The leaves are falling and Christmas decorations are already in the aisles at your local Fred Meyer. And don’t get me started with the pumpkin spice foods and fragrances. The year, my friend, is slowly winding down. Where have you gone 2019?!
Before you start to make party plans for the holidays, consider this: Homes on the market today are some of the best deals of the year and buyers should seriously consider making a move (literally and figurately) on a new home before the year ends. Here are four reasons to consider:
- Prices may never be this low again (or at least not for a long time) – We live in a market where home listings and prices tend to follow a convenient and consistent path – up in spring and down in winter. In Seattle, we average 1,092 active listings across the full 12 months but in November and December the figure is closer to 300 and the trend through this September is for it to be even lower this winter. Think about it: If a home is listed during the quietest times of the year, the seller is likely quite serious about getting rid of that property and – one could surmise – willing to accept an offer (possibly any offer!) to complete the deal. This scenario plays right into a buyer’s needs and wants. And, you can almost forget finding a true bargain by springtime, when home prices historically appreciate for the next buying season.
- Mortgage rates are extremely favorable – As of this writing, 30-year conventional mortgage rates were around 3.875% (and inching higher) – more than a full percentage point lower than a year ago when market experts were projecting rates in the 5%-6% range for 2019. Just the opposite occurred as more investors piled money into Treasury notes, the main barometer that mortgage lenders track when setting their rates (usually about two percentage points above the 10-year yield). If you are planning to mortgage your new home, consider the low rates of today because one never knows where they will be next year.
- There are tax benefits to buying this year vs. next – Your tax accountant can provide direct advice that relates to your situation but, in most cases, buyers can benefit from closing on a home by Dec. 31. There are tax deductions for interest paid on a mortgage and on property taxes. Plus, there are tax credits for making certain energy-related upgrades – up to 30% off the cost of buying and installing alternative-energy equipment (for example, a solar hot water heater) this year but only 26% of the cost in 2020. (There will be slight advantages to selling a home next year when Washington’s real estate excise tax rates change – essentially good news for sellers of homes priced at or below $1.5 million.)
- An uncertain year to come – There are signs of an economic slowdown nationally (and globally, for that matter) that could have a ripple effect on the Pacific Northwest. Even with a nice blend of big businesses in our area, there are certain aspects out of their control – U.S. foreign and trade policies, plus a presidential impeachment inquiry and election. Even a whisper of recession and the other factors may cause people to change their spending habits and prepare for an economic (and buying) slowdown at home. Recession signs could raise concerns over wage stability and job security. Can a buyer wait out the national and global uncertainties – which may take a year or more to rebound from – or should they act now?
A large section of America agrees with the home-buying sentiment. A survey of 2,700 U.S. households from July through September (2019) said 63% believe that now is a good time for a home purchase, with 34% of those respondents saying they believe strongly. A full 72% of people with a household income above $100,000 said now is a good time to buy. (In addition, 74% of those polled said that now is a good time to sell, including 81% of respondents in the West.)
In all cases, a buyer should consult with his/her team of experts – financial advisor, real estate professional, real estate attorney and others (if necessary) before making the big decision. The signs are there: Buyers could indeed benefit from purchasing sooner rather than later.