When is the Best Time to Buy (or Sell)?
Is there a statistical answer to the best time to buy or sell? Yes! Well, sorta...
Today is January 6, 2025, the first real work week of 2025.
It is now officially time to:
Start the diet
Go to the gym
Buy a home
I can’t help you with #1 and #2 (although I may join you in those efforts) but I can with #3.
Let’s discuss.
The Timing Question
The first week of the year is when those who are planning to be in the real estate market start thinking about timing.
Perhaps the lease is expiring in June, or a child is starting school in the fall, or it could just be that the upstairs bedroom and the old knees are no longer compatible –– and a change in the living situation is required.
And so the question in nearly everyone’s mind when the calendar flips from December to January is ‘When is the best time of year to buy (or sell) a home?’
The answer is basically that yes, there are best times of the year to enter the market, but there isn’t one best time –– it really depends on what you are trying to accomplish and (more importantly) what your constraints are.
Your individual situation will determine the best timing.
Hopefully, this post will shed some light on the reasons.
How to Answer the Question? Look at Seasonality!
Newsflash –– the real estate market is fluid, and over the course of any given year, the balance between buyers and sellers shifts. Most refer to the shift as the ‘seasonality’ of the real estate market, but the ebb and flow has a very real and measurable impact on pricing.
How can we see the seasonality and the impact it has on pricing? Quite easily, really.
By looking at the percentage over (or under) the asking price a home sells for, we can estimate how many contracts were written on the home, total them all up and divide that number by the number of available listings to see how much a segment is under (or over) supplied at any given time.
Make sense?
(We wrote an entire blog about how to determine the buyer / seller imbalance in our last update, if you want to do a deeper dive.)
Seasonality Tells Us Several Things
Ok, if we map the buyer / seller imbalance month over month, we can begin to see several things:
The point at which buyers enter the market.
The point at which sellers enter the market.
The balance between buyers and sellers.
The impact the shifting balance has on pricing.
The shift in balance between buyers and sellers has a very real impact on pricing and it changes how much a buyer may have to pay for the same house over the course of a year.
Shrewd buyers can use this knowledge to their advantage and choose the best time to enter the market based on their goals.
Ok, When is the Best Time?
In order to establish what time of year is the ‘best’ time, we need to determine two things:
How do sales prices relative to asking prices track over the course of the year?
How do new listings track over the course of the year?
By answering both of those questions, we can begin to tackle the question of ‘best’ time to buy or sell.
#1 | Over / Under Asking Price
We already know that you can accurately estimate the buyer pool relative to the seller pool by looking at how much over or under the asking price buyers tend to pay.
If the final sales price exceeded the asking price, it implies that more than one offer was written on the home. And the higher over ask a home ends up, it is safe to assume that the number of offers increased as well.
Remember:
When Asking Price to Sales Price equals 100%, it means there was at least one buyer per home.
When Asking Price to Sales Price over 100%, there is more than one buyer per home.
When Asking Price to Sales Price less than 100%, it means at most one buyer per home.
(Again, you can read more about that here.)
Historic Over / Under Asking Price Chart
Over the past 10 years, let’s see what the over / under asking price percentage looks like on a monthly basis:
Over the course of the past decade, you can see that the number of buyers RELATIVE to the number of sellers increases from January to roughly May, and then begins to decrease as the remainder of the year rolls on.
The shape of the curve suggests the number of buyers increases faster than the supply of homes in the spring and into the summer, only to decrease in the late summer and into the fall / winter.
This implies that sellers have a bigger advantage in the spring, but the advantage decreases as the summer turns to fall, with winter being the lowest level of leverage the sellers will have all year.
Additional Notes
A few other things to be aware of:
The final closed price is not recorded until the sale settles, so the prices in chart above really reflect the market conditions 30 to 60 days prior. When you see the final sale price in May, know that the contract was written in March / April and reflective of the conditions at the point of writing, not settlement.
The fact that the percentage falls from May to June does not mean that sellers outnumber buyers, only that the number of buyers relative to sellers falls. Don’t assume that it becomes a ‘Buyer’s Market’ every August, only that it tends to be less competitive than it was in May.
So yes, there is a definite trend, and yes, it probably tells you about what you thought –– spring (March to May) is the most ‘active’ period for real estate sales.
But that is only half of the story.
#2 | Listing Count
Part two of the question relates to choice –– at what point of the year does the market offer the greatest number of choices?
And yes, we can answer that one, too.
Again, the seasonality of the market is easy to see –– the number of listings accelerates notably in February and peaks in the April / May time frame, with a steady decline over the course of the year.
Seasonality = Premium (or Discount)
In reality, what we are really measuring is the difference a buyer will pay over the course of the year for the same home. We can think of this as a ‘premium’ (or ‘discount’) depending on the time of the year.
From what we have seen, a buyer can expect to pay a ‘premium’ for a home in May, but receive a ‘discount’ in November for the same home (again, a relative measurement and each individual case will be different.)
Knowing this, it may help you decide if waiting until later in the year to buy is the right answer.
Using the chart as above, you can see that the difference between May (101.2%) versus November (99%) is 2.2% –– in effect, implying that a buyer can expect to pay a +/- 2% higher price in the spring RELATIVE to the asking price versus waiting to buy in the fall (again, a 10 year average.)
Use the findings appropriately.
How to Leverage Seasonality?
What does this mean for you?
The key takeaway is relatively simple –– as the market wakes up in the spring, both the number of homes for sale increases as does the number of buyers, but the number of buyers seeking those homes increases even faster!
In other words, in the spring the premium increases.
And as the market slows in the back half of the year, the number of homes coming to the market slows, but the number of buyers slows even more.
In other words, in the fall / winter the premium decreases (or perhaps even becomes a discount.)
To reiterate –– the buyer pool both increases and decreases faster than the number of listings does.
So yes, it appears that the spring market will cost you more –– but you are more likely to get what you want. In the fall, you may not get exactly what you want, but it will cost you less.
How do you take advantage of these trends? Well, it depends on who you are.
Buyer Profiles
No two buyers are the same, but most share some similar characteristics.
Depending on where a buyer is in their housing lifecycle, as well as their financial picture and their goals in finding their home, will determine how they approach the process.
Here are a few typical buyer profiles:
First Time Buyers
If you are a first time buyer and using a highly leveraged loan product like FHA, VA, or some other grant program-based loan AND you are at the entry point of the market where the inventory is thinnest, being in competition with multiple offers is your enemy.
Why?
Sellers want certainty, and in order to beat 3, 5, 10, or perhaps even 20+ competitive bids, you are going to need to write an offer that escalates, is cash (or substantially cash), is without an appraisal contingency, and is without inspections (or at least minimal inspections.)
Writing an offer that is subject to appraisal and inspections and other requirements is simply not competitive when you are in competition with multiple buyers.
So what should you do?
You should attempt to buy when the competition is lowest (October to January.) As a matter of fact, if you are a FTHB reading this post, get pre-qualified right now and get out there this weekend. By mid-February, you will be competition with far more buyers than you will be right now.
Pro Tip
If you are in a rental situation, you should sign a month to month lease to give yourself the flexibility to purchase during the less competitive window later in the year. The $100 more per month you might pay for the ‘mo. to mo.’ privilege will pay off in spades by allowing you to buy when there is far less competition.
This is especially true if you are an FHA or other highly leveraged buyer that cannot waive inspections and appraisals.
‘We Want the ‘Perfect’ Home …’
If you are a well-funded buyer AND you have flexibility on closing dates AND it is important for you find a very specific home (specific neighborhood or school district or specific look / feel) then you are statistically most likely find it between March and maybe as late as early July.
Why? Roughly 60% of all listings that will be brought to market in any given year will come online during that 4-5 month stretch.
After July, the odds of finding the perfect home decrease due to the fact that the majority of the new listings have already come to market.
Yes, you will be in competition with the most other buyers and pay a ‘premium’ for the privilege of buying when the market is most competitive, but the highest number of listings will appear during the March to July timeframe, making it the most likely time to find the ‘perfect’ home.
The ‘Seller → Buyer’ Situation
Ok, this is important –– most sellers are also buyers.
If you are ONLY a seller, the answer is easy, put a for sale sign in the yard in late March to early May, and then sit back and wait for all the offers (there are few exceptions to this rule, but we can save those for another post.)
But for most owners, the sale of one home means the purchase of replacement property –– which means the market in which you sell is also the market in which you buy.
Being a seller into the spring frenzy means leverage, but a ‘Seller → Buyer’ then has to turn around and give it back. Any benefit captured by selling during the spring disappears immediately once you switch sides and become a part of the frothy buyer pool.
Pro Tip
The ‘Seller → Buyer’ situation does allow for some seasonal leverage when either upgrading or downsizing is involved. If you are downsizing, selling in the spring makes more sense as the price you will receive is likely bigger than what you will spend.
If you are upgrading, the fall may be a better time as the less competitive market will mean a smaller premium paid on the larger home –– provided that having the maximum choice is not the most important aspect of the search.
It never fails to amaze me the number of sellers who think that the spring market only applies to them when they sell, and that as buyers, they are somehow immune from being in competition. Newsflash, the market applies to everyone equally.
So the timing question is a basically negated by being on both sides of the sell → buy process.
What About Selling and Waiting?
Could a seller put their home up in the spring and then wait until fall / winter to buy?
Of course, but not without a very liberal rent back negotiated during the sale of the home (which does happen for extraordinary homes) or by moving into a short term rental. Moving multiple times, however, is expensive as well as disruptive … and probably not worth the effort.
But if you know that you are likely to save 2 to 3% by selling in May and buying in October, then you at least have some numbers to work with to make the decision.
2025 ≠ 2022 ≠ 2019 ≠ 2014
A final note about seasonality –– it varies year over year.
I used 10 years of data in this analysis, but the last 10 years of premiums and discounts have been a wild ride especially in the spring:
April 2014 –– 98.2%
April 2019 –– 99.6%
April 2022 –– 107.9%
April 2024 –– 102.9%
As you can see, all years are not created equally.
The pattern is the same, but the actual amounts vary due to inventory levels, mortgage rates, demographics, migration, and economic conditions (and pandemics, and Fed interference, and policy shifts, and election results … I could keep going for quite a while.)
Don’t assume that each April buyers should expect to pay 101% of the asking price and by September the number will fall to 99%. In 2021, even December averaged 102% of the asking price.
The amount will vary year to year, but the pattern is largely the same –– waiting until later in the year to buy will likely yield a less competitive environment, but also fewer choices.
Use this knowledge to your advantage.
A Final Note
The real estate ‘market’ is made up of thousands of transactions between individuals who are wholly emotional creatures.
Nothing is more central to the human condition than ‘home,’ and each time we buy or sell we fill ourselves with hope or close out a chapter of our lives filled with memories.
I don’t care who you are, transacting a home is personal.
It seems a bit contradictory that a $3 TRILLION market is as intertwined with emotion as it is, but it’s true.
The Market Doesn’t Care
And thus this statement pains me to say –– the market really doesn’t care about your situation:
The market doesn’t care that mortgage rates are 2-3X where they were in 2021.
The market doesn’t care that prices are up 40%.
The market doesn’t care that builders just raised their prices … again.
The market doesn’t care that drywall is up another 20% this month.
The market doesn’t care that milk and eggs are twice as expensive.
The market doesn’t care that you have $100K in college debt.
The market doesn’t care that you have made 13 offers and lost each time.
I could go on and on.
The bottom line is that sellers want to sell for the most they can and the fact that you really want the house doesn’t mean you will win the bidding war.
Sellers will act in their own self-interest and should not be faulted for it.
Resist the very real urge to become emotional and frustrated. Being pragmatic, even-keel, and decisive will give you best chance.
First Time Homebuyers? Sorry…
Newsflash, the entry point of the market it brutal right now, and will be so for a long time.
There are not enough ‘starter homes’ to go around and an ever increasing number of buyers trying to secure it.
The demographics of both the nation and Richmond is such that there are more ‘30 somethings’ than any other age group and there are still more on the way.
Most people think that the Boomers are the largest generation, but it reality, each of the 4 year age groups from 15 to 44 are all larger than the largest segment of Boomers (60 to 64) –– and that is a huge problem for housing:
What does the market need en masse? Affordable / attainable entry level housing.
What does it not have enough of? Affordable / attainable entry level housing.
What is next to impossible to build? Affordable / attainable entry level housing.
The Supply is Fixed
The supply $300K to 400K brick ranches and bungalows of the 1940s and 1950s in the inner suburbs is not only fixed, but declining. Many builders / investors are aggressively snapping them up, improving them, and then reselling them for 2X or more –– or hold them for rentals.
Why? It makes a lot of financial sense.
The economic reality of being an entry-level buyer is not pretty –– despite prices rising, supply has not increased and will likely be held down for decades as owners who were fortunate enough to refinance in 2022 hold those 3% mortgages for extended periods.
I wish I could deliver better news, but it’s unfortunately true –– the housing shortage is real and unlikely to change anytime soon.
Use Seasonality to Give Yourself a Chance
So use the trends detailed above to get in the game.
As a ‘50 something’ / Gen X, my path to ownership was a far different experience (and far easier) than the path today, I had far less competition and lower interest rates to help me finance it. But it does not mean that the pathway to ownership should not be walked today just because it is difficult.
Be patient, be persistent, be aggressive, and be pragmatic. Slough off the failures and get back in the battle as soon as you can. While renting to ‘wait it out’ sounds easier, those who have waited have simply fallen further behind –– all while rents have risen sharply.
The market, especially here in Central Virginia, will be kind to the owners of housing, at all price points and all geographies, in the coming decades.
Get in the game.
Coda: Defining the Data
I think it is important to talk about what numbers I used for this analysis:
They are all from CVRMLS (Central Virginia Regional MLS)
They are all ‘single family detached’ with no townhomes or condos
They are all resales (no new construction)
They are from the Richmond Metro (Chesterfield, Henrico, City, Hanover, Powhatan, Goochland, New Kent)
I did not limit the price points
And I went back 10 years
New Homes are Excluded
Why no new construction? As I have discussed in other blogs, I tend to exclude new construction because MLS does a mediocre job of capturing new home sales –– especially when it comes to time on market. In effect, the new home sales data in MLS is compromised and really needs to be analyzed in a vacuum to be relevant.
Excluding new home sales data doesn’t meaningfully impact the answer to the timing question.
Why 10 Years of Data?
By going back 10 years, I was able to quiet some of the noise of the 2020 / 2021 markets. From the onset of Covid until the Fed began to raise rates, home sales were inflated by artificially low rates and the tsunami of transactions that the ‘work from home’ movement allowed.
In other words, the last few years have been ‘atypical’ to say the least.
With Covid (hopefully) in the rear view mirror, ‘Work From Home’ somewhat declining in popularity, and mortgage rates far closer to historical norms, the market we are now in resembles 2014 to 2020 far more than it does the ones in the wake of Covid and 3% mortgage rates.