an area with cold winters, snow can obstruct your view of the exterior of a home and prevent you from getting a good feel for the landscaping. Home inspections may also fail to reveal all possible issues during cooler months. As Bankrate points out, inspectors can’t test air conditioners because doing so in cold weather will harm them. In addition, snow can mask problems with a roof, and you can’t detect water intrusion if the ground is frozen.

More people off from work means you may need to exercise a bit more patience in the buying process

Holiday schedules vary, but with people working fewer hours and taking vacations, there’s a chance that one or more parts of the home buying process could take longer to complete than might be possible at other times of the year. Real estate agents take time off and usually have more social commitments during the holidays, and this is also true of home inspectors, movers, those who work at title companies, etc. In addition, staffing will likely be lighter at financial institutions. Of course, all of these factors will be balanced by people’s motivation to wrap up a deal before the year ends. Just know that some flexibility and courtesy with regards to other people’s time can go a long way toward striking a successful deal before you ring in the new year.

Like any season, buying a home over the holidays has its own set of challenges, and it can demand a bit more persistence as you navigate through holiday schedules, possible winter storms and your own commitments involving family and friends. However, it can also be one of the most rewarding times to get into the real estate market. With tenacity and realistic expectations, house hunting over the holidays can pay off in major savings on a new home that can put you on track to grow your wealth, and attain greater security and financial well-being.

Think you might be ready to reap the benefits of the holiday season’s low interest rates, homes priced to sell and fewer buyers competing for the home you want? The Police Credit Union offers a wide variety of home loans to fit your budget, lifestyle and financial goals. Our mortgage products feature below market rates, low fees, fast funding and down payments as low as 3.00 percent for qualified buyers. Many of our first-time homebuyers also appreciate the ability to use gifted funds for their down payment. Home prices have been stabilizing in late fall 2021, so now can be an excellent time to buy. Find details about our mortgage products here.

 

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