When Is The Best Time to Buy or Sell?

Is one of the most frequently asked questions in real estate.

While we are certain there are many answers to this question, we find there are two to focus on: Statistical & Philosophical.

STATISTICAL APPROACH

We looked back over the last decade for the market trends of buyer and seller activity to look for how market balance shifts through the year.

First Quarter - Seller Favored
Buyer activity grows nearly 600% faster than Seller activity during the first quarter of the year, largely due how quickly Buyers ready themselves for purchasing after taking a holiday break.

Second Quarter - Balanced

Growth of Buyer and Seller activity is most balanced in the second quarter with Sellers growing about 25% faster than Buyers.

Third Quarter - Buyer Favored

Growth of new Sellers peaks in the third quarter while Buyers tend to mildly decline throughout the remainder of the year which creates a more Buyer favored market.

Fourth Quarter - Balanced
Both Buyer and Seller activity rapidly diminish in the final quarter of the year which tends to create a more balanced market which mildly favors Buyers.

Buyer Conditions Improve Throughout The Year But Prices May Not

This data is a bit deceptive though as it makes it seem as if you might get a better price for the similar home in August than you would in April, and in our experience we haven’t found this to be true. Generally, prices for very comparable homes increase month to month similar to the monthly share of the annual appreciation (1% for a year where annual appreciation is 12%). Prices don’t really fall for comparable homes unless the broader market is falling outside of the seasonal norms.

Many people point to the median home price cycle as evidence of rising and falling prices which mean the third quarter is the best time to buy. Yes, it’s quite common to see median home prices increase dramatically in February through June, and then retreat from July to October. Here’s a view of 16 years of monthly median price changes… keep in mind the average annual price increase during the last 15 years is 5.4%.

However, this has more to do with higher priced homes tending to dominate the market in the months of April to August where we see their share of the market rise from 25% to 39% and thus they bring the median sales price higher for these months.

Depending on their market, as the year progresses conditions for Buyers may improve with more choices available and fewer buyers competing over each listing so they’ll have more flexibility on their offer terms and approach. However, they may also find they are left with fewer choices of ‘great’ listings and needing to pick over the “clearance rack” of homes with less desirable characteristics & pricing.

Statistical Conclusion

Generally, the statistically best time to be a seller is during the first quarter of the year, and the best time to be a buyer is the second and third quarters.

Philosophical

Our home is much more than just an investment or statistic… it is the center of the universe for most people, and as such statistics are not the most important factor to the timing of when we buy or sell a home. The following are far more important factors for most of our clients:

Convenience - moving is hard work, and often it needs to be scheduled around school & work schedules, weather windows for home prep work, lease expirations and other factors which may make certain times of year preferable to those which are statistically ideal.

Ideal Home Availability - since all homes are unique, the appearance of the ‘ideal’ home (or the improved probability of ideal homes) largely drives most buyers and sellers timing of their transactions.

Market Economics - timing economic trends such as mortgage interest rates, tax refunds, promotions and pay raises play a large role in their market timing.

Philosophical Conclusion

The philosophical factors often vastly outweigh the statistical factors for market timing for Buyers and Sellers since they have a much bigger impact on finding the right home and a quality of life than the marginal gains seen by optimal statistical timing.

What’s Next?

If you are thinking about buying or selling, you should look into both the statistical and philosophical factors of your market when choosing the best time for you to take action. We can help you do this by providing the stats of your market, as well as helping guide you through the right questions to see what the ideal ‘philosophical’ time is for you to take action.