May 24, 2017 by Lisa Brammer
Spring is in the air. Walking down the street, you can hear the ubiquitous buzz of lawn mowers in the distance, smell the sweet fragrance of fresh cut grass, and see beautiful flowers blooming everywhere. Do you know what else you see popping up in yards this time of year? For sale signs.
Spring marks the beginning of the busiest home selling and buying season in most areas across the United States. Common sense might tell you the best time to put your house on the market is during this prime real estate season that begins in the spring and lasts through the summer. But is it really the best time to buy? The answer to this question begins with another question? What is most important to you: price, a large selection, or convenience?
If you have school-age kids convenience is probably extremely important to you which means you’ll most likely be buying with the masses—in the summer—so you will be all moved in and settled before the kids start school. If this is the case, it’s going to be one of those ‘I’ve got some good news and some bad news’ situations. The good news is that with all of the homes on the market you will have a lot of houses to choose from. The bad news? You are going to pay more for it.
I know this sounds counter-intuitive since typically when inventory is up, prices tend to go down. But in real estate the opposite is true. NerdWallet conducted a study last fall that analyzed the past two years’ worth of listings and sales in the 50 most populous metro areas in the U.S. using data from Realtor.com. According to the article I read, what they found was that the sale price—the amount buyers actually paid—was highest during the peak summer season. House inventory was also the highest during peak season. And since a lot of people are wanting to buy during the summer, competition was the highest too, which explains the high sale price.
Interestingly, after the summer season is over real estate listing prices really don’t fall that much—less than a half of one percent, but actual sale prices, the amount buyers paid, dropped almost 3 percent. Using average pricing in the 50 metro areas, that’s a savings of $8300 for buyers who waited until fall (September – November) to purchase their homes. And if you want to save even more money, wait until winter. Homes bought in January or February had the cheapest sales price and cost almost 8.5 percent less on average than houses sold in the summer (June-August).
“If your circumstances give you the freedom to be able to choose the best time to look to sign a contract on a new home, there’s no question that the market dynamics favor you the most to do that in the dead of winter, ideally in January or February, right before the activity starts to heat up,” says Jonathan Smoke, chief economist for Realtor.com.
Right now the real estate market is hot. Houses are looking their best, inventory is abundant, and if you play it right, you can close on your new property and move in while the kids are off on summer break. But if a good price is what you are looking for, hold tight this is not the best time for you to buy.
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