How seasonality impact real estate market
Seasonality is an important factor that has a great influence on the real estate investing business. The market is cyclical, just like the seasons of the year, so it is vital for agents, realtors, and investors to determine the most suitable time for buying or selling commercial or residential property. The change of seasons affects many aspects of the real estate market, like demand and median home prices.
However, it is worth noting that seasonality is not the only essential thing that has an impact on marketing conditions. Overall state of the economy, political events and changes in interest rates are also of critical importance. In this article, we will review the major changes and trends in the market that happen due to the seasonal factor. This information will be useful for investors who are going to buy the property to rent it out, to gain income through appreciation or through flipping.
Summer Real Estate Trends
The main distinctive feature for the summer real estate market is high competitiveness. During the summer season, the housing demand is incredibly high, especially for the homebuyers who are looking for properties with a good school in the neighborhood. Homeowners typically put the houses for sale in summer because of nice weather for showings. The other reason is the intention of the buyers to purchase the next house before the beginning of the school year.
The first summer month – June – is the most favorable for the dealers. According to the statistics by the National Association of Realtors, the four busiest months are May, June, July, and August. During this period about 2.1 million purchase transactions are conducted which makes about 40% of annual sales of the houses. Thus, summer is the best time to sell a house or an apartment. On the other hand, it is the worst time to buy a piece of real estate due to low affordability, high demand, and competition.
Fall Real Estate Trends
Fall is considered to be a suitable time for buyers, so the investors who are willing to purchase a property may try their luck during this period. The competition is declining after summer, and this results in lower demand and, accordingly, lower prices. The buyers with school-age children have already found the property during the summer, so September is the end of the busiest time in the real estate industry.
One of the drawbacks of the fall season is a small number of available homes for sale. However, the benefits are the drop in the prices and more room for negotiation. Real estate investors say that during the fall the homeowners are more motivated to sell the property before the holidays. That is why they are able to reduce the price of the property.
Winter Real Estate Trends
One of the main advantages of the winter season is a larger number of serious buyers. During the summer people usually tend to postpone the deals, while in winter the investors are straight to the point.
The major drawback of the winter season is, of course, the weather. It is more difficult for homeowners to show the property if the weather is snowy or windy, and the potential buyers can not fully appreciate the exterior of the house.
December is the worst month to sell the house due to the holiday season. People usually travel a lot during the Christmas holidays and they are often busy with the preparations. Nevertheless, the skilled investor may take advantage of the slower months of the year, and use this opportunity to gain profit. The competition is very low, the prices are at the lowest rate, so the buyers’ efforts will be rewarded during the wintertime. Also, this is a perfect opportunity to save costs on taxes and mortgage payments.
It is noteworthy, that according to the experts, the average return from the investing in REITs reaches the highest point in January, so the investors may consider putting money in a mortgage or equity REITs.
Spring Real Estate Trends
Springtime is the busiest time of the year for both of the buyers and sellers of real estate. During the spring period, the properties are selling the fastest. Experts say that the homes listed in spring, especially in May, are being sold 18 days faster, in comparison with the average listings. The demand rate during the spring season is incredibly high, and the result is the increase in the prices.
According to the statistics, the most active months for sales are April and May. In this time the listed home would be sold 15% faster than in any other month. This is primarily due to the fact that the major part of the Americans takes vacations during July and August. Also, the weather is favorable for the sellers to showcase the property.
Every season of the year has its advantages and disadvantages for real estate buyers and sellers. The real estate investor who wants to benefit from the seasonality of the market needs to analyze his future goals to define the most suitable season for investing.
The buyers of the investment property should pay attention to the slow seasons, especially winter. The demand during wintertime is low, this also applies to the prices. Moreover, the price can be negotiated with the seller, because due to the low demand rates, homeowners are more open to collaboration. This is a perfect opportunity to buy a piece of real estate at an affordable price in order to increase revenue in the future.
Spring and summer are the best time for the sellers because of the warm weather which is suitable for showings. Many people are looking for new houses before school starts. Also, the sellers may put higher prices.
The end of the hottest season for sale is September. Some sellers who have not managed to sell the property during the spring and summer months may take the chance in fall. The demand in this period will be lower, but there will be more potential buyers with serious intentions.