When To Buy Or Sell A Home in Southern California
One of the most common questions I’m asked as a residential real estate agent is, “When is the best time to buy/sell?” The fact of the matter is, that nobody can truly predict the market. The real estate market cycles and, depending on who you ask, you may be told that we cycle every 7ish years. Some people even see an 18 year trend. You can hedge your bets by looking at the seasonal/monthly trends as well as the up-to-the-minute data.
There are 4 phases of a cycle (Recovery, Expansion, Hyper Supply, Recession) but it’s best to focus on seasonal trends over the last few years to keep it relevant. If you’re interested in reading about the bigger picture, check out this blog article, straight from Harvard: How To Use Real Estate Trends To Predict The Next Housing Bubble
Buyer & Sellers: What does this mean to you? I’ll lay it out:
SELLERS: Should you sell?
That depends on your goals. If you want the most amount of money for your home, trends dictate that Summer is the time for you, however, keep in mind that inventory soars to its highest during this time and you’ll be competing with every other home out there. Selling in the winter months sees fewer Buyers, but the ones who are out looking are more serious. There’s usually a reason for them to be buying during the holiday season.
BUYERS: Should you buy now?
Should you wait? How long do you plan on staying in your new home? Right now is a time to buy-and-hold. The short term market (the next 2 years or so) is projected to be pretty solid but we will eventually hit another downturn, during which you probably wouldn’t want to sell. A good rule of thumb is this: If you find a home you resonate with, make an offer. That then becomes the right time to buy. Wait, and you may lose your opportunity. Many people wait for “the right time to buy” and they end up in the same spot for years, waiting for that perfect time. I’ve had clients kick themselves for missing their shot (metaphorically, of course).
Take a look at the local real estate trends since 2013. Looking at graphs can be a bit boring so I compiled a summary based on sales volume and inventory*:
1. January – Feb
The lowest sales volume of the year. Those selling/buying during this time usually need to do so and are much more motivated. You’ll find fewer lookiloos at open houses and more serious offers. All in all, lower inventory and more focused players. Sellers and Buyers start poking their heads out in February and begin to re-enter the marketplace.
2013: 5,323 – 5,312 Sales
2014: 6,300 – 6,600 Sales
2015: 6,542 – 6,634 Sales
Jan 2016: 8,181 Sales
2. March – April
The market starts to capitalize on the momentum from February and sales begin their upward climb to Summer.
2013: 7,313 – 7,954 Sales
2014: 8,124 – 9,377 Sales
2015: 9,652 – 11,003 Sales
3. May – June – July – August
Inventory and sales climb to the peak of Southern California’s real estate market. It’s a listing frenzy. Inventory is high with lots of competition for listings but also lots of Buyers buying. This is the busiest time of year.
2013: 8,906 – 9,608 Sales
2014: 9,794 – 9,760 Sales
2015: 10,896 – 10,768 Sales
Sales usually drop a bit from the summer frenzy. This downward September trend tends to be pretty reliable and consistent through the years. Home sales in September take lead from the season: They Fall.
2013: 8,184 sales
2014: 9,158 sales
2015: 10,372 sales
Although 2015 saw a bit of a drop in October sales, this time of year usually picks up a bit before the drop off to Winter.
2013: 8,654 sales
2014: 9,648 sales
2015: 9,977 sales
6. November – December
Here comes winter. Surprisingly, sales drop in November and rise during the holiday season with help from the business community. Relocating executives are looking for homes for themselves and/or their families before their January 1st start date. Sales during this time are usually driven out of necessity. There may be better pricing deals out there but inventory is low and competition amongst Buyers is high.
2013: 7,649 – 8,166 Sales
2014: 7,724 – 8,995 Sales
2015: 7,714 – 11,509 Sales
BUYERS: Buy when you find the right home, whatever the season, with the mindset of staying there for several years.
SELLERS: Our market pricing has been strong all year round. If you have the inkling to sell, do it.
USE AN AGENT. The FACTS say that using an agent can net you more money with less hassle than going about it alone, 16-22% more. We also limit your liability, which is an important protection in our litigious society . Multiple studies exist to back this statement, and can be found on the National Association of Realtors website.
I hope this answers your questions. Now, let’s get into escrow!
*Information from Infosparks, considering all single family residences (houses) sold as standard sales in the CRISNET MLS.