Puget Sound Real Estate:  The 5 Seasons of Homebuying

As we enter the Fourth Season of Homebuying – The Fall Bump, I want to address a question that comes up quite often:  When is the best time to buy?  Cutting to the chase, the answer is:  Whenever the time is right for you.  Oftentimes that’s not exactly the answer the person was going for, but it’s true!  You can’t time the market, and there are pros and cons to buying in every season.

The context:  Prices for single family residences here in Puget Sound oftentimes rise in the first half of the year, peak sometime during the summer, hold relatively steady for a month or two, then decline in the late third and fourth quarter.  This predictable cycle has discerning Buyers concluding that buying later on in any given year will net them the best deal since prices are usually lowest at that time.  That’s a perfectly respectable hypothesis on the surface, but if we’re really going to dig into the question of When’s the Best Time to Buy, we need to take a look at WHY this predictable price-cycle exists in the first place.

The First Season of Homebuying – Is this the best time to buy?  Maybe.  Buyers may have just received a holiday bonus and/or are on track for a good sized tax refund; plus they probably just made a New Year’s Resolution that THIS IS THE YEAR!  Even better, prices are generally at their lowest to start the year.  The problem facing buyers in the First Season is that inventory levels are also at their lowest to start the year here in Puget Sound.  Reason being:  Well, let’s just say that if I’m a seller I’m not exactly jumping at the opportunity to go through the rigamarole of selling a home during the coldest, darkest, and wettest time of the year; while the kids are in school, the Seahawks are in the playoffs, and the Kraken are making a run.  Plus, I’m still decompressing from the holidays!  So though prices are low, and the buyer-pool is highly motivated, there just isn’t much to buy.

The Second Season of Homebuying – Is This the best time to buy?  Maybe.  As the Big Dark transitions into Spring, the days get longer, slightly warmer, and sometimes less rainy; but most importantly would-be sellers have now read a bunch of headlines about how there’s no inventory out there and buyer demand is high!  As well-priced listings start hitting the shelves in April, May, and June, buyers get excited with all the new inventory to look at and things turn into somewhat of a frenzy.  Oftentimes the years’ buyer-pool is large enough that even though there’s more inventory hitting the shelves in the Spring, well-priced listings drive competition, which drive housing prices higher.

The Third Season of Homebuying – Is THIS the best time to buy?  Maybe.  Eventually the calendar flips to July – the official start of Summer here in the PNW.  By this time, the hungriest of buyers have been satiated, and a fraction of other buyers find themselves on vacation or just simply enjoying summer in Seattle.  Due to this, competition between buyers is relatively lower during the summer months than it is during the first 6 months of the year.  Sounds like a welcome reprieve if you ask me!  Unfortunately the flipside is that new listings are now being comped out against the closings in April, May, and June, and are therefore priced higher than the new listings of the Spring.  So buyers are presented with more inventory and less competition, but at relatively higher prices.

The Fourth Season of Homebuying – All this brings us to where we are now:  The beginning of the Fourth Season of Homebuying, the Fall Bump.  Kids are back in school (Thank the heavens!), the weather is still nice (but not as nice as it was in July and August), and the biggest distraction occupying brain-space is fantasy football.  September marks the reimplementation of routine into our lives, which makes it easier to get down to business and buy that darn home we told ourselves we were going to buy last January!!!  This is why I call it the Fall Bump – because we generally start to see a bump in buyer-activity in mid September due to buyers getting back down to business.  This bump in buyer activity is what keeps the median house prices relatively steady from the summer’s peak.  Now, prices may have drifted a little lower, but not by much.  So the question becomes:  Is THIS the best time to buy?  Maybe.  Buyers are presented with a good amount of inventory, and some listings may even willing to negotiate if they’ve been sitting for a month or two.  Plus there are a few new and exciting listings hitting the market too.  But overall homes are still priced near the annual high and there’s more competition as buyers make one last attempt at realizing their New Year’s Resolution of buying a home.

The Fifth Season of Homebuying – Finally we get to the Fifth Season of homebuying:  Winter Clean Up.  Starting in about mid October we start to see seller activity fall off a cliff.  The weather is getting colder, days are shorter, the kids are in school, the holidays are coming up, and we’ve got football on the weekends and Kraken during the week!  Prices fall in the late Fall and Winter because there just aren’t very many new listings to drive competition and therefore prices higher.  Do falling prices mean that the people who just bought during the summer paid too much?  Absolutely Not!  Prices are only falling because there aren’t many new listings to drive prices higher.  A greater majority of the transactions are now aged listings with motivated sellers trying to close before the holidays.  So then is THIS the best time to buy?  Maybe.  Buyers have more leverage during the Fifth Season of homebuying than they’ve had all year, but there’s not a lot of new and exciting homes to bid on – It’s largely the remaining inventory that wasn’t gobbled up during the Third and Fourth Buying Season.

Take it Home

Labor Day marks the beginning of the Fourth Season of Homebuying here in Puget Sound (September through October).  This is a time where we can expect housing prices to be near the annual high, but not setting a new annual high.  There will still be competition as buyers get back into their daily routines, but there’s also a good amount of inventory to look at (some of which was listed over summer, and some new listings).  The Fourth Season of Homebuying is the last good chance to view a lot of homes with not a crazy amount of competition until the following year…so we get a nice little Fall Bump in the Northwest Housing Market. 

At the end of the day, there is no Best Time to Buy.  The best time to buy is honestly whenever the time is right for you. 

1 Sentence Summary

We are entering the Fourth Season of Homebuying – the Fall Bump – Where there is a good amount of inventory to view, not a terrible amount of competition, but where prices are still near their annual highs.