House Price Seasonality and Why It Matters

Cardinal Financial October 1, 2018 | 4 min read
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What role does seasonality play in the housing market?

Just like any other market, there are patterns in the housing market that affect supply, demand, and price over time. In some markets, “over time” could mean multiple years or even decades, but in the housing market we see the same trend year in and year out. If you didn’t know, home buying and selling activities heat up during the spring and summer months and cool off during the fall and winter. This trend, known as seasonality, has a marked effect on home prices throughout the year to the point where it seems as if every season has a different housing market. You may not think that the time of year should have an impact on how much you can buy or sell a home for, but it truly does make a big difference—in some cases up to 10% either way. It’s important to know how to take advantage of house price seasonality and get the best possible price for your home, whether you’re buying or selling.

So, how do I take advantage of housing market seasonality? Well, my friend, I’m glad you asked.

Know your market

How do you take full advantage of seasonality and make it work for you? Well, you can start by knowing your real estate market, or speak to a real estate agent. The seasonality of a market can vary from location to location and each market has its own nuance. Many hot-weather destination cities in Florida and the Midwest experience a “snowbird effect” where markets heat up in winter months because of the influx of people coming in from different regions who are relocating or looking at buying a second home. Inversely, in cold-weather cities, the climate affects the seasonality by slowing down the market altogether.

You may not think that the time of year should have an impact on how much you can buy or sell a home for, but it truly does make a big difference—in some cases up to 10% either way.

As a buyer

With summer being the busiest moving time of the year, there are more people buying than in the winter, which limits the number of available houses, raises prices, and makes the market more competitive overall. However, in the winter, since nobody wants to move in the cold, demand decreases which can make it the perfect time to snag a good deal on a home. Sellers in the winter probably won’t be getting much interest or many offers from other buyers, so they may be more willing to negotiate on the price.

As a seller

Seasonality is a bit of a two-edged sword, because if you’re a seller, it usually means you’re also a buyer. Of course, as a seller, you’ll want to sell when demand and pricing is high and more people are viewing your property. But what do you do while you wait for the market to cool down so you can get a deal on a house? It’s a tough situation, but if you don’t immediately need the proceeds from selling your home to help fund the purchase of your next, then buying in the winter, setting up a short-term living arrangement, and selling in the spring would be the ideal way to make the most of seasonality as a seller.

House price seasonality matters because of the extra insight it provides when you’re planning to buy or sell a home. Making seasonality work for you is a skill that can not only make the process of buying or selling easier, but more worthwhile because of the money you could potentially save. In a housing market that can be pretty difficult to navigate, it’s important to be aware of any tools you could potentially use to your advantage, and seasonality is one of them.

Did you take advantage of seasonality when you bought your last home? Do you plan to next time? Let us know on social media!

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