Everyone and your local meteorologist seems to be talking about climate change of late, and for good reason, as long as any potential threats to the planets exist, as many scientists indicate.
But climate also plays a major role in purchasing a home, too – although few homebuyers may realize that, at their own financial peril.
According to a new study by NerdWallet, summer is the most expensive season to buy a new home, while winter offers the hottest deals for new mortgage consumers. “Specifically, June and July are the most expensive reasons to buy a home,” NerdWallet says. “In January or February, though, homes cost 8.45% less on average than in June through August.” January had the cheapest sale prices in 29 of the 50 metro areas NerdWallet surveyed, and February had the cheapest prices in 19 areas.
There seems to be a slight, gradual decline in home prices as the weather turns colder, as prices fall from summer to autumn, as well. “On the flip side, selling in the winter, will likely make less than selling a home in spring or summer,” NerdWallet states in its report. “Prices and inventory begin to build up again in the spring.”
That goes for even perennially warm weather states, where prices also go down as the calendar flips into colder months.
“Shockingly, for a buyer in this shifting, stalling market in California, it can be the months of December and January, where prices are lowest,” says Lori Aronsohn, a real estate agent in Sherman Oaks, Calif.
“I’ve had buyers who were reticent to pay inflated prices for a house, so we waited,” she explains. “People who overprice their house, and won’t budge on their number, in spite of the fact that the listing stays up month after month, finally decide to cut their losses at year’s end and agree to a lower price.”
Real estate industry insiders agree with that outlook, adding that demand seriously impacts home prices in summer and winter.
“The best time to be a buyer is indeed the winter,” notes Heather McRae, a real estate specialist at Chicago Financial Services, in Chicago, Ill. “While the inventory may not be as plenty during the winter months there is much less competition. We all know as the demand for something rises it causes the price to increase. Due to this, one will pay less for a house in January than if they had bought that same house in April.”
There are some other, fairly obvious reasons why home prices decline in icier weather, although homeowners don’t seem to take advantage.
“Simply put, there is less traffic,” says Rachel Hillman, founder of Hillman Homes, a full-service boutique real estate firm located in West Newton, Mass. “At this point, many buyers put their searches on hold until the spring. This allows buyers who are looking a bit of breathing room to look at homes with less buyers in the pool.”
The need to sell a house faster in winter is a big factor in price declines, too, Hillman says. “If a property is sitting on the market for 30 or more days in the winter, it is likely the seller is more willing to negotiate the price versus if it was during the summer time,” she explains. “We find people selling in the winter either have to move or really want to move. This can lead to a better price for buyers who can close when the sellers need to move.”
A bonus – moving prices are lower too when Old Man Winter blows into town. “Buyers will be able to also take advantage of lower moving costs as most movers increase their prices to match the demand of the busy season,” says Hillman. “It tends to be less expensive to move on a weekday versus weekend, during the month versus the last few days of the month, and in winter versus summer.”
Don’t neglect autumn, either, as homes do show better pricing value when the leaves turn red and gold – especially on a tax basis.
“Fall is a great time of year to purchase a home, says David Hryck, a prominent New York City tax real estate adviser and lawyer, and a partner at Reed Smith. “Inventory may be a bit lower then in the spring and summer, but you can still take advantage of homeowner tax breaks. Property tax and mortgage interest are both deductions you can take for your whole year’s worth of income, even if you closed on your home in December.”
Hryck says that, when you own a home, you are eligible for certain year-end tax breaks. “If you’re house hunting in the fall, you may feel a sense of urgency to find the perfect house prior to year end to take advantage of certain tax breaks,” he notes. “Mortgage interest payments and property taxes are both deductible from your gross income, as is any prepaid interest. Any payments that are made prior to the closing of the loan are tax deductible.”
“That can make a serious difference in the amount you owe the government at the end of year and is a major benefit when it comes to buying a home in the fall,” he adds.