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Believe It or Not: 4 Seasons and Their Impact on the Real Estate Market
When I lived in Massachusetts, there was this running joke about how there were only two seasons: winter and construction. If you are reading this from the east coast or if you have ever lived on the east coast, then you are likely familiar with this situation.
Cooling weather can mean a cooling real estate market, depending on where you live. Whether you are purchasing or selling a property, the supply and demand of housing matters.
One of the factors impacting housing supply and demand is the seasonality of your market. While you might not think the seasons of the year influence the price you are paying or asking for your home, it makes a big difference—in some cases, as much as 10%.1 How’s that for a seasonal discount? Right now, most of the United States (as a result of COVID and the shutdowns) is seeing a pent up demand for homes. So, it is true that the seasonal changes may not be applicable in 2022. Nevertheless, it is important to understand them.
It’s important to be able to identify the factors that influence your region so you can understand the impact of seasonality trends on the housing market.
Buyers and sellers with children typically do not want to uproot their family in the middle of the school year and will wait until its end so they have more free time for moving and the chance for a fresh start once the next school year begins. Studies have shown the busiest moving times of the year occur during the summer, with June being one of the busiest months and July 31 the single busiest day, meaning people are likely shopping the housing market at the end of the school year and as the summer draws to a close.
Additionally, you will likely find fewer people moving during the holidays, which essentially eliminates the period between November and January. At this time of year, people do not want to add the logistics of moving to an already hectic holiday season filled with family obligations, end-of-year deadlines, unpredictable weather conditions, and more.
In the winter, however, since nobody wants to deal with the inconvenience of moving during this time, these typically low-demand periods are perfect for those who are looking for a good deal (maybe not in 2022, but look for them in 2023). Because sellers aren’t necessarily getting a lot of interest or offers from others, they’re more willing to negotiate and you’re able to obtain a substantial discount on pricing.
Additionally, as a seller, you want to be able to sell in a peak market when everyone’s getting eyes on your property and demand and pricing are high. However, if you don’t immediately need the proceeds from selling your home to go into the purchase of your next, then buying in the winter, setting up a short-term living arrangement—whether that be leasing, temporarily moving in with others, or something else—and then selling in the spring can be a great way to maximize the trade between what you’re selling and what you’re buying.
As with your groceries or clothes, when you’re able to get a discount it doesn’t make sense to skip the discount and pay full price. With real estate seasonality, it’s the same. You can save anywhere between 5%–10%, or tens of thousands of dollars, and have a better equity position in your home. Seasonality is simple supply and demand: Don’t try and buy when everyone else is—if you can help it.
Cooling weather can mean a cooling real estate market, depending on where you live. Whether you are purchasing or selling a property, the supply and demand of housing matters.
One of the factors impacting housing supply and demand is the seasonality of your market. While you might not think the seasons of the year influence the price you are paying or asking for your home, it makes a big difference—in some cases, as much as 10%.1 How’s that for a seasonal discount? Right now, most of the United States (as a result of COVID and the shutdowns) is seeing a pent up demand for homes. So, it is true that the seasonal changes may not be applicable in 2022. Nevertheless, it is important to understand them.
Know Your Real Estate Market
The seasonality of a market varies from location to location. Each market has its nuance. For example, cities like Phoenix experience a snowbird effect, wherein winter months are popular due to an influx of people coming from different regions like the Northeast—people are relocating or buying a second home. Alternatively, in cities like Salt Lake, the cold weather climate plays a part in the seasonality of the market by slowing down the typically brisk pace of home sales.It’s important to be able to identify the factors that influence your region so you can understand the impact of seasonality trends on the housing market.
Key Factors in Seasonal Real Estate
While the weather is something that will differ in each market, some nationwide considerations contribute to seasonal trends in real estate. The holiday season and school year both hugely influence the supply and demand of any given market.Buyers and sellers with children typically do not want to uproot their family in the middle of the school year and will wait until its end so they have more free time for moving and the chance for a fresh start once the next school year begins. Studies have shown the busiest moving times of the year occur during the summer, with June being one of the busiest months and July 31 the single busiest day, meaning people are likely shopping the housing market at the end of the school year and as the summer draws to a close.
Additionally, you will likely find fewer people moving during the holidays, which essentially eliminates the period between November and January. At this time of year, people do not want to add the logistics of moving to an already hectic holiday season filled with family obligations, end-of-year deadlines, unpredictable weather conditions, and more.
How Seasonality Works for Home Buyers
Due to the fluctuations in supply and demand, it’s during this identified “seasonal pattern” that you’ll find you don’t have as much competition from the average homebuyer. With summer being the busiest moving time of the year, people buy more aggressively than in the winter, limiting the number of available houses and raising market prices.In the winter, however, since nobody wants to deal with the inconvenience of moving during this time, these typically low-demand periods are perfect for those who are looking for a good deal (maybe not in 2022, but look for them in 2023). Because sellers aren’t necessarily getting a lot of interest or offers from others, they’re more willing to negotiate and you’re able to obtain a substantial discount on pricing.
Approaching Seasonality as a Home Seller
If you’re a seller, it usually means you’re a buyer. For a lot of people, this means you do not have the luxury of selling when everyone else is buying and buying when everyone is selling because you need a home to live in during that gap.Additionally, as a seller, you want to be able to sell in a peak market when everyone’s getting eyes on your property and demand and pricing are high. However, if you don’t immediately need the proceeds from selling your home to go into the purchase of your next, then buying in the winter, setting up a short-term living arrangement—whether that be leasing, temporarily moving in with others, or something else—and then selling in the spring can be a great way to maximize the trade between what you’re selling and what you’re buying.
As with your groceries or clothes, when you’re able to get a discount it doesn’t make sense to skip the discount and pay full price. With real estate seasonality, it’s the same. You can save anywhere between 5%–10%, or tens of thousands of dollars, and have a better equity position in your home. Seasonality is simple supply and demand: Don’t try and buy when everyone else is—if you can help it.
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