Buying a home can be tricky, especially if you're looking outside the traditional spring and summer months when the market tends to be more active. This year, the situation may be even more complicated due to factors like fluctuating interest rates and a limited inventory of single-family homes. But don't worry—there are still ways to navigate the housing market and make smart choices. To get advice based on the current real estate and lending market, we tapped the experts for insights on why buying a home “out of season” might be different this year and how to take advantage of current opportunities.
Why may it be harder to buy a home “out of season” this year?
"Traditionally, peak 'homebuying season' starts in May and lasts through late summer as many are looking to coordinate a move during the spring and summer months," explained Felton Ellington, Vice President and Community Lending Manager in Chicago for Chase Home Lending. "This past year, we saw slow sales growth during these months due to higher interest rates and higher home prices caused by a lack of inventory. Low housing inventory was due to the fact that many—roughly 70% of those with mortgages— are sitting at a rate of 5% or lower, creating a 'lock-in' effect where many didn’t want to sell given they’d have to buy at a much higher rate."
"With the Federal Reserve (the Fed) cutting interest rates by 50 basis points recently, buying 'out of season' this year may hold more advantages," he added. "A decline in mortgage rates may also prompt existing homeowners to sell, creating more inventory and potentially softening prices across the real estate industry. Buying in the fall and winter months can also be advantageous given that competition often wanes and, as a result, potential buyers might be able to negotiate with sellers and secure a better deal."
As I glance at the current mortgage interest rates prior to publishing, it's obvious that timing is everything if you expect to hit a sweet spot with the economic conditions. Ellington agrees, adding "Timing the market exactly right is difficult, if not impossible, to do. I always tell prospective homeowners that the best time to buy is when you’re financially able and ready to – you can always refinance later."
How can you find local grants or incentives?
Saving money is very important for hopeful homebuyers and homeowners alike, but educating yourself on the options takes time and patience. "Many new and experienced homebuyers leave money on the table by not researching down payment and homebuyer assistance programs, grants, and incentives that help make owning a home more affordable," Ellington explains. "These programs can help with things like down payments and the closing costs that come with buying a home."
He adds, "I advise consumers to start with their local bank or a mortgage lending expert who can help them uncover the various local, state, and federal programs that can help reduce homeownership costs. You can also find many of these programs online. For instance, we have a Homebuyer Assistance Finder on our website that can help match prospective buyers with local programs that they may be eligible for. We also offer the Chase Homebuyer Grant that offers homebuyers up to $7,500 in eligible areas, which can be combined with other programs."
Is it a good time to refinance, or should I wait longer? And, how much would rates have to drop for it to be worth your while?
"With recent interest rate cuts, [it] may be a good time to start considering refinancing if you’re sitting at an elevated mortgage rate and want to lock into those lower rates," he suggests, highlighting again that timing is everything. "If the interest rates drop below 6%, roughly 4.7 million consumers could come into money from a refinancing opportunity and take advantage of competitive rates and a lower monthly payment."
"As I mentioned before, timing the market exactly right is nearly impossible to do, so if your mortgage is sitting at 7 or 8%, we highly advise talking to your local mortgage professional to see what options are on the table and what makes the most sense for your specific financial situation. For some existing homeowners, refinancing at the current rate might make a lot of sense financially."
