5 Things To Cost You the Home of Your Dreams in 2025
Have you been sitting on the fence this past year, wondering what to do about this real estate market? Interest rates are up, you need to move but you aren’t sure it’s the right time to buy? Now there’s been an election, that guy is back and interest rates still haven’t budged. What is a homebuyer to do!?!
Today we are going to talk about how the real estate market shifts throughout the year here in the DC Metro Area or DMV. Along the way I’ll dispel some of the fallacies buyers have when entering this market. This information is going to serve many of my incoming spring clients well, so it should be a great help to you also.
Misconception #1: “There Are More Houses for Sale in the Spring, I’ll Just Wait Until Then”
Yes, you and everyone else. Buyers approach the spring market with high hopes, and they can quickly be destroyed. Let’s go over seasonality.
Every season brings its own variety of crazy to the real estate market in the DC Area. We have the infamous spring market, which everyone believes is the best time to look for homes. The school year will soon be winding down, so the kids won’t be disrupted with change. Most people believe, and it does prove true, that the most homes are for sale in the spring. I typically sell 80-85% of my annual sales in the first half of the year.
How does the Spring Market unfold? Here’s what happens. In January and February, the eager beavers are out there. They have been waiting for months, perhaps years, and this is it. They are going to buy a home. Initially you will see a lot of demand on the homes that are new to the market. By February when we are post-Superbowl and as the weather gets warmer, more homes are listed and more buyers are out there.
In the DC Metro area, Memorial Day at the end of May is the “unofficial” start of summer here. This is when half of the buyers from spring are gone. Some bought homes, others are burned out and the rest decide to enjoy their summer. For those who remain in the market though, it is strong in the DMV well through July. Then it’s very quiet in August. Not much is listed, but it’s a really good time to buy a home. In fact, it’s the second best time to buy a home in this area.
Fall is a short market. September and October are when homes will be listed again, though it’s nothing like the volume you will have experienced in the spring. It starts to slow down by Halloween. A few homes will be listed in November before it all comes to a halt. There is usually one or two homes that may work for you that are listed between mid-November and mid-December. Those are the sellers who just don’t want to wait two more months for the spring market. This, my friends, is the BEST time to buy a home. November and December. There’s practically no competition, and you have a captive seller who is motivated to sell.
After the holidays, we’re back at the New Year which is basically Spring. Once you lay it out like that, it a sobering reality on how short the opportunities are during a regular year to lock down a home.
Misconception #2: “I’ll Just Wait for the Interest Rates to Come Down”
Do you hear yourself? You do not want to wait for the interest rates to come down because just like with waiting for spring, you are not the only one with this idea. When rates come down and the cost of ownership comes down, demand goes up.
The housing shortage is all over the news. Estimates indicate that the U.S. is in a deficit of between 2.8M and 4.5M homes. That’s a lot of homes! And that means there are more buyers trying to get into them. You should think about getting into a house when your competition can’t stomach buying at these rates. Rates will come down again.
Misconception #3: “This House Checks Most, But Not All of the Boxes, Let’s Keep Looking”
Do you know who our #1 Employer is here? It’s a little something called the Federal Government. All the employees of the Government, related agencies and contractors need places to live. Finding a home in the Maryland and Virginia suburbs of DC can be extremely difficult – especially if you’re not realistic about the market. Being realistic about our market conditions is very difficult if you are moving here from somewhere else. This trial-by-fire situation we have here is difficult to comprehend.
You are not going to get a 10 out of 10. It just doesn’t happen. It doesn’t even really happen with new construction. The goal here is to get the best house that works for you and your family for at least 5 years. It’s probably going to be a 7 or 8 out of 10. I wish the news were better here, but your alternative is to rent. That’s also fine, but at $3000 a month for a small house, with rent increases you will pay close to $160,000 of someone else’s mortgage for the next 4 years. If that’s okay with you, then all good. You can see yourself out. By the time most people contact me, they’ve already decided that’s not okay with them.
Misconception #4: “It’s Been on the Market a Bit, Can I Write an Offer Below List?”
Sure. Like T.I. Says, whatever you like.
If you’re a parent, you probably have a hard time watching your kid make a decision you know they are going to regret. Usually though, with kid decisions, they can be corrected because they aren’t catastrophic. Usually.
As your advisor, I have such a hard time watching someone play around with a house that clearly has their name written all over it. No, not because I’m calculating my commission. I’m foreseeing the future. The future where you are like that forlorn ex, comparing every house to the one that got away. It’s not a good place to be.
I hate nudging people. I have historically been passive with my clients, letting them weigh things out. I provide the comparable sales and let them decide if they want to make an offer and at what price and terms. I will tell them there’s currently no other offers but that could change at any second. I never want my clients to feel like I’m not helping them negotiate but we don’t live in a market of negotiation. The sellers have had the upper hand here for over a decade.
I have learned that some of you don’t realize when you’re making a decision you are going to regret. It is so hard when I know that you are putting a hurdle into your offer that is going to render you bid the losing bid. I had three clients lose out on homes in the past month. Despite knowing that in each case this was “their house,” and guiding them as best as I could, they put the offer together that they wanted. I don’t want anyone to think I’m pushing them. But in all cases, they didn’t get the house.
Do you know how sad it is to get that call from your client asking you to call the listing agent to let us know if anything fell through? Because in most cases, things don’t fall through. And in each case, my clients felt like they lost the house that should have been theirs. That. Sucks.
Misconception #5: “I’m going to use a VA/FHA Loan”
This is the worst news for most buyers who move to the DC Area from somewhere else in the country. It’s rare to get a VA/FHA offer accepted. I’ve had people say, “Well we looked up the seller and they bought with VA, so we hope they will feel camaraderie with us.” No. Everyone goes for the cold hard cash. No one goes for the emotions.
Why will the listing agent encourage the seller to take conventional financing over VA? VA loans have “built in” contingencies that protect the Veteran from losing their earnest money deposit in the event of a loan denial or appraisal coming in under value. In a multiple offer situation, a seller will prefer to take an offer where there are no contingencies to protect the buyer. The VA Buyer cannot waive the contingency like a conventional buyer can and often will. Couple that with the conventional buyer having a high down payment and a high earnest money deposit, and it’s very difficult to get an offer accepted with VA or FHA financing.
Another reason VA home loans are tougher to get accepted is because of the home appraisal requirements. Conventional financing can sometimes be awarded a “waiver” of the appraisal if the value on paper is there and the buyer has a very high down payment. VA home appraisals are not eligible for that waiver. Additionally, Veteran home appraisals have strict requirements to protect the Veteran. They may require repairs to the home that the conventional loan wouldn’t – such as requiring a handrail down a staircase or front walk-up, which is a common condition.
VA loans also have longer closing times where conventional loans can close in 2 weeks.
