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 2015 holiday season.
Looming Potential of Increased Mortgage Rates
Currently, mortgage rates are still near record lows but if you've been paying attention to any news regarding the Federal Reserve's plans to increase the short-term federal funds rate you know that mortgage rates will be negatively impacted.
At their latest meeting in October, the Fed projected that there was a "possibility" they would implement a rate hike after their December meeting. 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
The median existing home sales price in October was $219,600 and the average existing home sales price was $262,800. Year-over-year the median existing home sales price is up 5.8 percent and the average is up 3.4 percent.
Though the recent lack of existing home inventory is likely a factor for the spike in October's home prices, as the housing market continues to rebound, so will home prices.
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. The prospect of higher mortgage rates and home prices, are encouraging households to buy now, according to NAR Chief Economist Lawrence Yun.
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.
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 2015 or in 2016 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 Rising
October median rents increased a seasonally-adjusted 4.5 percent from 2014, according to Zillow data. In October, the median rental payment nationwide was $1,382 which translates into roughly 30 percent of the median U.S. family's income of $53,657.
If you're wanting to get out of the rental circuit in 2015, download our free Mortgage 101 Handbook, a great homebuying and home financing guide for first-time homebuyers.