Seasonal Difference in Real Estate

How Much Difference Do The Seasons Really Have On Home Sales?

A question that almost always comes up during real estate discussions is: “When is the best time to sell, or buy a home.” Opinions vary because every transaction has a different set of priorities based on the needs and resources of each buyer or seller; however, there are patterns that shed some light on the question that go beyond often quoted common knowledge.

The topic is currently in vogue because some economists are pointing out that fall is the best time buy or sell. 

Here’s how the seasons stacked up in an analysis of 17,714 Tri-Cities closings.
Spring - 25%

Summer - 29%

Fall - 25%

Winter  - 20%

Since the study is based on closing dates, and the typical closing during the study period was 30 to 45 days, the seasonal mix is slightly skewed. What the study does affirm is spring and summer are the top market seasons. But not by much.

And when you look at closing patterns for August, September and October you’ll see a healthy increase from previous years. The region’s demographics account for some of that shift since an older population includes more empty nesters. There has also been an increase in homes bought by individuals, instead of families that seem to time relocations with the school calendar.

The real estate data group Redfin did a similar nationwide analysis and found that just as buyer demand follows a seasonal pattern, so do home prices.  Nela Richardson, Redfin’s chief economist, reported that “over the past five years prices have increased by an average of 3% month-over-month in the spring and then dropped by about 1% each month during the fall.”

During the past five years local average prices increased 2.2% month-over-month in the spring, then up to 2.6% in the summer then dropped by 1.5% in the fall.

Simply put, there’s no huge seasonal average sales price advantage or disadvantage. The local and national studies show motivated sellers and buyers need be informed on demand and recent sale prices in their neighborhoods instead of relying on seasonal patterns or non-local media reports.

The biggest decision they can take right now is to stop procrastinating and get started.

While it’s true that the market is more focused in the spring and summer, things like mortgage rate increases or decreases and consumer confidence have dramatic effects regardless of the season. That means no matter how hot a market is - and the local market is still in record sales territory - there will be more price reductions and more inventory staying on the market longer September through December. Currently a little more than one-in-three homes are reduced price listings.  According to current Realtor.com data, the only markets where average sales prices are at, or a little above, the asking price is Johnson City and Greeneville.

The takeaway is buyers should pay close attention to the comps their agent develops for them and be ready with the right offer.  Sellers face the same reality.  One of the biggest stumbling blocks is over estimated home value instead of setting a sweet spot asking price.  The sweet spot varies from neighborhood-to-neighborhood. But the rule of thumb is half way between the average asking price and the average sales price of comparable properties.

The bottom line: Today’s market realities have moved beyond previous year’s seasonal preferences and elevated the value of real-time local market information.  Buyers and sellers making decisions based on national reports in the popular press put themselves in the same class as stock investors who try to time the market. More often than not they either pay too much or leave money on the table.  The exceptions to this rule in the housing market are those who partner with a Town & Country Realtor® who specializes in local market conditions, has access to public and private market data resources and the all-important local market knowledge.