When is the best time to buy?
Is there a best time? Does it matter? Turns out, it’s a complicated question, but some interesting positions can be taken. In short, it’s always the right time…and always the not right time. For this review, let’s focus on residential, single family homes. There are different results when looking at multi-family properties, commercial, farm land, etc.
In residential new home sales and re-sales, we often see that Spring brings a bustling of real estate activity. March through June yields our most active residential and building lot market while the Winter season of November through February often works wonders for commercial and investment properties. Of course, there are many, many exceptions to these broad statements.
According to an article at TheRedPin.com, the cheapest day of the year to buy a house is sometime in January…or maybe February. You can read more here, but overall, the idea is that the February market may have a higher proportion of sellers left from the previous year who chose to stay on the market over the winter months because they have a time motivator to sell (think separations, relocations, etc). TheRedPin.com analyzed five years’ worth of sales prices in the Toronto housing market and found there has been a whopping $60,000 difference in the average selling price of a Toronto house in January versus in May. This is a little under 10% of the average selling residential selling price in Toronto when considering all single family housing types including condos. In the Ottawa market, the average selling price is floating just under $400,000. In the rural areas, it is a little less.
It’s worthwhile noting that the Winter months usually have less housing inventory available on the market, but there are also less buyers to compete with. Another consideration is to wonder whether any savings will offset the lack of visible yard when you buy in the Winter in Canada. What will the Spring thaw bring? A lumpy yard or maybe spots of no grass or perhaps a wet basement?
Another analysis of purchases and sales in different times of year performed by RealtyTrac out of the United States (note for Canadians – no winter or snow to contend with in making the analysis! – The Oldford Team thinks this could be a significant game changer on the data!). RealtyTrac reviewed more than 32 million sales of single family homes and condos since 2000 and found that the month where buyers have gotten the best deal on average is October. Of the 2.7 million sales closed in October over 15 years, the average sales price was 2.6 percent below the average estimated full market value at the time of sale.
“The start of the school year and the holidays influence our buyer decisions and serve as a strategic indicator of the most advantageous times for buyers to land their lowest-priced deal. Due to less buyer competition, October and November typically provide a dip in the Southern California real estate activity cycle,” said Mark Hughes, chief operating officer with First Team Real Estate, covering the Southern California market where the best day to buy at a discount is October 1st.
Following October as best months to buy were February, July, December and January — all fall or winter months except for July, which was a surprise given that conventional wisdom would suggest that is a good time to sell but not necessarily to buy to buy at a bargain price.
“As we enter the rainy winter months in Seattle, things usually start to slow down. But it’s not just inclement weather; the days also get significantly shorter, making it challenging for sellers to present their homes in the best possible light,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market where the best day to buy at a discount is April 1st. “We often advise our sellers to take their homes off the market until spring. On the flip side, we tell our buyers that this can be a very opportune time for them because sellers, who keep their homes on the market through the holidays, are often very motivated to sell. There are also typically fewer buyers in the marketplace, so there is less competition for homes.”
The worst month of the year to close on the purchase of a home is April, when buyers over the last 15 years have purchased at an average premium of 1.2 percent above estimated market value at the time of sale. On the other hand, that makes April the best month for sellers.
RealtyTrac analyzed the best day of the year to buy to get the biggest discount in major metro areas across the country, and found that while in most markets the best day to buy is in the fall or winter months, there are some exceptions. Out of 109 metro areas analyzed, 37 had their best day to buy in the fall months of September, October and November, and 44 had their best day to buy in the winter months of December, January and February.
All of this analysis and information is a great help and reinforcement of anecdotal stories in real estate, but always remember, the best day to buy and all real estate information varies by market! Also, these percent increase/decreases can be significant or not depending on the price range you are buying in.
Want to talk more? Call the Oldford Team. Helping you is what we do!
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