Have you wondered when would be the best time to buy a house? If you can time it perfectly, taking into consideration supply and demand, when would be the ideal time to avoid the heavy competition but still have enough inventory to choose from? The real estate market is cyclical; it goes by our four seasons and correlates with the school year. Before I answer the question of “when is the best time to buy a home,” let’s explore each of these seasons with the real estate market, and to help you come to a conclusion.
- Summer. It may be commonly believed that summer is a good time to sell. Summer seems to be the perfect time to move while the kids are out of school. The family gets a couple of months to pack, move, unpack, and get settled before the new school year begins in the fall. But families are also busy during the summer. They fill their weekends with activities like camping and going to the beach, and going away for long vacations. Going to open houses gets in the way of doing these fun-filled activities. Generally, supply and demand of homes is strong. If you are a family with school-attending children, then summer may be the best time for you. Summer offers no interruption from school and allows time for the kids to get settled before schools starts again. Prices may be at their highest in the summer months, due to higher demand for homes, which can create bidding wars.
- Fall. The year is beginning to come to a close. Stores are preparing for the holiday season, and we begin to see items for sale for Halloween, Thanksgiving and Christmas all at once. Kids have returned to school, and families seem to be settling in for another school year. For some sellers, if the house has not sold by now, they might take it off the market and try again next year. Some people may not like to have their holidays disrupted with prospective buyers trekking through their home, and therefore choose not to have their house up for sale around this time of the year. Supply of homes begins to go down, and demand also goes down. Fall is not a bad time to buy, because you do have less competition. However, a seller who is selling in the fall will be marketing their home based on sales value from the summer, which is peak sales time.
- Winter. This is busy time with holidays. People travel to visit family around this time of the year. There are enough chores on the holiday list that real estate is not first in mind for most people. The weather also plays a factor. When it’s rainy and cold, people want to stay in and not drive around town, getting in and out of the car to look at houses. Supply and demand of homes is the lowest of the year in the winter. If you don’t have children children, or even if you do and do not mind the interruption of moving your children mid-way through the school year, then I suggest buying in the winter. Although there is less supply of homes in these months, there is also less demand. You will not be competing with as many buyers in the winter, as compared with the summer and fall. In the winter, sellers tend to be more negotiable. Because there is a smaller buyer pool, sellers may not be as selective. You may be able to negotiate better with a seller who has to sell in the winter because he is relocating for work, versus a seller who chooses to sell in the spring and summer because that is prime time.
- Spring. You will notice that your neighbors are working in their garden and sprucing up their front yard with colors after months of dark, rainy days. Besides the annuals that are popping up on the neighborhood front lawns, real estate signs are also popping up. It is often said in the Realtor community that something magical happens after Super Bowl weekend in February.… people want to sell their homes. Buyers also seem to waken from hibernation, and more and more flock to open houses on the weekends. Supply of homes increases, and demand is just starting to pickup in spring. Spring is an ideal time to buy, because you have more supply to choose from. The market is just starting to heat up in spring and hasn’t reached its summer peak. Prices tend to be lower because you have less competition compared to summer. While winter had the least amount of homes on the market and lowest competition, spring offers a little more inventory to choose from, but not the heavy competition in the summer. Spring value comes off of winter sales value, which is lower because the demand for homes is the lowest in the winter.
When is the best time to buy? The answer varies depending on the type of buyer you are. Ultimately, timing when you buy your next house is a personal decision, and you will determine when that time is. One good rule of thumb to remember is that home price is a reflection of what a seller agrees to sell and what a buyer agrees to buy. When there is competition, it tends to drive prices up. Hopefully this has given you some fruit for thought, so that you can make an informed decision the next time you buy a home.
*Average Sales Price by quarter in 2010 for Single Family Homes in Menlo Park, Palo Alto, Mountain View.
|Average Sales Price in 2010|
|Q1 – Menlo Park||1,181,330|
|Q2 – Menlo Park||1,351,570|
|Q3 – Menlo Park||1,367,116|
|Q4 – Menlo Park||1,288,323|
|Q1 – Palo Alto||1,564,192|
|Q2 – Palo Alto||1,681,872|
|Q3 – Palo Alto||1,555,295|
|Q4 – Palo Alto||1,406,402|
|Q1 – Mountain View||906,378|
|Q2 – Mountain View||965,718|
|Q3 – Mountain View||964,293|
|Q4 – Mountain View||972,11|
*Data taken from mlslistings.com.
Rosa Hellen is a realtor at Intero Real Estate in Menlo Park. She teaches a real estate seminar at Intero Menlo Park. If you would like to attend, please email her at firstname.lastname@example.org.
Image provided by Melissa Miller & Vinnie Fernandez, PAMP’s Lead Photographers and co-owners of C’est Jolie Photography