Real estate values can have a wide divergence depending on property location, condition, age, the economy, and current market conditions. Because so many of these circumstances change on a continuous basis, the market conditions and values in the spring market may be significantly different eight months later. That is why understanding the things that drive real estate markets can be vital in knowing when to buy or sell a home.
Things That Drive a Strong Real Estate Market
As with any industry, supply and demand are the main driving factors for real estate. While national and state economic conditions play a role in real estate markets, regional and local markets also play a role. Supply and demand can also experience variations based on local weather conditions.
While some parts of a state may be in the midst of a slow real estate market, a local employer who is expanding and hiring hundreds of people or new high-grade shopping construction can drive local real estate markets to go higher. These types of upticks in sales can happen at any time of year and may show a steady market even during the traditional off seasons for other state regions.
Lower sales can also be evident if a region of a state is experiencing significant layoffs, local government corruption, an uptick in local crime, or other community problems. These can have both short term and long term ramifications for real estate values and sales.
New Construction Markets
Unlike the traditional real estate markets that can show wide swings in activity, the new home construction industry rarely sees as much volatility unless a major event happens that shifts the local or national economic conditions. Because the process for building new homes is extensive, many subdivisions have pre-construction sales before construction begins. In addition, buyers often have more flexibility around occupancy dates for new construction, which allows for a steadier marketplace.
General Real Estate Market Trends
In general, peak buying seasons for the real estate market are spring and summer. Because the weather is generally much more favorable in these two seasons with fewer weather extremes, they are the most popular for buying and selling.
The spring and fall seasons are also often very favorable for moving conditions since the weather I change makes people more active. The summer is a peak time for personal vacations, and the winter is cram-packed with holidays and less daylight, which makes it a much less favorable time to move into a new home or sell a home.
While in most cases, the summer is a slower real estate market; there are exceptions to this rule. Areas that are located around tourist areas or natural vacation spots such as lakes or the ocean can be very busy in the summer. Additionally, if the weather is particularly cooler during the summer months, activity may pick up coinciding with more favorable conditions to be outside. Summer months allow for longer hours in the day for viewing or showing houses.
Time to Buy versus Time to Sell
As a buyer, off seasons can have greater advantages for negotiating. If the seller has had the home on the market for a while and they are motivated to sell because of a relocation, retirement, home purchase contract, or other personal reasons, they may be more apt to negotiate a favorable selling package to a buyer. Off-season markets are usually the best time to try to buy a home when the buyer needs more flexibility with certain terms and conditions.
As a seller, placing a home on the market just before the beginning of the busier seasons is usually a wise decision. If the home is priced just slightly above the market, it should sell quicker with some minor negotiating. Significant overpricing can create missed opportunities since buyers may not even put the property on their viewing list if it is too far above the general marketplace.