Friday, October 19, 2018 / by John McLaughlin
We get this question all the time from potential clients of ours: "When really is the best time to buy or sell?" When considering the best time to buy real estate, it starts with deciding why you need/want to buy a home in the first place. Do you have a growing family? Are you tired of paying rent? Are you looking for an investment opportunity? Are you relocating for work or to be closer to family? Once you decide the reason to buy, the rest becomes much simpler.
The short answer to, "when is the best time to buy?," is when there are the fewest numbers of buyers shopping for homes. As a home buyer, the last thing you want is competition from additional potential buyers. Simple economics taught us that more competition = more demand = a higher price for you.
As of 2018, Millennial/Gen Y (mid-30s) and Gen X (late 30s to early 50s) working class families are the largest demographic that buys homes at 62% of buyers. They are more likely to revolve their move time around the school year ending. Why? Because there's only so much you can do during the day and the family routine of school/work/activities takes precedence. We start to see the most buyer activity kick in around around March, April, and May for this reason. It leaves enough time to schedule moving while adjusting to the new home.
So, let's then ask the next question: "When are there fewer numbers of Millennial/Gen Y (mid-30s) and Gen X (late 30s to early 50s) working class families looking to buy a home?"
Answer: During the school year.
In a hot seller's market, you need to stay on top of new listings that match your criteria or they will be snatched up quickly by someone else. Juggling careers on top of getting kids get to school on time, then after school activities, while also staying on top of the hot new listing in the preferred neighborhood you want can be pretty unpractical.
Most sellers that want to sell think there's fewer buyers looking in the Fall/Winter, and instead hold off going on the market until Spring to try and capture a greater buyer pool. In order to get the biggest premium in value, Sellers think, they'll wait until the Spring.
This leads us to share with savvy home buyers that want the best deal - shop for homes when there's fewer buyers looking. When is this? When school is in session, and around the holidays.
Most markets are considered "seller's markets" today, meaning, there's fewer homes available on the market than there are buyers looking. In a real world seller's market scenario, a properly priced and well-conditioned home could result in you paying list price, even possibly above list price, if you're not prepared and educated on your market. While rates are reasonably low and prices are starting to see new record highs, the best time to buy from an economics standpoint is sooner rather than later. As rates continue increase, the affordability factor in the size of home you'd like will decrease if you wait too long. In fact, for every 1% increase in your rate the amount of purchase power you have will decrease by roughly 10%. Meaning, if you can afford a $400k house at 4%, if rates jump to 5% you'd only be able to afford a $360k house.
Curious to learn more about planning for homeownership? Click here download our complimentary Fall 2018 Buyer Guide. Our team of specialists are available any time you have questions, need guidance, or would like to discuss planning for a move. There's no cost, no obligation, and no pressure.