Many sellers in DC, Bethesda and other close-in Maryland suburbs ask me “should I wait until the Spring to list my home?”. My typical advice is to not let the season determine when you sell your home. The purpose of owning a home is to make your life better. Therefore, when it’s the right time in your life to sell, so be it. Homes sell every day of the year, regardless of the season.
I recognize there are always people who want to time the market. I hope the following discussion helps you understand the cyclical nature of the market.
Typically, the Fall market ends around Thanksgiving and fewer new listings hit the market. This causes the inventory of homes for sale to dwindle in December, January and February. The lower inventory levels in these months creates pent-up buyer demand as the Spring market approaches.
When Spring arrives, with its beautiful weather and blooming flowers, buyers seem to turn out in droves. Since very few new listings come on the market during the winter months, the early-Spring inventory tends to be very low. As buyers enter the housing market at a time of limited supply, the initial homes that come available tend to sell fast and, in some areas, even bid up to cause price appreciation. As the Spring market runs its course, prices generally increase through June.
By the time schools let out, homes are still coming on the market, but much of the pent-up buyer demand has been satisfied. We usually see prices peak for the year in the June/July timeframe. August is the most interesting month of the year. This is when many of the listings that went Under Contract in June or July finally go to settlement. So we see the new high water mark for those prior sales. At the same time, new buyer activity tends to cool off at a time when plenty of inventory is still on the market. August is the turning point in the market, with the slowest sales.
As the Fall market begins, the supply of homes for sale tends to be higher than the buyer demand. It’s not unusual to see a little bit of a price correction at this point.
The seller in the Fall market may have a very different experience than the seller in the Spring market. The Fall market seller may actually sell their home for more money than the Spring market seller did and here’s why. As the market peaks in mid-summer and then begins to soften in the Fall, prices may give back a little bit, but still tend to be higher than they were in the Spring.
As an example, the person who sold in the prior Spring may have listed their home for $500K, received multiple offers which bid up to $515K, sold in three days and been delighted. The person who sold in the fall may have listed their house at $525K, negotiated down to $520K and taken 30 days to sell. So who did better?
When people are thinking about waiting until the next spring to “time the market”, they ideally should wait until late spring or early summer to try to catch prices at their peak. This means waiting almost 8 to 9 more months to sell. So you need to decide if you want to wait for the next spring market and to, hopefully, catch the next wave.
Just keep in mind that as you enter the winter market, the pricing may even give back a little more before the Spring market begins. At the end of the day, the net proceeds to you may not be materially better, depending upon your cost to carry the house.
Ultimately, it is the cumulative appreciation over a long period of time that creates the long term profits from holding real estate. Hopefully, when the timing is right for you to sell, you will have owned your home long enough to have substantial profits, so that trying to time a six-month swing won’t matter to you one way or the other.