Is There a Peak Season to Buy or Sell Real Estate?

Historically, the real estate industry would cite Spring as being the hottest season for buying and selling property. Sales pick up in March, peak in April and May, and remain strong through June and July. Summer is a good time for families to move. Buyers are finished with (and perhaps flush with cash from) their tax refunds. The kids are out of school for their summer vacations and the warmer weather makes it a great time to show and view homes.

The problem with this picture is that while the volume of home sales may be up during this time, it does not necessarily translate to buyers getting more for their money and sellers getting more for their homes during this time.

Contrary to traditional real estate advice, Spring is no longer the answer to obtaining the highest value for your money when buying a home or receiving the most amount of money when selling a home.

In today’s market paying attention to greater global economic concerns may prove more useful than simply placing all your faith in the old spring market.

Pay attention to lending guidelines – availability of credit can have a huge impact on buyers and sellers.

As we have seen over the past three years, tighter underwriting guidelines can significantly reduce purchasing power or even disqualify some previously qualified buyers from obtaining loans.

The effects of tighter underwriting guidelines impact and effectively reduce the number of qualified buyers in the marketplace thus decreasing demand resulting in downward price pressure on existing inventory. Under these circumstances waiting to sell (or reduce prices that are too high) can result in sellers “chasing the market” . . . down.

In a time of less restrictive lending, buyers will typically have less trouble qualifying but often end up willing to pay more for homes. This creates competition with other qualified buyers in which case sellers can expect to receive higher prices as more buyers compete for the existing inventory of homes.

Watch interest rates – fluctuating interest rates can greatly affect buyer purchasing power.

Rising interest rates will decrease the amount of money for which borrowers are able to qualify. This will, of course, reduce their purchasing power and resulting price point. If the market does not offer these buyers reduced purchase prices (or if home prices are on the rise) many buyers may find themselves priced out of the homes they desire – or out of the market entirely.

For sellers, rising interest rates will effectively increase the cost of their house and consequently decrease the total available pool of buyers qualified to purchase.

Declining interest rates are good for buyers in that it allows buyers to afford a higher purchase price for the same monthly payment and good for sellers as it increases buyer’s purchasing power and increases the number of buyers that can afford to purchase homes.

These are a few influencing factors make reading today’s housing market challenging. Spring alone is no longer a benchmark for determining the health of the housing market. Similarly, the “neighborhood specialist” has become a thing of the past. In today’s housing market, working with a qualified real estate professional who understands the market and, more importantly, the factors that influence it, will prove more beneficial than merely following advice based on antiquated trends and mythical beliefs about market timing.