Understanding Real Estate Seasonality
Residential real estate has clear seasonal cycles. There are months when demand and prices are higher and months when demand and prices are lower. These cyclical trends are driven mostly by the timing of the school year and the winter holiday season. So, while the true best time to buy a home is when a potential homeowner is financially and psychologically ready, seasonal timing can affect buyers’ choices and costs.
What is the Best Time of Year to Buy a House?
Blowing Hot and Cold
The seasonal housing cycle is easy to describe: when the weather starts to heat up, so does the market. There are more shoppers in the spring and summer. Home buyers with children generally want to buy in the summer between semesters and get settled before school starts. For all homebuyers, it’s simply more enjoyable to visit open houses and tour neighborhoods when the weather is nice.
Sellers know that April to June are the months when buyers are plentiful, so more houses go on the market at this time. They are also priced accordingly. When the demand is high, sellers feel confident they can get more money for their homes. Bidding wars are stressful for buyers but an opportunity for sellers.
The market slows down considerably as the holidays approach. People feel pressured enough without adding house shopping to their holiday to-do list. Plus, chillier weather makes the experience less inviting. Studies have shown that the single best day to close on a home to get the best price is December 26. Clearly, almost no one wants to be buying a house on the day after Christmas. The slowdown continues into January and February.
Sellers whose houses have been on the market since spring or summer are ready to readjust their prices by the winter months. Sellers who first put their house on the market during the off-season generally do so because they are under time pressure to sell and are motivated to offer deals. These factors drive prices down and create negotiating power for the shoppers who are in the market.
Although these cycles occur to some degree throughout the country, the differences in demand and pricing are more pronounced in locations where the differences in seasonal temperatures are also greatest. Florida buyers won’t see large differences. Buyers in New York and throughout the Northeast, however, are likely to see significant fluctuations in housing availability and pricing.
Which Season Is Best for Me?
That’s what the cycle looks like, but what is the best time of year for a particular homebuyer? That depends on their priorities:
- For the largest selection (and highest prices), buy in the spring and early summer.
- For the best pricing (and lowest inventory), shop in the fall and winter.
- For the best balance between choice and price, consider late summer and early fall.
Should I Wait to Buy a House?
Whether it’s worth waiting for the “perfect” season to buy depends both on local conditions and homebuyers’ individual situations. In other words, how much difference is there between on-season and off-season selection and prices? That will depend on the specific neighborhood where buyers are looking, as well as the general region. Higher priced neighborhoods tend to experience greater fluctuations. Also, what are the consequences of waiting for the right time? If renewing a lease for a short period is going to be very expensive, for example, that could outweigh the savings from a delay.
Note that fluctuations in the larger economy can interrupt or even reverse the usual rhythms of the real estate market. Major events like wars, recessions, or pandemics have much stronger effects on volume and prices than seasonal cycles. Homebuyers need to be aware of the bigger picture that can influence their local market.
What If I Have to Buy a House in the ‘Off-Season’?
For some, buying a house can’t wait. For those forced to buy during the expensive real estate season, here are some tips for securing a better deal:
- Shop at either end of the week, not in the middle. Studies show that buyers get the best deals on Mondays and Fridays.
- Use a real estate agent who knows the area very well to locate deals.
- Look for a seller who is very motivated, such as someone who needs to move quickly for a new job.
- Consider a fixer-upper to reduce upfront costs.
- Ask the seller to pay closing costs instead of negotiating for a lower sale price; psychologically, it’s an easier sell because homeowners don’t like to think they are being offered too little for their beloved home.
- Find a great lender and the right mortgage to keep your monthly bills in check.
Buying Your House with Bethpage
When you’re ready to buy, Bethpage is ready to help you through the process. We have professionals to guide and advise you on all the mortgage choices you’ll need to make from your type of loan to its repayment time frame. We’ll keep you informed throughout the loan process so you feel comfortable every step of the way.
Start the process before you shop by getting pre-qualified. A pre-qualification letter can convince home sellers that your offer is serious. Start the pre-qualification process online or contact our mortgage experts.
Bethpage Federal Credit Union operates more than 60 branches and shared service centers on Long Island. So when you find a great home, stop by the branch nearest you or apply online for a mortgage that will help make now the best time to buy.