Know When to Make the Deal
Home sales heat up with the seasons. Homebuyers and sellers think alike when it comes to timing, with home inventory showing predictable peaks around the country.
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.
North: Rising Temperatures Heat Sales
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.
Most of the country sees home sales rise in the spring as buyers and sellers take advantage of milder weather
South: Mild Winters Drive Vacation Home Buying
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.
Home sales in the south peak in the winter months as vacationers seek warmer weather--and new homes
Good News for Deal Seekers
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.
Take Action Now
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:
- Get Talking: No matter the season, potential buyers should talk to friends, family and neighbors about the true pros and cons of home ownership. If you decide it's right for you, talk to a loan officer early—up to a year in advance—to learn the steps you need to take and discuss how much home you can reasonably afford. With all the different options and programs available, many buyers are closer to becoming homeowners than they thought.
- Give Yourself Credit: Your loan officer will also review your credit report, and if there are any reporting errors or areas for improvement, you can correct them before they affect your mortgage loan. This can take several months, so be sure to allow yourself time. You don’t want to risk missing your dream home due to credit issues.
- Show Sellers You’re Serious: After meeting with a loan officer, you can get a free pre-approval document. This can give you an advantage when you find your dream home, as sellers typically favor offers from pre-approved buyers. Having this pre-approval (and a frank discussion with your loan officer) can also help take some of the anxiety out of negotiating a contract with a seller. Buying a home is an emotional process, so it’s important to know what you can afford before falling in love with a home that’s out of your price range.
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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Staci Titsworth says home sales typically peak in the summer for much of the country
Becoming a home owner is like becoming a parent—we don’t know how much we don’t know. Knowledge is power, and PNC is here to help.
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