I get asked when is the best time to buy and sell a home all the time and my response is always the dreaded “it depends…”. But, unfortunately, it’s true. People have tried to crunch the numbers and break it down to a science before. TheRedPin has been studying the trend for over a year now and not long ago released their 5-year study which showed that May was the best time to sell and January the best time to buy.
So does this mean you should only buy a house in January and only sell a home in May in order to get the best bang for your buck?
Let’s take a look at some of the reasons and factors that make pinpointing the best time to buy or sell a home in the GTA difficult to achieve.
The Self-Fulfilling Prophecy
Ask your friends, family, neighbours or coworkers and you’re likely to get a few different responses to the question. I know that a lot of people seem surprised when I tell them that the summer months, particularly August, are pretty slow in real estate compared to other months.
But then I’ll ask them when they bought their house and the typical response is Spring or Fall.
When I ask them why they usually say they didn’t feel like looking in the cold months of the winter or they were too busy in the summer and decided to look once school started up again.
So from a personal preference standpoint you can reasonably see why Spring or Fall make for good real estate markets.
But, is that the only factor at play?
A Seller’s Market
Right now we operate in a seller’s market in the GTA. Supply is low and demand is high. Sellers recognize that and want the best value for their home possible. And that’s fair. Wouldn’t you want that especially if you had to also buy in this market?
So what ultimately ends up happening is sellers are advised by agents and others that Spring or Fall is the best time to sell, so they wait until that time to put their home on the market. Because that’s when buyers are actively looking, right? That doesn’t leave much in the way of listings for the rest of the year either.
If sellers are continually told those months are the best and the statistics back up their assessments, then people will continue to list in the Spring or Fall and it will continue to be the most active time of the year for real estate.
What If You Can’t Time the Market?
Many sellers have the luxury of waiting until the peak time of the year to sell but what if you don’t? What if you were one of those savvy buyers who scooped up a home in January, close in 30 days, and need to sell?
Well, you don’t have much choice do you? You put the home on the market, price it and show it as best as you can and get as much money for it as possible. You might not get as much for it as you would have two months later but you also wouldn’t have been able to buy the home you just did.
In the end, everything is relative. If you purchase during a busy market you’re going to pay more. If you sell during a busy market, you’ll probably get more for your home.
You can’t time the market when you’re both buying and selling but you will notice different motivation and different quality of homes on the market during different times of the year.
The Seller’s Motivation
You will see a lot of great quality houses in the spring months because a lot of sellers have been spending months getting their property ready for sale. What will also come with the Spring season is the dreaded multiple offer.
This begins to happen because the homes that go for sale are more desirable and we’re still very much in a seller’s market.
What you’ll notice is that the amount of homes selling in multiple offers does decrease as the year, and demand, starts to go down. The less multiple offers there are on the market the less homes tend to sell for.
So you will see prices come down a bit from May to, let’s say, August but the prices will rebound again in September (not always to May levels though).
During the slowest months you may see properties that are not quite as ready to move into. Perhaps the seller has a personal issue and has to move immediately (divorce, new job in another province/country) but often people just sell when they feel ready regardless of the time of year.
Again, this isn’t the case 100% of the time but there does come a point in the year where a lot of realtors will say to each other “Man, there is such a lack of good quality listings for my clients”.
This is when those statistics are skewed and houses look like a bargain in January. However, in reality the quality of those houses in general are not as great as the ones that sell at the peak of the year. A less attractive house plus a lower amount of buyers in the market from a number of factors equals a lower average purchase price.
So When is the Best Time To Buy/Sell Then?
This really all depends on your situation and the type of home you’re looking for.
Are you looking for a completely turn key home with that amazingly remodeled kitchen? That’s more than likely going to be available during the busiest months.
What about if you’re looking for something that you can fix up? Well, maybe that place with the horrible pictures listed on December 15th is perfect for you and you get a great deal on it.
But, generally speaking, there is no best time to buy/sell. You do it when life allows you the energy and time to do it because in the end you’ll probably come out the same if you bought/sold in December as if you did in May.