Buying home before end of year has advantages
With the presidential election only days away, and 2016 drawing to a close, many would-be home buyers are wondering whether they should buy now, or wait until after the first of the year before making their purchase.
People who are new to the Houston area might have added apprehension due to their unfamiliarity with the city, on top of any uncertainty they may feel about the local market.
According to Ed Wolff, president of Beth Wolff Realtors Real Living, now is the perfect time to buy a new home.
He said that many consumers perceive November, December and even January as slow months for real estate, which just isn’t the case.
“There are many years when December is our busiest month of the year,” Wolff said. “The number one reason for that in Texas, is that we have the homestead exemption. So, for anyone considering buying a house in the next few months, buying before the end of December is going to make a large difference in the amount of property tax that they are going to pay going forward.”
The homestead exemption allows homeowners to save money on the property taxes of their principal residence. The exemption removes part of the value of the property from taxation, thus lowering their taxes.
Depending on the taxing entity, the homestead exemption can be up to 20 percent of the property’s value.
For example, Wolff said, “If you buy a house for $300,000 in December, and your effective tax rate is $3 per $100 value, that’s $9,000 a year in taxes. If you have a homestead exemption on that property, in most cases, your property taxes would drop to about $7,000. That’s an annual savings of $2,000 on a $300,000 house.”
Another factor that often comes into play for people who are considering purchasing a new home before the end of the year, has to do with opportunities that might exist within the corporate world, as companies are looking for ways to reduce inventory.
“There are corporate listings and properties that are now owned by companies as a result of employee transfers,” said Wolff. “There are some asset reasons why those companies would like to get those properties off of their books by the end of the year. So, the opportunity to make a better deal on some of those corporately owned properties is also very attractive for people who are looking to buy a home.”
Likewise, Wolff said that home builders might also have new construction properties that they would like to have off of their books by the end of the year, which could spell opportunity for home buyers to make a better deal on their purchase.
Additionally, home buyers can take advantage of the low interest rates currently available on a new home mortgage.
This is important as speculation continues to circulate about potential interest rate increases, especially after the first of the year.
As for Houston, Wolff remains positive about the city and the relocation activity that continues to bring more and more new residents.
He said that the Houston real estate market offers several advantages for relocation buyers who are coming in.
“We’ve actually seen an increase in relocation activity, and I think Houston is somewhat of an anomaly, in that a lot of what has happened is that the headquarters of different companies are bringing people back, and so while we are seeing some outbound relocation, we are also seeing a lot of inbound relocation,” Wolff said.
He said that it is also important for relocation buyers to understand that Houston is still a seller’s market, and that the oil prices haven’t affected the real estate market to the degree that people might expect.
“Houston has still not increased our inventory to a level that puts us out of a seller’s market, and as much as people think hard times have hit Houston, we haven’t seen it in the real estate market,” explained Wolff.
He added that there haven’t been drastic reductions in property values, and that the Houston market has fared very well in light of oil prices and job losses.
While there have been significant job losses within the oil industry, Wolff reminded that there have also been significant increases in jobs related to other business sectors in Houston, such as the health care and chemical sectors.
At the same time, the availability of property inventory has increased in the Houston area, creating additionally opportunities for home buyers currently in the marketplace.
This means that they have more properties to choose from, and that they are less likely to enter into bidding wars and other such situations, which can lead to buyer fatigue and frustration.