You’ve decided that it’s finally time to purchase a new home. But it’s December, and you live somewhere cold. The thought of trudging through snow to look at houses doesn’t seem appealing. You determine that it’s best to wait until spring to start looking for a new home.
But wait; although spring and summer are when housing inventory is typically at its peak, they might not be the best seasons in which to actually buy a home. With more homes on the market comes more competition among buyers, as well as sellers who are more likely to hold firm on their prices.
October and December may be the best months to buy because they’re when sellers typically receive the lowest premiums, according to ATTOM Data Solutions, a national property and real estate data firm. A lower premium for sellers means that buyers get a better bargain. That said, location matters. December is the best month for sellers in sunny Panama City, Florida, who saw an average 2.5% premium between 2011 and 2017.
If you can afford to be flexible — and maybe a little less picky — purchasing a home during the holidays could be the right move for you. Here’s everything you need to know about how seasonality affects buying a home:
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1. There’s less competition
ATTOM reports that single-family homes and condos sold at a faster pace in June, July and August during the past six years. The fewest sales occurred in January and February. Here’s a more detailed breakdown:
If you can wait until off-peak winter months, “you’re not competing as much with multiple offers in this market,” said Samantha Dardano, a real estate broker with Dardano Properties, Inc., in Colorado. “And you’re not competing as much with other buyers during that time.”
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2. Sellers are more motivated
If a seller puts his or her home on the market during an off-peak season, it could be because of a time-sensitive issue, like a job relocation. “Some people with corporate relocations and things like that — they have no choice but to sell their house at Christmas time if they need to be somewhere by the beginning of the year,” said Melissa Richards, a real estate broker with LIV Sotheby’s International Realty in Colorado.
Because sellers often need to get their home sold quickly if they list it during an off-peak time, buyers could be positioned to get a better deal.
“They’ll probably have a particular reason for wanting to sell at that time of year,” said Tendayi Kapfidze, chief economist at LendingTree. “So I think there are potential advantages there.”
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3. You don’t have children, or you don’t mind moving them during the school year
Because many families like to move in the summer, before a new school year begins, buyers without school-age children can take advantage of the off-peak months after school starts — September through February — to secure a better deal. Alternatively, parents with children who don’t mind moving during winter break could wait until this time to buy a home.
Richards said that the real estate markets begin to retract after the Fourth of July, at least in Colorado.
“You can sometimes take advantage of that kind of retraction phase if you’re willing to get your kids in school maybe a couple of weeks after school starts,” she said.
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4. It’ll be easier to negotiate
With less competition comes more negotiation power for buyers. Richards said that sellers have to be prepared for less negotiation power if they put their house on the market during an off-peak season like the holidays.
“The perception is going to be that [the buyer is] going to be getting a better deal because you have to sell during this off-season,” she said.
Indeed, single-family homes and condos sold between 2011 and 2016 fetched a higher median sale price in warmer months, according to ATTOM. The lowest price? ATTOM can pinpoint, to the day, the best time of year to buy a home: February 7. So, if you miss your mark in December or January, just know that February has low prices, too.
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5. You live in a cold city
Because real estate seasonality primarily affects colder cities, you might secure an even better offer on a home if you purchase during the holidays in a city where it’s likely to be cold and snowy outside.
“There is a seasonality to buying and selling,” Richards said. “It will vary depending on where you are in the country. For example, here in Colorado, nobody really likes to move in the winter because of the snow. So that’s probably our lull.”
Seasonality is present in warmer areas, but it’s not as evident as it is in colder cities, Kapfidze added. “In places where there’s greater variances in the weather, the seasonality is greater,” he said. “So in the Northeast, you’d see more seasonality that you’d see in, say, the South. But even in the South, there’s some seasonality.”
In Chicago, for example, the median home sale price was $225,000 in the second and third quarters of 2017. It was just just $193,000 in the first quarter and $205,000 in the fourth, according to data from ATTOM. The Cleveland metro area saw a similar trend, with a median home sale price of $114,000 in the first quarter of 2017, $133,000 in the second quarter, $135,000 in the third and $128,000 in the fourth, according ATTOM.
ATTOM notes that hot cities, such as Phoenix and Miami, don’t follow the typical seasonality trend in home buying. In fact, their data showed that the median home sale prices in Phoenix in 2017 were $223,000 in the first quarter, $234,000 in the second, $235,000 in the third and $238,000 in the fourth.
Dardano said that, overall, she believes the weather has a significant impact on homebuying behavior.
“I think the weather plays a lot on the attitude of buyers,” she said. “It’s always been my opinion that buyers and sellers are more active on good weather days. You don’t see as much activity when it’s not.”
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6. You’re not picky about what you want in a home, or you’re searching for a starter home
Although there is less competition for homes during off-peak months like December, January and February, that also means that there are fewer homes for sale.
“There’s less inventory, so there’s less choice for a buyer,” Kapfidze said. “The buyer might be offering less because they’re compromising on something, because they can’t find their ideal property or because there’s less inventory.”
If you’re not super picky about what you want in a home or are purchasing a starter home that you might not live in five years down the road, purchasing during the off-season may yield a better deal.
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The best time to buy a house throughout the year
Although it depends on each individual housing market, the best time to purchase a home throughout the year is typically from late August until March. During this time, few homes are on the market and fewer buyers are shopping around.
“If you’re looking to buy and you don’t want to deal with the feeding frenzy, you’re limited on funds or you can’t compete because you can’t cover appraisal costs or you can’t bid up a property, if you can be patient and move during that off-season, it definitely will benefit you as a buyer,” Richards said.
Dardano added that one time in particular that could be ideal for purchasing a home is from the middle or end of August through the end of the year. In many areas — including Colorado — this is the time period right after school begins.
“There’s a little bit of lull in activity then,” she said. “So I think a buyer could essentially get a better deal as far as price on their offer from that time pretty much through the end of the year.”
And with home prices appreciating in general, there’s no reason to wait, assuming you’re ready for home ownership. In fact, median existing home prices in June were 5.2% higher than the same period last year, according to the National Association of Realtors. June marked the 76th straight month of year-over-year gains.
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Do your due diligence
Kapfidze said that he can’t stress the importance of a buyer doing his or her due diligence when home shopping enough.
“Try to understand the seasonality of your local market,” he said. “If you look at the data — either the home sales data or the house price data — for your local market, you can see the seasonality in the data pretty clearly.”
This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.
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