September 17, 2017

How do the seasons affect local home sales, prices?


Did you hear the news?

If you wait to buy a home in the fall, you'll get a better price and face less competition than shopping during the peak spring and summer seasons. Some of that is true, but don't bank on all of it.

2017 NETAR President


The truth is every real estate transaction has a different set of priorities based on the needs and resources of each buyer or seller. But there are seasonal patterns. And they are not as dramatic as what's often touted by pundits. Of course, the final details rely on your local market because sales volumes and prices can vary widely from community-to-community.  

Here’s how the seasonal share of sales stacked up in an analysis of 41,058 closings in the 11-county region monitored by the Northeast Tennessee Association of Realtors®' Trends Report from 2008 through 2016.

Spring – 25.8%

Summer – 29.4%.

Fall – 25.2% 

Winter - 19.6%

Since the study is based on closing dates, and the typical closing is 34 to 48 days after an offer is accepted, they don't always happen in the same season as when a deal goes under contract. For example, summer has more closings than spring, but a good part of late spring sales close in the early summer months.

And when you look at closing patterns for the years after 2012 you’ll see a healthy increase from previous years. The market's recovery from the recession has a lot to do with that.  

The real estate data group Redfin did a nationwide analysis and found that during the past five years prices have increased by an average of 3% month-over-month in the spring and ticked down by about 1% each month during the fall. And a RealtyTrac's analysis of more than 32 million home sales over 15 years found that on average, October buyers paid 2.6% below estimated market value.

Interesting stuff for those who like to look at national-level housing data. But what does it look like on the local level?

During the past seven years, the local average price was 2.9% lower in the fall than the summer and 1.9% lower than the spring average.

Simply put, there is not a significant seasonal difference in average prices.  For example:  In July, the year-to-date local average sales price was $165,832. If we assume that price would be 3% lower in the fall, it's a savings of just under $5,000. And if you assume a 10% down payment and the current best available 30-year fixed rate mortgage the difference in the monthly mortgage payment would be a little over $20.

What the studies really say is the best time to buy or sell is when market conditions are right for the individual considering the transaction. Motivated sellers and buyers need be informed on supply and demand in their neighborhoods instead of relying on seasonal patterns or media reports about sales and prices on the national level.

The biggest decision both sellers and buyers can make right now is to stop trying to time the market for little or no real advantage and partner with a professional Realtor® to find the best option available to them.

While it’s true that the market is more competitive in the spring and summer, there are other variables to consider.

The bottom line: Today’s market realities have moved beyond yesteryear’s seasonal preferences. Buyers and sellers making decisions based on national reports in the popular press put themselves in the same class as stock investors trying to time the market. More often than not they either pay too much or leave money on the table. The exceptions are those who partner with a local Realtor® who specializes in local market conditions, has access to public and private market data resources and the all-important local market knowledge.

 Eric Kistner is the 2017 president of the Northeast Tennessee Association of Realtors. The real estate education and trade group is the voice of real estate for the Tri-Cities and has over 1,200 local Realtor® members and almost 100 affiliates.