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When is the best time to buy a house in California?
Most homes are listed for sale in the spring and summer, and traditionally, this has been the best time of the year to buy a house. During this period, families bought homes so their children could be enrolled in their new schools before the start of the school year.
These days, the pattern has shifted a bit, and although most home sales take place during spring and summer, buyers can find their dream home any time of year.
The "best" time to buy a house really comes down to personal choice including funds, timing, and other factors unique to your situation.
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Read on to learn more about the best time of the year to buy a house.
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Best time of the year to buy a house
Housing inventory is plentiful during spring and summer, but you may pay top dollar. In general, home prices go lower during the late fall and winter, when most people are focusing on holidays and less people are home-shopping.
During late fall and winter, some sellers who were holding out for more money may be willing to negotiate a lower price.
While purchasing a home may seem like a simple task, there are many factors to take into consideration, including your income, employment stability, short and long-term financial goals, savings, housing inventory, and mortgage rates, which fluctuate throughout the year.
Let’s look at these in more detail:
Inventory. When housing inventory is low, prices go higher as people compete for the available homes.
List price. This is the price the house is listed for. List prices for homes are generally lower during the winter. However, inventory is usually lower in winter, which will decrease the number of available houses on the market. Home sellers are generally willing to negotiate, and you may get the home for a lower price. However, it’s not uncommon for the home price to rise if two or more buyers are interested and engage in a “bidding war,” which drives the price higher than the list price.
Mortgage rates. The mortgage rate you qualify for will determine how much of a mortgage you can afford. Speak to your lender about locking in an interest rate to avoid paying more if the rates fluctuate.
Realtor commission. The home seller pays the realtor commission if they have their home listed by an agent. If a home is for sale by the owner, the seller doesn’t pay commission unless they use a flat fee listing service that includes a commission agreement. Homebuyers are not required to use a realtor or real estate agent when shopping for a home.
Other factors to consider
You may be asking yourself, “should I buy a house now or wait?” Here are other factors to consider before you start to shop:
Housing market conditions. Low mortgage interest rates and low housing inventory have resulted in pent-up demand for homes. Market conditions change all the time, and though the current situation can make it challenging to buy a home in California, the California housing market and heightened demand for homes is apt to settle.
Personal circ*mstances.
Don’t let temporary market conditions prevent you from making a move that you or your family need. If you have the income and need to move or want to buy your very first home, there are good opportunities to buy.
Is now a good time to buy a house in California?
Yes. While mortgage interest rates have recently increased, according to economic data, mortgage rates are still low compared to years past.
As long as your employment and income are stable, and you want to settle down in a particular neighborhood for several years, buying a home is still a great investment and a better long-term investment compared to renting.
Choosing the right lender is the first place to start. A CU SoCal mortgage specialist can help you get pre-approved for a mortgage, so you can start home shopping right away.
Before you buy
There are some important steps to take before you decide to buy a home. Taking these steps as much as a year in advance of shopping for a home can save you money and time.
Check your credit score. All mortgage lenders look at a potential homebuyer’s credit score as part of the loan approval process. Knowing your score and reviewing your credit report for errors could help you boost your score and qualify for a lower mortgage interest rate. Most mortgage loan programs require good credit, at least 650 or more. Learn more about how to build credit.
Create a budget. Once you know you want to buy a home, it’s prudent to create a budget to help keep you on track for saving for a down payment, closing, costs, and other home buying expenses. Add up your monthly income, then subtract your expenses. Do you have money left over to put aside? If not, you may need to eliminate unnecessary spending.
Save for a down payment. Use your budget as a guide to determine how much you can afford to save each month. Putting a little extra money aside in savings each month can really add up. Learn more about how to save money for a house.
Examine your debt-to-income (DTI) ratio. Lenders use this number to determine, in part, how much to lend. To calculate your DTI ratio, add all your monthly expenses (debt payments) and divide that number by your gross monthly income (before taxes). Lenders prefer a DTI under 36%.
Shop different lenders. Mortgage loans are available from different types of lenders, including credit unions, banks, and online lenders. However, it’s always smart to start the process by speaking with the financial institution where you currently have an account. You may qualify for special interest rate promotions or fee discounts. Learn more about choosing the right mortgage lender.
Decide what kind of house you want. There are many options and knowing which will best suit your needs will help when it comes time to shop for a home.
Decide where you want to live. Is your job location a factor or do you want a particular school district for the kids? Do you prefer the beach or the mountains? Knowing the type of house and location you prefer will help you start your home buying search.
Get pre-qualified for a mortgage. A CU SoCal mortgage specialist will ask you some simple questions about your income and expenses, then run the numbers. You’ll learn how much of a mortgage loan you may qualify for
Why savvy consumers choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
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