Holiday parties, guests, shopping, baking and cooking: would you want to add buying a house to your stacked holiday to-do list? While homebuyer traffic does decrease significantly on actual holidays, house-hunting isn't as impacted as you'd assume during the holiday season (and for good reason).
According to the National Association of REALTORS®, the amount of traffic on their website's home search page is pretty much back to normal by the Saturday of Thanksgiving weekend. And surprisingly, the "Black Friday" of holiday homebuying is December 28th. If you're thinking of purchasing a home, here are several reasons to do so during the 2016 holiday season.
Looming Potential of Increased Mortgage Rates
In the week of Thanksgiving, the average rate for a 30-year fixed-rate mortgage pushed past the 4% mark for the first time in 2016, according to CNN. Though still historically low, mortgage rates aren’t likely to decline with the high likelihood of the Federal Reserve increasing the federal funds rate at their December meeting.
Though the federal funds rate is directly linked to short-term interest rates, long-term interest rates like mortgages are likely to experience an uptick, as well. A rise in mortgage rates could shut some potential homebuyers out of the market by decreasing mortgage affordability.
Home Prices Are on an Up-Trend
As existing home inventory continues to dwindle, home prices are pushing upward. According to a Redfin report, the median home sale price increased by 7 percent in October, marking the strongest year-over-year gain since December 2015.
On the other end, if you're thinking of selling your home, the increase in prices are resulting in more equity for current homeowners, and those homeowners are using that equity for down payments on their next home purchase.
Less Buyer Competition
Buying a home during the holidays can give you significant leverage as a homebuyer. From Thanksgiving to New Year's, less people are crowding the market, potentially giving you more time to decide on a home purchase with less competition from other buyers and some leverage with home sellers.
More Motivated Sellers
Whether a home seller just wants to move before the holidays, has an upcoming job relocation or is just in the holiday spirit, you may find sellers are easier to bargain with before the year's end.
If the need to sell is urgent or the home has been listed for a few months, you may be able to use that to your advantage through your offered purchase price or negotiated seller concessions.
Potential Tax Benefits
While this shouldn't be the sole reason for buying a home at the end of the year, some tax advantages certainly do sweeten the deal. If you itemize on your taxes, you may be able to deduct any points (also known as origination fees) you paid at closing, property taxes and mortgage interest.
Whether it's better to purchase before the end of 2016 or in 2017 for tax purposes is dependent on how much you plan to deduct this year or next. It is always a good idea to consult with a tax professional when it comes to determining homeownership deductions.
Rent Prices Are Still Adding Up
According to a recent Trulia study, buying a home is 37.7 percent cheaper than renting on a national basis for homebuyers who put down 20 percent on their home purchase and stay put for seven years. This percentage is up from last year’s 37.2 percent.
As far as the nation’s 100 largest metros, it’s cheaper to buy in all of them, even in cities with notoriously expensive housing markets.
Though Trulia’s study calls for homebuyers to put down 20 percent, there are several loan options that allow borrowers to purchase with little to no money down.
If you're wanting to get out of the rental circuit in 2016 or 2017, download our free Mortgage 101 Handbook, a great homebuying and home financing guide for first-time homebuyers.