01 Dec Best Time to Buy and Sell Real Estate
Contrary to popular belief, the Spring Market is not always the best time to sell and the Holiday Market is not necessarily the best time to buy.
The Best Time to Buy or Sell: timing the market has more to do with trends than it has to do with seasons.
Seemingly handed down from the days of yore, the public perception, REALTORS® in the trenches, and just about everybody in the real estate industry believe that the Holiday Market is the best time to purchase a home and the Spring Market is the best to sell a home. Unfortunately, the data does not quite support this expectation.
Since 1990, the best time of the year in terms of the highest month over month change in the median sales price for detached homes is actually the month of March, occurring 28% of the time.Remember, these are closed sales; thus, they are truly a reflection of homes that were originally placed into pending status in January and February, not quite the Spring Market. The second best month was May, 20% of the time. February was third at 16%. February is a reflection of December and January, the Holiday Market, typically the slowest time of the year for sales.
In terms of the lowest expected market time of the year, for the past decade, it too has been all over the board. The lower the expected market time, the better it is for sellers. 40% occurred in March and April, smack dab in the middle of the Spring Market. Yet, 30% occurred in February, not quite the Spring Market. 20% occurred in September, a reflection of the tail end of the Summer Market. In 2012, November ended up being the best time of the year based upon the expected market time.
We have officially entered the Holiday Market with Thanksgiving this week, and the expected market time has been dropping, an indicator that it is getting better for sellers and not buyers. It has dropped from 3.3 months, or 100 days, in September to 2.9 months, or 87 days, today. If this was really the best time to be a buyer, the expected market time would be on the rise and not dropping.
After extensive research, it turns out that “timing the market” had more to do with market trends than it had to do with the time of the year.
Here’s what is really going on which illustrates why attempting to time the market is nothing more than a waste of time. If you chat with REALTORS® in the trenches, they will tell you that they all know of sellers who are waiting to sell until the Spring Market. Yes, there are a lot more buyers during the spring, but there are a lot more sellers in the spring as well.
During the Summer Market, there are slightly fewer buyers looking to purchase with the distractions of vacationing and family fun, but, for the same reasons, there are slightly fewer sellers coming on the market.
During the Autumn Market, with school starting, there are fewer buyers entering the fray and demand drops. Knowing that the Spring and Summer Markets are in the rear view mirror and that school is in session, fewer sellers come on the market.
Also, many sellers opt to throw in the towel during this time of year; thus, the active inventory drops. When both supply and demand drops at the same time, the expected market time does not change much from month to month.
Finally, there are a lot fewer buyers active in the market during the holidays and competition drops. At the same time, fewer homeowners look to sell and even more sellers pull their homes off the market; as a result, the inventory drops substantially.
The bottom line: when there are more buyers, there are more sellers; and, when there are fewer buyers, there are fewer sellers.
During the Spring Market, sellers may encounter more buyer activity, but there will be more competing sellers as well. During the holidays, buyers may come across less competition, but there will be a lot fewer homes for them to look at as well.
The current trend is very little real appreciation from month to month. As a seller, waiting for the Spring Market will prove to be fruitless. With the expected market time dropping, buyers cannot anticipate that they will find a “deal” just because we are entering the holidays.
Instead, Buyers & Sellers should cash in on today’s historical rates and not waste time looking to pick the “best time of the year to sell”. As a result of the low rates, right now is a great time to buy (because payments are low) and now is a great time to sell because more buyers can afford your home (because payments are low).