Six Things to Remember When Buying a Home in the Offseason
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It used to be that the best time for buying or selling a home was during what was known as the “home buying season,” a period from the first warm days of March until vacation time in August. Any other time, especially around the holidays, saw few buyers and fewer listings.
But in recent years, the idea of a season for buying a home has lost much of its significance. According to 2012 census data, more people are flocking to warm weather states like Texas, California, and Florida, where cold weather doesn’t stop the homebuying season dead in its tracks.
Also, the Internet makes it easy to market a home at any time of year, which means weather is even less of a factor for buyers and sellers.
This year, a large number of homes came onto the market in late spring and summer. More homes to choose from means this fall and winter may be the best offseason period in which to buy a home in many years.
Here are some factors for buyers and sellers to consider:
1. Inventories are showing less variation from spring to fall. It’s a myth that inventories are always smaller in the fall and winter months. In December 2012, there were more than 1.56 million total listings on Realtor.com, while in March 2013—just as the buying season began—there were nearly 36,000 fewer listings.
Today, inventory is more dependent on factors like price increases and number of distressed homes than time of year.
2. Inventories are growing. This year, for a number of reasons, inventories are behaving exactly opposite of what the buying season myth would have you believe. As we moved out of the traditional buying season, inventory declines that occurred in the spring started to ease as more homes were listed on a monthly basis.
Inventories increased more in the late spring and summer rather than in the early spring, as is traditionally the case. On Realtor.com, for example, there were 28 percent more homes for sale in July than in March. If this trend continues, more homes will be for sale in the fall than were available in the early spring.
3. Inventories are not growing stale. Traditionally, buyers have been hesitant to buy homes in the fall, expressing concern that the selection of listings will be stale and picked over.
Fortunately, that’s not the case this year because so much new inventory was listed in the spring and summer months. In May, the height of the buying season, the median market time of listings on Realtor.com was 79 days. In July, that time was 85 days—only six days more.
4. Buyers do not have as much competition, and sellers are more willing to negotiate. By September, many of the buyers who started shopping in April are long gone. Those who failed to find what they were looking for are waiting until next spring, and the field is less competitive for the fall and winter buyers who remain in the hunt.
Buyers will find that sellers—who are counting down the days until the deadly holiday season—are more willing to negotiate. If sellers can’t unload their homes by Thanksgiving, they may have to wait until the following spring.
5. Real estate services are more accessible in the offseason. With sales volume slightly lower in the fall and winter months than in the spring, lenders, appraisers, inspectors, settlement attorneys, and other real estate professionals are less busy and more available to take care of your needs.
6. Mortgages may be easier to get. Lenders’ underwriting standards—the criteria they use to decide about the consumers to which they will lend—have slowly eased during the year. If your credit or debt-to-income situation is marginal, you might be better off applying for a mortgage in the fall or winter.
According to Ellie Mae’s Origination Insight Report, the closing rates for loans in January and February of 2013 were 55 and 56.8 percent, respectively. In May, during the traditional buying season, that closing rate was 53.5 percent.
If you’re considering buying or selling a home this fall or winter, don’t be deterred by traditional thinking about real estate seasonality. In many ways, the housing crash of 2007 (and the subsequent recovery that began last year) disrupted many of the old patterns.
Steve Cook is executive vice president of Reecon Advisors and covers government and industry news for the Reecon Advisory Report. He is a member of the National Press Club, the Public Relations Society of America, and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate companies, financial services companies, and trade associations, including some of the leading companies in online residential real estate.
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