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By Staci Titsworth
The bell curve, once dreaded by students, can help homebuyers and sellers strike a deal.
Low interest rates for mortgages over the past few years have prompted many renters to consider buying homes. Meanwhile, sellers put their homes on the market in search of “next step” homes that are bigger or in a more desirable community. This follows a traditional bell curve, where home sales gradually ramp up to a peak before tapering off. The timing of those peaks depends on your location.
In parts of the country with distinct seasons, the spring warm-up brings April showers, May flowers and more pleasant weather for open houses that bring homebuyers and sellers together. In this part of the country, sellers tend to list their homes more often in the spring and summer. Sellers who want to spruce up their homes usually wait for spring, when the milder weather makes home improvement projects a little bit easier. Many sellers opt to update kitchens and bathrooms then add a fresh coat of neutral paint to the whole house to make it easier for buyers to envision it as their own.
According to the National Association of Realtors, homes typically sell after four weeks on the market, so timing home improvement projects for early spring can help sellers make the most of the summer peak in sales.
With those homes fresh on the market, buyers tend to take advantage of warmer temperatures to explore neighborhoods and head to open houses. Face it—it’s more fun to be outside in sandals than winter boots. These two factors help spark more activity in the spring ahead of a summer peak and gradual slowdown in the fall and winter.
This April we saw new home sales reach their highest level in eight years, thanks in part to continued job growth and a 3.61 percent interest rate for a 30-year fixed-rate mortgage—the lowest monthly average in the last three years.
While much of the country sees a summer peak in home sales, the opposite is true in the southernmost states. Milder temperatures in the winter make the south, particularly the Southeast, a popular vacation destination, with home sales peaking in the winter due to increased traffic.
We see a higher rate of vacation home purchases in the winter months in these states, with prices varying based on how much inventory is available. Fewer homes on the market with lots of buyers can create an advantage for sellers seeking a higher price, while more homes for sale can help buyers negotiate a desirable deal—or pursue another property.
When “snow birds” and vacationers fly back north for the summer, home buying and selling activity slows down before ramping up again in the fall and early winter months.
For buyers seeking a deal and sellers hoping to cash in on their investment, rest assured that these peak times aren’t the only opportunities for great deals. Buyers can secure a dream home for a bargain during any season if the seller is motivated—especially when you consider that each year there are more than 5 million total home sales in the United States. In 2015, 43 percent of sellers reduced their asking price at least once, ultimately selling for 98 percent of their final asking price.
We often see sellers who need to relocate for work, so they want to sell as quickly as possible and may accept a lower offer from a qualified buyer. On the other hand, some buyers need to be out of their previous home or rental unit by a certain date and may be willing to pay a higher price to make the move fit their timeline. Typically, around 30 percent of home sales are to first-time buyers who are often moving from rental properties with rising rents. For this population, timing is everything.
If you’re thinking of buying a home in the next year, now is the perfect time to start your homebuying homework. Below are three steps to help find your dream home:
With a strong understanding of your finances and support from your loan officer, you can leverage your purchasing power and negotiate a favorable sales contract that lands you in your dream home, no matter the season.
Staci Titsworth is a regional sales manager with PNC Mortgage
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