NOVEMBER AND DECEMBER ARE HISTORICALLY 2 OF THE 3 BEST MONTHS TO BUY A HOME IF YOU WANT A DEAL: 6 ECONOMISTS AND REAL ESTATE PROS WEIGH IN ON WHETHER THAT TREND WILL HOLD IN 2022
Winter is coming. And in the case of real estate, that may be a good thing — at least for buyers looking for a lower priced home. Indeed, a 2021 analysis from real estate research firm ATTOM Data Solutions found that October, November and December were the months when buyers paid the lowest premiums from homes. But will that be true this winter? (See the best mortgage rates you may get now here.)
Some pros say yes: “House prices have been dropping as they usually do in autumn, after the end of spring and summer homebuying season. They’ll continue to slip lower, mostly because rising mortgage rates are forcing buyers to shop for homes in lower price ranges. Home buying activity will slow as Thanksgiving approaches,” says Holden Lewis, home and mortgage expert at NerdWallet.
For her part, Realtor.com chief economist Danielle Hale says: “Bargain hunters may be able to snag a home below asking price, as price cuts have risen sharply compared to one year ago, but the discount is coming off of a much higher original asking price.”
And Orphe Divounguy, senior economist at Zillow, notes: ”Home values flatlined in September after a slight correction in July and August. This is a much needed rebalancing to more healthy housing market conditions after the demand-fueled rush for real estate we saw over the past two-plus years. However, the price adjustment is likely going to be slow if inventory remains tight.” And inventory is still tight, with new listings down 16% compared to a year ago, he notes. (See the best mortgage rates you may get now here.)
Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors, says that: “With mortgage rates above 7%, home prices will decelerate even further, increasing 5% by year end.” But she notes that: “Home prices are still higher compared with one year ago and are unlikely to fall sharply as inventory remains tight. Although many buyers have been forced out of the market due to low affordability, demand still outpaces housing supply.”
Indeed, this isn’t a market where you’re going to be getting a bargain basement price — especially when you factor in mortgage rates. “Even though home price gains are slowing, when combined with higher mortgage rates, today’s home shoppers are paying much more to buy a home with a mortgage than they did one year ago,” says Hale.
What’s more, price fluctuations do depend on the market. There’s been a softening of prices in what had previously been the hottest market, and prices in those select areas will see some pullback. “But this will remain the exception rather than the rule. Most areas will see a plateauing of home prices. Sellers won’t get the price they would’ve gotten in April or May but they’ll still get a price that’s higher than year-ago levels,” says Greg McBride, chief financial analyst at Bankrate.
And while it’s true that home prices are declining month-over-month in most markets, it’s actually normal and expected this time of year due to the seasonality of the real estate market. “What’s not being widely reported is that housing prices are still significantly up year-over-year in all of the markets Houwzer monitors, ranging from 3.88% in the DC region to 16.13% in Tampa Bay,” says Greg Phillips, chief technology officer at real estate and mortgage brokerage company Houwzer.