Why October’s the Best Time to Start Looking for Your First Home


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As the leaves start to fall and the air gets autumn-crisp, the housing market cools down. But if you’re ready to buy your first home, there may be no hotter time to start the search.
Trulia, an online real estate resource for homebuyers and renters, recently released a report concluding that October is the best month for starter-level home-hunting. The organization found that starter-home supply peaks in October and rises 7 percent in the fall months, compared with the spring. That results in home prices that are 4.8 percent and 3.1 percent lower
in the winter and spring, respectively, than in the summer, the busiest home-buying season.
The Trulia report aligns with an analysis released recently by ATTOM Data Solutions, a real estate database. ATTOM reported that home buyers get the best deals in February, when the median home price is 6.1 percent less than the rest of the year, on average. These findings were based on public home-selling data from 2000 to 2016.
Buying a home could be a long process. If you are going to seal the deal in February, you need to be making offers in December or January, which means you should start looking as early as October or November, said Daren Blomquist, ATTOM’s senior vice president.
How the fall housing market aids first-time buyers
The fall house-hunting guidance holds particularly true for first-time buyers, many of whom tend to be young professionals without children, experts say.
“They are not as tied to the school calendar,” said George Ratiu, managing director of quantitative and commercial research of the National Association of Realtors. Conventional wisdom says the fall season is the best time for first-time buyers to look for houses because home prices are likely to drop as more houses come on the market and families with children have either moved or stopped looking.
People searching for starter homes also enjoy more flexibility than existing homeowners looking to move.
“The catch-22 is that if it’s a good time to buy in the fall, it’s a bad time to sell,” Blomquist said. “So it’s kind of a wash for move-up buyers. Whereas first-time home buyers don’t have to worry about the selling of the equation.”
New buyers still face many obstacles
However, it can still be a challenging market for first-time home buyers, and it’s getting tougher, experts say.
Supply and demand
Nationally, housing supply has been shrinking over the past few years. It has tightened even more in 2017 than in previous years. Existing homes available for sale at the end of August fell 2.1 percent to 1.88 million and were down 6.5 percent from last August, according to the NAR .
It would take 4.2 months for the houses on the market to be sold at the current pace, down from 4.5 months a year ago. (Six months is considered a balanced buyer-seller market.)
But the demand for housing has been growing as a result of an improving economy and increasing job opportunities.
“Prices had nowhere to go but up,” Ratiu said. Homebuyers “have more money, but there are not enough homes on the market, and the price of homes has outpaced their income, which makes it hard for them buy.”
Nationally, the August median sales price of existing homes, which starter buyers tend to purchase, was $253,500 , 5.6 higher percent than last August, according to the Realtors’ association. Meanwhile, wage growth remained fairly stagnant, at around 2.5 percent, the Bureau of Labor Statistics reported.
The NAR on Tuesday reported that Pending Home Sales, a future-looking indicator, fell 2.6 percent in August compared with last year — its lowest reading since January 2016.
“When I see pending sales declining, it’s likely sales for the next month will be down,” Ratiu said.
Ratiu said that much of the declining sales was the result of the housing shortage, which indicates that people looking to buy may not be able to find a house. But if they can buy, fall months are still a good time to snag a suitable home, Ritiu said, because the slow sales season gives starter home buyers that edge in a tough seller’s market.
“If first-time homebuyers are competing with buyers who have bigger down payments, which typically you would have with a move-up buyer, they are going to lose out more often than not in that situation,” Blomquist said. “So if they are willing to buy when other buyers are dormant or in hibernation, then they could get an edge and face less competition.”
Tougher lending standards
Tougher lending standards since the financial crisis have have hit hard among first-time buyers, who made up 31 percent of all homebuyers in August, the NAR reported. The median down payment percentage in the second quarter of 2017 rose to its highest in nearly three years, at 7.3 percent, up 1.4 percentage points from last year’s 5.9 percent, according to ATTOM .
This means if you buy a home for $200,000, you would have to put down $14,600 today versus last year’s $11,800.
To put that in perspective, at the peak of the last housing boom in 2006, before the financial crisis, the median down payment percentage for houses sold nationwide was 2.1 percent, Blomquist said.
There are good reasons why the down payment percentage rose, but it puts a huge financial burden on college graduates and young professionals coming into a pricey real estate market while carrying an average student loan debt of more than $35,000 , experts say. (On that topic, here are some important things to know if you have student loan debt and are buying a house .)
Trulia reported that first-time homebuyers need to allocate nearly 40 percent of their monthly paycheck to buy a starter home, up from 31 percent in 2013.
Factors to consider when buying your first home
Seasonality is just a piece of the puzzle in homebuying — the biggest factor people should consider is affordability, Blomquist said.
“You’ve got to look at your finances and determine if it’s a good financial decision for you to buy a home,” he said.
Also recommended: Weigh the pros and cons of buying versus renting , as it sometimes makes sense to rent, depending on your long-term plans. If you are looking to buy your first home in the coming months, you can check out this guide for first-time homebuyers to help you through the long and complicated process.

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