Often homeowners move up because of a life event. Perhaps two single homeowners are getting married and need to sell their current homes and buy a home better suited to their new life. (A Realtor’s dream – 3 transactions!!) Or perhaps an expanding family requires more space. Or a wonderful career opportunity pops up outside of Northern Virginia.
However, other moves are discretionary. The homeowner has the financial resources to move to a new home and desires to do so for a variety of reasons; more space, bigger lot, smaller lot, more amenities, better schools, etc. The actual timing of the move is not critical so these folks often ask, “How is the market? Should I do this now or wait?” There may be some personal financial factors that dictate the proper response but the market is not really a factor. Here’s why.
DON”T TRY TO TIME THE MARKET
If one is selling and buying within the same market at relatively the same time, whatever market cycle we are in will make a homeowner feel like a winner in one of the deals and not as great in the other. If it is a buyer’s market, a great deal is to be had on the purchase but on the sale one might feel like “we gave it away.” In a seller’s market, the sale price might be more than expected but on the buy side after fighting off multiple bidders, a buyer may feel they “overpaid.” Taking the whole picture into account, it probably worked out just fine.
Occasionally there are certain segments of our market that are out of step with the rest of the area but generally the tide rises and falls fairly equally throughout the region. (A recent exception was that the foreclosure crisis hit harder in the western suburbs causing prices to fall deeper there. On the other hand, those areas have appreciated more this year than closer in areas.)
Except for investors (see Investors, time to do a 1031 Exchange?) and retirees leaving the area, it is really hard to take advantage of market imbalances. There will likely be financial pain on one side and euphoria on the other. When the time is right, just do it and don’t over think the market.
DO THINK ABOUT THE TIME OF YEAR.
The chart below shows the flow of inventory throughout the year. This follows a relatively similar pattern year in and year out and can influence the best time for you to make a move.
For those just buying and not selling, the time of year does not matter. A buyer just needs one home and that home could be out there in times of low inventory just as easily as in time of high inventory. But if both selling and buying, there may be reasons to consider the time of the year. The key question is are you buying first or selling first. (See “Moving Up Is Hard To Do” for a discussion of the pros and cons of each.)
Buyers need to decide if they are looking for a hard to find home – very specific features in a specific location – or looking for a type of home relatively common in our market. If it is a unique home and the plan is to sell first and one ends up needing to look in the first two or the last two months of the year, the home may not be found before settlement on the current home. If the search is flexible, the timing may not matter as much.
I have always found that January and February are much better months for sellers than one would think. Inventory is low yet many folks start the year searching for homes. This is one part of almost every year where there are more buyers than sellers. So if the plan is to sell first, this is a good time to put a home on the market. If it sells during this period then the search will start as inventory builds.
Now, if the plan is to buy first and sell second, try to avoid putting a home on the market in late July or August. Yes, homes sell then but the peak season has passed. Out of town vacations not only mean time off from work but time off from looking for a home. So many buyers are out of the market during the summer. I have found it is even harder to get a home sold in the middle of the summer than the period between Thanksgiving and New Years. Look at the bump in inventory in September. Part of that is due to homes not coming off the market in August.
There are many more ways to play the annual flow of the market. If you are thinking of selling your current home and buying a new home, let’s talk and develop the best strategy for you.