Tis the Season to Buy

It is forecasted that approximately one million people will buy a home between November and January of this year when homes are more affordably priced. Typically, home prices have trended up three to five percent a year. In 2015, home prices gained six percent across the nation due to low home inventory. According to the National Association of Realtors, there is a “seasonal pattern of rising prices from the spring home buying season to the end of summer”.

Prices level off or retreat after the summer season based on history. History also shows that buyers get the best deal when they enter a contract of sale in December.   There is a tax advantage as well when closing before the year ends.

This seasonal decrease in home prices is not entirely attributed to the price depreciation of homes. What it is also attributed to is a higher percentage of lower priced and smaller homes being purchased over the winter months. Why? Typically, households with school-aged children are not looking for homes in the winter, because they don’t want to move during the school year. Generally, households with children require larger homes which are more expensive.

Another motivating factor for purchasing by the end of this year, is the Federal Reserve (FED) may raise interest rates. It was reported last week, U.S. employment increased in November further supporting this likelihood. Nonfarm jobs increased by 211,000 last month; and the previous two months this indicator was revised upwards by 35,000 jobs.

Just prior to the employment report, the chairman of the FED, Janet Yellen, stated the economy has been improving in recent weeks; and economic factors may meet the criteria the U.S. central bank has set for the first rate hike since June of 2006. The Fed next meets on December 15 and 16. The chairman, however, stressed that “the Fed will move slowly and cautiously in 2016 and monetary policy will remain accommodative”.

Many financial and economic analysts forecast the Fed will increase interest rates between 0 percent and 0.25 percent in December; and future interest rate increases are anticipated to be gradual.

The weak global economy and the strengthening of the dollar, which adversely affects the sale of U.S. exports, are becoming less of concern. The chairman expects China’s slowdown of economic growth is expected to be modest and gradual.

The chairman continues to stress how far the economy has advanced since unemployment peaked at 10 percent in 2009. Currently, the U.S. unemployment is 5 percent and close to what the Fed considers normal. The Fed is mindful that many people are without work and have given up on finding employment.   The FED, however, is weighing more heavily the amount of economic improvement since the downturn.

Greenwich realtors are reporting that there are serious buyers who have been looking at homes in this year’s fourth quarter. They may have been waiting to see how these economic indicators will effect outlooks. These developments may increase year-end sales and pending sales.

Mary Ann Clark is a realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

 

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