when is the right time to buy a house
To know when is the good time to buy a house, you must first understand when you should buy a house.
The ideal timing to purchase a home ultimately relies on your financial situation, your ambitions, and your personal schedule. Although the real estate market has its own peculiarities and trends, they are not infallible.
Work on coordinating your finances before you start the home-buying process. Although you have little control over the housing market's or mortgage rates' future, you may take efforts to position yourself for a positive home-buying experience.
Your financial situation and your plans for the future will have a big impact on whether or not you should buy a house. Also, market trends and economic factors play an instrumental role in choosing the perfect time to buy a house.
At this point, you must fully understand the home buying guide canada to have a clear understanding of the procedures as well as legal documents. This will help you shorten the time when you decide to buy a house and consolidate your knowledge about the home-buying process.
Here are some points that you need to take note of:
The ideal timing to purchase a home ultimately relies on your financial situation, your ambitions, and your personal schedule. Although the real estate market has its own peculiarities and trends, they are not infallible.
Work on coordinating your finances before you start the home-buying process. Although you have little control over the housing market's or mortgage rates' future, you may take efforts to position yourself for a positive home-buying experience.
Your financial situation and your plans for the future will have a big impact on whether or not you should buy a house. Also, market trends and economic factors play an instrumental role in choosing the perfect time to buy a house.
At this point, you must fully understand the home buying guide canada to have a clear understanding of the procedures as well as legal documents. This will help you shorten the time when you decide to buy a house and consolidate your knowledge about the home-buying process.
Here are some points that you need to take note of:
the best time to buy a house
You might find it surprising when the answer would be in winter. There are some facts to support this reason:
1. House price tends to be lower compared to summer, spring and fall: Common psychology, people like to buy a house when the weather is beautiful and warm. And looking at statistics over the years, house price usually peak in June and July and starts cooling down a bit in early winter.
2. Some hidden problems can only be discovered in winter: Professional home-buyers or investors will surely know why this is true. As in winter, some problems such as air leaking due to improper insulation or simply the house showing signs of deterioration can make the air flows into your house. In the long term, the difference in air temperature will cause your heating system to keep balancing the temperature and overpowering.
Furthermore, late winter and early spring can be considered the best time to look for a house. Because when winter passes, the problems of the house will be uncovered. For example, the house needs a new roof or the house needs to be repainted, or some parts of the house need to be replaced. These visual issues are easy to detect but only when winter passes.
1. House price tends to be lower compared to summer, spring and fall: Common psychology, people like to buy a house when the weather is beautiful and warm. And looking at statistics over the years, house price usually peak in June and July and starts cooling down a bit in early winter.
2. Some hidden problems can only be discovered in winter: Professional home-buyers or investors will surely know why this is true. As in winter, some problems such as air leaking due to improper insulation or simply the house showing signs of deterioration can make the air flows into your house. In the long term, the difference in air temperature will cause your heating system to keep balancing the temperature and overpowering.
Furthermore, late winter and early spring can be considered the best time to look for a house. Because when winter passes, the problems of the house will be uncovered. For example, the house needs a new roof or the house needs to be repainted, or some parts of the house need to be replaced. These visual issues are easy to detect but only when winter passes.
is it a good time to buy a house?
In fact, there are no indicators to guarantee when is the good time to buy a house, everything must be well-calculated, and sometimes uncontrollable impacts such as market trends and economic situation.
However, we have researched some facts that you need to know:
However, we have researched some facts that you need to know:
When the price is low
Pros:
- Lower price means you have more opportunities to search for more properties on the market.
- The buyer can negotiate the price (have negotiation power).
Cons:
- The rate will be high leading to higher monthly payments.
- Lower price means you have more opportunities to search for more properties on the market.
- The buyer can negotiate the price (have negotiation power).
Cons:
- The rate will be high leading to higher monthly payments.
when the rate is low
Pros:
- Monthly payment is low.
Cons:
- Higher house price means you are in the seller's market. And the buyer does not have the buying power.
- Because the house is in demand, so probably you will get into a bidding war with other buyers.
Note: It is advised to be cautious when buyers buy "with no condition" houses. As it is very dangerous and risky.
- Monthly payment is low.
Cons:
- Higher house price means you are in the seller's market. And the buyer does not have the buying power.
- Because the house is in demand, so probably you will get into a bidding war with other buyers.
Note: It is advised to be cautious when buyers buy "with no condition" houses. As it is very dangerous and risky.
buy when home demand is low
A buyer's market is ideal for home purchases: Both costs and supply are quite favo rable. The price of a home is frequently cheaper when there is minimal demand.
On the other hand, in a seller's market, costs are high and options are few. Sellers in this scenario are free to examine only a few bids while selecting the best one. A bidding war may result from many offers. In other words, if your offer isn't the highest, you can lose out on your ideal property.
Regardless of whether you're in a seller's or a buyer's market, a skilled real estate agent can help you obtain the greatest bargain.
On the other hand, in a seller's market, costs are high and options are few. Sellers in this scenario are free to examine only a few bids while selecting the best one. A bidding war may result from many offers. In other words, if your offer isn't the highest, you can lose out on your ideal property.
Regardless of whether you're in a seller's or a buyer's market, a skilled real estate agent can help you obtain the greatest bargain.
what is the best month to buy a home?
The median number of days a home spends on the market rises between October and January historically, suggesting a less competitive market for buyers. Homes were on the market for 71 and 61 days in January 2021 and 2022, respectively. This is longer than June 2021, when properties stayed on the market for 36 days.2020–2022 median days on market.
The more opportunities buyers have to seek for and buy the property they want, the longer a home is on the market. Additionally, longer days on the market encourage sellers to be more flexible in pricing, closing dates, and other factors that can be advantageous to buyers.
In short term, January and February are the best months to buy houses as this is the time when a lot of people want to sell homes. As mentioned above, the average days of a house on the market are higher than in other months so this indicates more opportunities for new houses in your search area and less competition.
The more opportunities buyers have to seek for and buy the property they want, the longer a home is on the market. Additionally, longer days on the market encourage sellers to be more flexible in pricing, closing dates, and other factors that can be advantageous to buyers.
In short term, January and February are the best months to buy houses as this is the time when a lot of people want to sell homes. As mentioned above, the average days of a house on the market are higher than in other months so this indicates more opportunities for new houses in your search area and less competition.
buy a house when you are ready
There are no signs or indicators of the market to define a perfect time to buy a house or the ideal condition to buy a house. Needless to say, the best time to buy a house is when you are ready and well-prepared after having done your calculations. In short term, you should buy a house when the numbers match your income and expenses.
1. Calculate your mortgage
A mortgage calculation can help you to visualize what type of house fits with your income and the amortization periods, and the monthly payment.
- Down payment: The percentage of pre-payment to pay for a house. The government of Canada allows first-time home buyers to buy house with 5% down. Be careful, when you put less than 20%, you have to pay mortgage insurance - in case you are failed to pay the lender. This is just an extra cost that is mandatory.
Note: This only applies to a 25-year amortization period. For any houses over $500,000. The minimum down payment is 5% and 10% of any amount over $500,000.
For example, in Manitoba, the premiums of mortgage insurance are:
- 4% premium of the loan amount from 5% - 9.99% down payment
- 3.10% premium of the loan amount from 10% to 14.99% down payment
- 2.8% premium of the loan amount from 15% to 19.99% down payment
- 0% premium for the loan amount of 20% or higher.
Let's say you purchase a $400,000 house with a $40,000 down payment:
So that's a 10% down payment. The loan amount in this example is $360,000.
By rule, you must pay 3.10% of $360,000 = $11,160 mortgage insurance over 25 years.
- Amortization period: The number of years you pay for your mortgage. A standard period would be 30 years, however, depending on your income and value of the house, expenses, and the years of term, your amortization period can be longer or shorter.
- Interest rate: The rate of borrowed money from the lender you have to pay over the amortization period.
2. Calculate your expenses
Expenses are not calculated in your monthly mortgage payment. However, it will help you know how much money you have to pay in your total monthly deduction of the house. Here is the list of expenses:
- Land transfer tax: The amount of tax when you buy a property, is required.
- Property tax (school tax): The amount of tax you pay yearly.
- House insurance: The insurance you pay for your house, depends on the broker to calculate your premium of insurance.
- Hydro bill.
- Maintenance fee: Roof repair, house repaint, lawn care, property care, basement rework, water pipe, electrical system, water damage, furnace, heat system, air conditioner. These types of maintenance are usually hidden. However, it usually should be calculated as 10% of your mortgage.
- Closing costs: This is the cost when you buy and close a deal on your house. There is a myriad of costs including legal fees, lawyer's fees, agent's fees, land transfer fees, etc. For example, closing costs in Manitoba for a $500,000 house with a 20% down payment would be around $12,000.
Remember, don't try to alleviate the numbers to make you feel comfortable with the numbers. As this is real life scenario and you must calculate your numbers exactly to the details.
BOTTOM LINE
Buying a house is a complicated and long process. People wait just sit and wait for the perfect time to buy a house. I say it is never gonna happen as the house prices recently have skyrocketed in the past few years. The perfect time to buy a house is when you work out your numbers and it matches with your calculation.
1. Calculate your mortgage
A mortgage calculation can help you to visualize what type of house fits with your income and the amortization periods, and the monthly payment.
- Down payment: The percentage of pre-payment to pay for a house. The government of Canada allows first-time home buyers to buy house with 5% down. Be careful, when you put less than 20%, you have to pay mortgage insurance - in case you are failed to pay the lender. This is just an extra cost that is mandatory.
Note: This only applies to a 25-year amortization period. For any houses over $500,000. The minimum down payment is 5% and 10% of any amount over $500,000.
For example, in Manitoba, the premiums of mortgage insurance are:
- 4% premium of the loan amount from 5% - 9.99% down payment
- 3.10% premium of the loan amount from 10% to 14.99% down payment
- 2.8% premium of the loan amount from 15% to 19.99% down payment
- 0% premium for the loan amount of 20% or higher.
Let's say you purchase a $400,000 house with a $40,000 down payment:
So that's a 10% down payment. The loan amount in this example is $360,000.
By rule, you must pay 3.10% of $360,000 = $11,160 mortgage insurance over 25 years.
- Amortization period: The number of years you pay for your mortgage. A standard period would be 30 years, however, depending on your income and value of the house, expenses, and the years of term, your amortization period can be longer or shorter.
- Interest rate: The rate of borrowed money from the lender you have to pay over the amortization period.
2. Calculate your expenses
Expenses are not calculated in your monthly mortgage payment. However, it will help you know how much money you have to pay in your total monthly deduction of the house. Here is the list of expenses:
- Land transfer tax: The amount of tax when you buy a property, is required.
- Property tax (school tax): The amount of tax you pay yearly.
- House insurance: The insurance you pay for your house, depends on the broker to calculate your premium of insurance.
- Hydro bill.
- Maintenance fee: Roof repair, house repaint, lawn care, property care, basement rework, water pipe, electrical system, water damage, furnace, heat system, air conditioner. These types of maintenance are usually hidden. However, it usually should be calculated as 10% of your mortgage.
- Closing costs: This is the cost when you buy and close a deal on your house. There is a myriad of costs including legal fees, lawyer's fees, agent's fees, land transfer fees, etc. For example, closing costs in Manitoba for a $500,000 house with a 20% down payment would be around $12,000.
Remember, don't try to alleviate the numbers to make you feel comfortable with the numbers. As this is real life scenario and you must calculate your numbers exactly to the details.
BOTTOM LINE
Buying a house is a complicated and long process. People wait just sit and wait for the perfect time to buy a house. I say it is never gonna happen as the house prices recently have skyrocketed in the past few years. The perfect time to buy a house is when you work out your numbers and it matches with your calculation.