In the year of the coronavirus, the demand for homes remains at a record high and the amount of inventory at a record low. For active buyers, less competition from other buyers during the holidays could provide a small advantage. But buyers won’t have an advantage with sellers because they are well aware of how strong this seller’s market is. Prices are not likely to be any more negotiable during the holidays than at any other time of the year.
For buyers, the hope is there won’t be other buyers outbidding them for the few homes on the market. Historically, there are always some active buyers during the holidays and these are serious buyers rather than casual lookers. This year, you should expect plenty of serious buyers to be active compared to recent years. That means less competition but stiff competition. So, what other advantages should holiday buyers expect?
- More access to real estate professionals. Even if the decline in buyers is less, real estate agents are still dealing with fewer clients. They have more time to work with you, find what you want, and negotiate the best sale possible. The same applies if you are just now getting started with the process by working with a mortgage broker or lender. They have more time to work on your specific situation. The other end of the spectrum is also the same. If you have a signed deal or are about to sign one, the closing process should go faster. Closing before the end of the tax year can reduce the income taxes owed by new owners (deductions for mortgage interest, property taxes, and the application costs for a loan).
- A rental house can be a unique opportunity. A landlord might also want a contract in hand for year-end tax reasons. If it's a rental property that incurred a loss, they are likely to want to take the deduction this calendar year. But be aware that there will probably still be plenty of competition.
- Interest rates can’t go much lower. Interest rates are still near historical lows but no one can tell you if they will remain at historic lows early next year. Any changes will show up in your monthly payment. Waiting until spring could mean nothing more than a few more dollars for every monthly payment or it could be the difference between getting a mortgage approved or not.
- Patience can be key for buyers. Although most real estate professionals have more time available, some others do not. Scheduling showings with sellers could take a bit longer than usual as many people, including builders and representatives, take time off during the holidays.
- Learn how the house deals with winter. You can test things such as how the heating and plumbing keep up with the colder months. You can check for drafts and steamed-up windows. There are things you’ll notice during the winter months that you wouldn’t notice during dry warm weather. But keep in mind the possibility that snow could mask problems with a property.
- Home furniture and appliances are on sale. Be cautious here so that you don’t take out a loan that affects your ability to qualify for a mortgage. But if you can pay cash or have a nice financial cushion, plenty of seasonal clearance sales will be happening to let you give your new home a personal touch.
- Ask your agent about “pocket listings.” Pocket listings are homes not listed on local multiple listing services (MLS) or otherwise publicized. There could be a house that the seller is actually ready to sell but took off the market during the holidays for one reason or another. A well-connected agent might know how to make one of these deals happen.
- It won’t be better in the spring. It has been a tough year for home buyers and there is no relief in sight. Waiting for the spring home sales season runs the risks that inventory will be even lower, there will be more competition from more buyers, and the possibility that interest rates will be higher.
These tips don't always apply every year or in every market. COVID-19 and tight inventory have made this holiday season unique. Check out the conditions in the local market and see if you can find the home of your dreams and get a great deal in the process. If you find a house that meets your needs, don’t let the holidays deter you from making an offer. For an example of real estate listing to where you can find a great house, just check out PenFed Realty (for houses for sale in Wichita KS).
What can you add to the list? Please comment.
Also, our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions, inquiries, or article ideas to [email protected].
Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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It's interesting that interest rates can't get any lower even into next year. My wife and I are wanting to buy our first home soon and I want to make sure we know the best interest rates. I'll have to consult with an agent that knows where the trends are going for sellers.
Hi Taylor,
It's a stretch to say interest rates can't go any lower. But when they are at or below 3%, there isn't much further room to the bottom. Those ultralow rates aren't available to everyone. Individuals can do things to qualify for a lower rate. Key is your credit rating, debt-to-income ratio, and down payment. Best of fortunes in your quest for a first home.
Brian Kline