Most people believe that spring is the best time to buy or sell a home. But is it or isn't it? As with most events in life - "that depends". If you want to move while the children are out of school so that you can enroll them in a new school at the beginning of the school year, beginning your home search in late spring can make good sense. Or you may have little choice in the matter if your job transfers you to another city. Otherwise, you may want to reconsider when you begin house hunting
The spring real estate market is affected by many variables. One of the variables that least affects the market is the date on the calendar. According to the calendar, the 2016 spring equinox occurred on March 20. But don't tell that to real estate agents. In the warmer and sunnier southern climates, springtime buyers and sellers begin showing up in larger numbers in January. It has more to do with the end of the holiday season than a date on the calendar.
For those in colder northern climates, it's more dependent on weather patterns. If the Philadelphia ground hog, Punxsutawney Phil, doesn't see his shadow on ground hog's day and accurately predicts the end of winter, real estate activity typically begins ramping up as buyers become excited to throw off the winter cabin fever. At the same time, sellers find the improving weather a good time to spruce up the yard from winter debris. Generally, many real estate professionals consider presidents day weekend, the beginning of the spring selling season.
That means we are already late in the spring real estate season. But does that really matter if you are a buyer?
Yes, there are two primary differences this spring but generally, activities have followed the spring markets of the past. The main aberrations have been a larger influx of homes coming onto the market (more inventory). But that hasn't translated into substantially more sales. Many sellers wanted to take advantage of the ongoing upward swing in prices. Many or most listed their homes for sale at or above market prices. Additionally, these sellers hoped that a hot spring selling season would bring bidding wars that further drove up prices. This did become reality in select markets that have consistently seen major upward trends in home prices regardless of the season.
Reality is that in smaller and less affluent markets this trend did not materialize. Potential buyers saw the upswing in prices and retreated from the market. Some areas this spring saw 30 or 40 people turning out for open houses. However, most of these potential buyers were actually tire-kickers. Once they saw that the increased inventory did not result in lower sales prices, these people retreated back to their rental units. Keep in mind that the biggest demographic of buyers are the Millennials. People under age 35 that only recently have been able to start meaningful careers following the depression. They simply don't have the savings and the financial wherewithal to make high down payments and afford the high mortgages (even at today's reasonable interest rates).
Spring is not necessarily the best time of the year for homebuyers. For the reasons listed above, the increase in inventory is accompanied by increased prices and more competition. RealtyTrac examined 32 million home and condo sales over the past 15 years. These findings showed that buyers that waited until October saw a 2.6 percent decrease in prices. The study also found that April sales averaged a 1.2 percent increase in prices compared to fair market value.
What some buyers see as a draw back to autumn buying is that inventory decreases as listing periods end. While there is less inventory available, there is also less competition from other buyers. Sellers that relist homes in the fall are more motivated to complete the sale and are more flexible on price and terms.
Even with less inventory on the market in the fall, the important thing to remember is it only takes one house for you to fall in love with and that can come on the market at any time. You may spend more time looking for your ideal house during the slower markets but you are more likely to save tens of thousands on the sales price and receive better terms on the sale.
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