November and December are historically 2 of the best months to buy a home if you want a deal.
Winter is coming. And in the case of real estate, that may be a good thing — at least for buyers looking for a lower priced home. Indeed, some 2021 analysis for real estate found that November and December were the months when buyers paid the lowest premiums from homes. But will that be true this winter?
Some say yes, House prices have been dropping as they usually do in autumn, after the end of spring and summer homebuying season. They’ll continue to slip lower, mostly because rising mortgage rates are forcing buyers to shop for homes in lower price ranges. Bargain hunters may be able to snag a home below asking price, as price cuts have risen sharply compared to one year ago, but the discount is coming off of a much higher original asking price.
Home values flatlined in September after a slight correction in July and August. This is a much needed rebalancing to more healthy housing market conditions after the demand-fueled rush for real estate we saw over the past two-plus years. However, the price adjustment is likely going to be slow if inventory remains tight.
With mortgage rates above 7%, home prices will decelerate even further, perhaps declining by 5% by year end. Home prices are still slightly higher compared with one year ago and are unlikely to fall sharply as inventory remains tight. Although many buyers have been forced out of the market due to low affordability, demand still outpaces housing supply.
What’s more, price fluctuations do depend on the market. There’s been a softening of prices in what had previously been the hottest market, and prices in those select areas will see some pullback. “But this will remain the exception rather than the rule. Most areas have seen a plateauing of home prices along with modest price declines. Sellers won’t get the price they would’ve gotten in April or May but they’ll still get a price that’s higher than year-ago levels.
And while it’s true that home prices are declining month-over-month in most markets, it’s actually normal and expected this time of year due to the seasonality of the real estate market. All in all we are experiencing a modest decline in prices after huge increases in 2020 and 2022. Nothing like the gloom and doom the media keeps talking about.
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