The housing market has gotten pretty competitive lately. And finding the right time to buy may seem like an arduous task. But whether it’s for tax purposes or you’re looking to buy a beach house, let this guide help you find the right time in 2022 to buy a house.
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Should I rent or buy a house?
It depends on whether you are making a long-term or short-term investment. For most of the U.S., buying is cheaper in the long run. A monthly rent payment may be cheaper for the first year, but the rent is likely to increase over time. According to a 2021 report by Apartment Guide, nationwide rent prices have increased by 10% year-over-year for one and two-bedroom apartments. A mortgage payment won’t have that kind of annual price hike, but it’s also important to remember that ownership comes with a variety of different costs, including property taxes, homeowners’ insurance, and homeowners association (HOA) fees.
Consider what your future might look like. If you are ready to make a long-term investment and you have the necessary funds to afford the multiple costs of homeownership, it will pay off over time. Eventually, you’ll get the mortgage paid off, and the monthly payments will dramatically reduce. Your home’s value will appreciate over time, which could lead to your patience ending in a big profit. So, 2022 is a good time to buy a house; though demand is high, it is likely to get higher.
Of course, if the goal right now is to just find something temporary, renting is the obvious choice. It’s cheaper in the short term, and it requires little to no commitment. But for the sake of the article, let’s say that you are intending to buy.
Best time to buy a house
Home buying season generally begins at the end of March and continues through the late summer. Not many people like to move during the winter (especially with the risk of ice). Spring tends to bring out more sellers due to the warmer weather and the end of the school year. Home inventory peaks in the middle of summer, meaning variety will peak in the months of June and July. However, this is also when home prices are at their most expensive. This year the housing market will be especially competitive. With the combination of low mortgage rates and housing shortages, it could be very difficult to win a bid on a home during these peak months. While millennials were typically notorious for choosing to rent, data shows they are trending towards homeownership year by year, making competition even more fierce.
For the best odds at sealing the deal on a house, you will want to avoid these peak months and try to buy early to late fall. There won’t be a large inventory to choose from, but that also means you won’t have to get into a large bidding war. As an added benefit, many sellers still holding on to a house this late in the season will typically be willing to lower their asking price just to get the house off their hands. But like I said before, the housing market is pretty competitive right now, so you may have to fight for what you want.
Best time to buy a house for tax purposes
For tax purposes, there’s a completely different time period to buy a house. In order to make the most of your tax deductions, you’ll want to buy early in the year during tax season. Why? A number of reasons. If you’re struggling to gain adequate funding for a down payment, a tax refund could ease some of the burdens. But perhaps the best reason is the money you’ll save from deductions.
Say you buy in January, and you have a monthly mortgage of $1,000. Coupled with your loan and other itemized deductions, like state income tax, you could be looking at deductions totaling $15,000 by the end of the year. In 2022 the standard deduction for single filers is $12,950 and $25,900 for joint filers. If you close late in the year, you won’t have enough to itemize, no matter your filing status. This will lead to a loss in deductions.
Best time to buy a beach house
Looking at coastal states like the Carolinas, it’s pretty much the same as any other kind of housing market. Demand and volume peak in the spring and carries through the summer. Prices are generally higher and bidding gets more competitive, but you’ll have a greater selection of homes to pick through. If you’re looking for cheaper costs, the best time to buy a beach house is from late fall to early winter. Mortgage rates typically dip during these times, and there isn’t much competition. This also means there won’t be much variety in the homes; the best homes were most likely taken during the spring or summer. If affordability isn’t an issue take advantage of the inventory and be ready to bid higher than the asking price. Here is a guide showing the best suburbs for one of the beach locations in the Carolinas. These offer the beauty and affordability you can’t really find anywhere else.
Best areas to buy a house
In terms of affordability stay away from the east and west coasts. California is experiencing crisis after crisis, from severe drought to a housing shortage so bad, a 500 square foot condo in San Francisco costs more than a McMansion in Ohio. New York is great if you like living in a hut above a nightclub for the cost of four-year college tuition. Not to mention the gluttonous tax prices that come with these places, which can quickly gouge your pockets until you are living paycheck to paycheck.
If you truly want a home that doesn’t feel like it’s emptying your pockets, your best bet will be in the Midwest and rustbelt. Michigan, Wisconsin, Ohio, Iowa, and everywhere in between. These states have a less competitive market, a greater variety of affordable homes, and a good chance of increased value in the future. The south is also a good source of cheap housing. The added plus of warmer weather is never something to take for granted (coming from an Iowan, although there’s plenty to love here).
Conclusion
For 2022, the time frame to buy a house depends solely on your needs. Peak months mean great selection, fierce competition, and a greater cost. The fall and winter months allow for a more affordable option, but it comes with less variety. It’s also the best time to buy a beach house, which is far less expensive during the offseason. For tax purposes, the best time to buy a house comes earlier in the year. These options come with their pros and cons, so take your time and decide which months work best for you. There is no definitive answer here. It depends entirely on you and you alone.
