I swear, I must get asked this question at least twice a week, every week, all year long.
Every potential buyer wants to know when is the “best time of the year” to buy, but the answer is long, complicated, and will differ depending on that particular buyer, and their goals and objectives.
The short answer probably is: “There is no ‘best time’ to buy.” But since that likely won’t suffice for all of you, let’s dig a little deeper…
My wife and I bought our current condo back in early 2011, and with a long closing date, we found ourselves moving into a unit with a 1,200 square foot outdoor terrace – perfect for summer entertaining, in early October.
We had a bit of a conundrum at hand: do we run out and buy a slew of outdoor furniture, even though we likely won’t use it until next summer, to take advantage of potential savings? Or do we avoid the maintenance and upkeep, and potential damage to the brand new furniture over the winter, and just do it next year?
We ended up going to DOT Elite over on Dupont just to take a look, and we ended up furnishing the entire terrace.
Since it was mid-September, the store was blowing out everything. I would imagine that they don’t sell a lot of patio sets in December, so it seemed to reason that they were ready and willing to make a deal.
I don’t know the patio furniture industry inside and out, but I’m told that “styles come and go,” and it might be hard to sell 2011 furniture in 2012. Personally, I think that’s insane, but I’m not in the business so I really have no leg to stand on.
In any event, we were able to walk in and pick up a $4,800 cast-iron, 8-person outdoor dining set with chairs for $1,800. Now, I’m sure that $4,800 was the MSRP price, and these were likely being offered at, say $3,900 in April or May, but I know we saved at least 50% by purchasing summer furniture in the fall, and that went for every single thing we bought.
It was like shooting fish in a barrel.
It may sound crazy to hear this – but I hate negotiating outside of my job. I do it all day, every day, while selling real estate, so I absolutely hate haggling in this arena. But in this case, I couldn’t resist saying, “I’d like you to throw in that wicker table over there,” since I knew they’d do it.
In the patio furniture industry, there is a “best time of year” to purchase, and it’s in the off-season.
As for real estate, I don’t believe there’s a parallel here.
There’s no “discount” per se, based on the seasons.
And the “best time” to buy might differ, depending on your objectives.
If you walked into a store, and there was one pair of pants, but it looked like a good deal, would you feel comfortable buying it?
Or would you prefer to see one hundred pairs of pants, in various colours, styles, and sizes, at a slightly higher price?
The “best time to buy” for most buyers more than likely refers to when the market is the busiest, but it’s a bit of a double-edged sword.
The busy Fall market is almost upon us – September, October, and November, and that’s going to provide a slew of single-family homes to the buyers that seek them.
But there will be competition for houses like we saw in the spring, and you might suspect that prices will follow accordingly.
So should a buyer then look in the summer?
Well, even if they wanted to – they basically can’t.
There’s almost nothing out there in the single-family house market, no matter where the area is.
This is the double-edged sword I’m talking about.
If you want to shop for a house when very few people are looking, and when you “might” be able to sneak out a slight discount, you have to look in August. But there’s almost nothing for sale in August, so you have no selection!
If you want to have option, after option, after option – they you need to be looking in the busy Fall market, along with everybody else.
Houses are a different animal than condos, and users are a different animal than investors.
A condo investor might not care what the unit looks like, where the building is, or really what they’re buying, so long as the yield is high, and the price is low.
End users – like young, growing families, are buying with emotion, and thinking about their future, so they’re probably going to be the ones to slightly overpay if need be to get what they want, and with such a life-altering decision at hand, they’re going to want to work in a busy market with a ton of inventory to browse.
This week, I’ve received three new inquiries from prospective buyers – one is a first-time condo-buyer, and the other two are home-buyers.
To the condo buyer, I said, “The market is a little slower for summer, but we’re seeing new listings out every day and now is a good time to be looking. We don’t know when your ‘perfect’ unit will come out, but we need to be active in order to do the background research to know what it is, when it hits.”
To the house buyers, I said, “The market is very slow right now, and I expect it to slow down significantly as we move into August. We can be active now as it will help us do the background on the areas you’re interested in, but I can almost guarantee that you won’t find what you’re looking for until September.”
And that’s the truth of the matter.
If you’re 100% motivated by price, and you don’t care where you live, or what the property is – then perhaps there are some houses lingering on the market right now that you could try and scoop up for a discount.
But most home-owners are sitting back and waiting to list in September, because they’re fully aware that it’s a stronger market, and they’ll do better on price.
Personally, I think that any home-owner who has his or her house on the market right now, unsold, with ‘days on market’ racking up, should cancel the listing, and re-list in the fall. The longer the property sits, the worse it’s going to get. August is a very slow month, and the active buyers aren’t out in droves like they are in September. If you can’t sell your home in July, you certainly can’t sell it in August.
Now what that signals to the buyers, of course, is that there could be an opportunity.
You won’t find five new listings in a week in mid-August in Riverdale, Cabbagetown, etc. But if you’re looking off the beaten path, there truly are deals to be had.
That goes for some condos too.
If I was looking at a condo that had been on the market for 64 days, with no price reduction, listed at $399,000, I’d have no problem offering $360,000. The logic: “You should have done a price reduction to $379,000 after 45 days, and thus my offer is actually in the ballpark.”
Try telling that to a stubborn seller, via their high-and-mighty agent, and you might not convince them.
But chances are good that the same unit in April probably would have had twice as many viewings, and had they come out at $379,000, they might have sold it.
With houses being far more scarce, and far more in demand, the same leverage isn’t present. But in an area where real estate doesn’t sell as quickly as the most sought-after family neighbourhoods, I think August represents a good time to see if there are any sellers who want to unload.
I’ll be the first person to tell you “We’re not in that kind of market” when you suggest any sort of “lowball” in a busy neighbourhood, in a busy market, but even if you’re looking at that semi-detached, 3-bedroom house in Davisville Village that didn’t sell in multiple offers in July like the seller figured it would (and it would have in April…), maybe there’s a deal to be had.
Maybe. Probably not. But maybe.
And in this red-hot Toronto market, isn’t “maybe” a good thing?
But for those of you who are more calculated, more forward-thinking, and not as interested in buying anything just to get a deal, the best time of the year to buy real estate – specifically single-family homes, IS the time when there’s the largest selection.
It’s September, October, November.
It’s March, April, and May, with perhaps the first half of June, and that varies year-to-year as the “end” of a busy spring market can come any time in June as families are busy with school exams, getting ready for camp, vacations at the onset, etc.
I’d rather have the selection and pay a slightly higher price, than get a modest discount on something I don’t really like.
But that’s just me.
Every buyer is different…
at 10:00 am
Once again, the guava.ca site provides a useful look at the seasonal dynamics of the housing market in Toronto: http://guava.ca/indicators.html
Possible conclusions from this data: (eyeballing the graphs)
1. Months-of-inventory (like a listings-to-sales ratio) are generally highest around late-summer / early-fall and in December-January.
2. Absolute number of sales peaks every year around April-May-June.
3. Average prices seem to have a bit of seasonality to them, and peak around May-June and September-October each year.
4. Days-on-market is strongly seasonal and peaks around November-December-January each year.
I will now sit back and patiently wait for other posters to drive by and say that this data is wrong or irrelevant.
Long Time Realtor
at 1:22 pm
The graphs are excellent. I especially like the average and median price illustrations. They clearly indicate that prices have increased Y/Y for every single month for every single year, for the past five years in a row. Completely making a mockery of certain “fools” who predicted a major correction 6 years ago.
at 10:38 am
at 11:47 am
I see many homes listed downtown/west which are not selling.
at 5:27 pm
I happen to fall in the opposite category of buyers – I house-shopped in July 2012 and bought the first weekend of August. Our house certainly has flaws, but has what we need for a family with a small child. We might have found something better in the fall, but the stress of competing against tons of other people would have done me in… So we all pick the battles we can fight, I guess. House was on the market for three weeks, got it for an acceptable price. On the other hand, my friend just sold her (very nice) house in early July for $40K more than asking. I imagine a good house will sell, no matter when.
As an aside: the other house we were looking at in July 2012 (attached, renovated two-bedroom in the Junction) sold then for $495K. It was back on the market this spring, and sold quickly… for $615K. Mamma mia, someone made a nice profit there.
at 7:50 pm
at 1:54 am