When is a good time to buy a home?

As students head back to school, families start to settle into their routines.  For many of us, home buying activities are not usually part of the family routine.  Plans to buy a home are often mistakenly put on the back burner until the spring. So why should you start your search for a new home now?
Deciding to buy a home is one of the most significant financial decisions we all make. While location is is usually the most important factor, timing may also have a big impact on how much you pay for a home.  According to home buying research, the best month for buyers is October. This means that if  you have been considering a home purchase, now is the time to start looking.  The best day of the week is Monday. And the single best day on the calendar is October 8th.
RealtyTrac reviewed over 32 million home and condo sales over the past 15 years, and they found that homes purchased in October came at a 2.6% discount to the current fair market value. Though based on the data, not many people were taking advantage of the discount, as only 2.7 million, or just 8.4%, of house closures occurred in October.
The discounts are most likely a function of there being fewer buyers, meaning sellers are more willing to settle on lower prices. These are significant numbers considering the price of a new home.
Sellers are often and mistakenly told to take their homes off the market until spring, On the flip side, real estate agents tell buyers that this can be a very opportune time for them because sellers, who keep their homes on the market through the holidays, are often very motivated to sell. There are also typically fewer buyers in the marketplace, so there is less competition for homes.   Following October as best months to buy were February, July, December and January — all fall or winter months except for July, which was a surprise given that conventional wisdom would suggest that is a good time to sell but not necessarily to buy at a bargain price,” said the report.
The worst month to buy a house was April, when purchases paid 1.2% more than the market value. It was also the only month that did not register some sort of discount.
Additionally, RealtyTrac broke down the days of the week. Monday was the best day to purchase a house, with closings on that day averaging a discount of 2.3%. Friday was the second-best with a 2% discount, and Tuesday was the worst with only a 1% discount.
So while the findings are exclusive of each other, closing on a Monday in October seems to be a pretty good bet.
Looking at the calendar, RealtyTrac found October 8 as the single best day to close, with an average discount of 10.8%. This was followed by  November 26 (10.1% discount), December 31(9.7% discount), October 22 (9.6% discount), and October 15 (9.1% discount).
The worst day of the year to purchase was January 19, with a 9.6% increase over market value. Home buyers also paid premiums over 9% on February 16 and April 20, both at 9.5%.
The most important first step in this process is to set up a meeting with your mortgage professional, negotiate a good pre-approval letter, then work with your real estate professional to find your new home.  Now is the time!  Picture yourself in your new home, call or text today  to begin your new home search!
Jerry Henberger, Broker and Vice President, REMAX Premier Realty – Direct line: (949)874-7126
Click here to find the value of your home:   Instant Custom Home Value

Housing Demand – Orange County, August 16

As expected, the Orange County housing market slowed in July a bit, transitioning from the red hot Spring Market to the beginning of the Summer Market. It was as if housing downshifted a gear, from 5th to 4th; it was still cruising, just not as fast as the spring. August typically looks a lot like July, maybe increasing a smidgeon, but still slower than the peak of the real estate market, March through mid-June. This cyclical phenomenon is easily explained by logically looking at the timing of the year. There are plenty of summertime distractions, especially in Southern California, from splashing around in the waves to traveling on the annual family vacation. The distractions lead to less buyer activity and demand drops. That’s the typical, annual real estate cycle in Orange County. Spring is the busiest time of the year. Summer is the second busiest. Then, there is the Fall and Winter Markets, where demand continues to downshift until it drops to its lowest level of the year by the end of December.

OC Demand Aug 16

This year has been quite a bit different as demand increased by 5% in the past month. It feels like June, the tail end of the Spring Market, and not at all a typical summer. Demand, the number of new pending sales over the prior month, increased from 2,783 to 2,935 in the past month. Compare that to last year at this time when demand decreased by 2% from 2,810 to 2,762 (6% less than today’s level). Demand has not been this high since 2012 when it reached 3,544 pending sales; however, 17% were short sales that took a very long time to sell and often never closed. Today, only 1.2% of demand are short sales. Stripping short sales from demand, the last time it was this high dates all the way back to 2005, prior to the great recession.

Many may wonder why housing is so hot this summer. It took the market a while to get to this point. Housing has healed. Foreclosures and short sales are scary stories from the past, currently representing less than 3% of all closed sales. In 2012, they represented 31%. Now that housing has been restored and distressed properties are only an asterisk, the market has been blossoming. Throw in rock bottom interest rates, even lower than last year, and you have a recipe for strong demand. And, it does not look like interest rates are going anywhere fast. The Federal Reserve raised the short term rate for the first time in nine years back in December of last year. They hinted at four more hikes in 2016. So far, NOTHING. It doesn’t appear that there will be a change until December, if at all.

Low interest rates are only part of the reason for hot demand. This year, like every year since 2008, fewer homeowners are opting to sell. There are 30% fewer homes on the market compared to 2000 through 2007. People are staying in their homes a lot longer and are just not moving. On average, the current turnover rate for homeowners is 23 years. That’s a far cry from the days of lore, prior to the Great Recession, when homeowners moved much more frequently.

With a low supply of homes and strong demand, it’s no wonder that there’s a heat wave in housing.

JerryNewest    Sig BHHS COLORS-01

Top 5 Strategies When Buying a House

 

JH Portrate Close upAnalyzing the market trends in real estate is just as important as your other investment tracking strategies.  I do my best to inform clients how to find and negotiate the best deal possible and market statistics play a big part.   Understanding can mean success or failure and will determine if you overpay for a property.

As an example, homes that are selling in an FHA range of loans – (ceilings of $625,000) represent 68% of the demand but only approximately 42% of the available homes for sale in this range. This means that the nicest homes in this price range will get multiple offers and will only last a few days before going into escrow. On the flip side, luxury homes priced over $1,500,000 represent only 4% of the demand but 22% of the inventory!

It is a sellers market for the lower priced homes and a buyers market in the luxury home market.

So what doe this mean for you?  Here are my top 5 recommendations to keep in mind when buying a home:

1.) Stay on top of the listings on a day to day basis.
Use speciality websites like HomesinSouthOrangeCounty.com or FindHomesinOC.com to track your searches. These are updated regularly rather than sites like Zillow or Redfin.

2.) Work with your broker or agent making sure they know what you want.
Often times agents learn about homes before they are ready to hit the MLS. You can possibly avoid the arduous process of open houses and multiple offers.

3.) Don’t think too long before visiting these homes. If you see something you like, go and see them right away with your agent.
I, like other agents will prioritize your needs if you have an active search plan in process involving your agent. I am always available to take calls in the evening and on week-ends.

4.) Make sure you have a team working for you.
Make sure you are ready during all stages of a purchase.  I strongly recommend a pre-approval qualification letter be put ready from your mortgage banker so when you find your home, your offer will be strong and stand out. Our team consists of a broker, a mortgage banker, a transaction coordinator, a title officer, an escrow officer, a property inspector, a handyman, a team of termite and repair professionals, a roofer and more. You will need all of these professionals before you move into your new home.

5.) Make sure you have a plan to address any special needs.
i.e. If you have a home that you need to sell, share that with your broker. Brokers like me are experts in helping you with transitional ownership. Selling your home and buying your home can put you in a disadvantage if you don’t have a plan in place.

Our next blog post will address transitional ownership. This will highlight both the journeys of rent-to-own as well as sell-and-then-buying a new home.

Call or email today to discuss your needs and to get a plan working for you! : jerry@henberger.com

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