What if I told you that the prices drop down by 0.2% according to the Oversight Index of the Federal Housing Enterprise. How is that possible? A quick look at bay area housing prices in the summer infers a price increase. What gives?
Its the Seasons!
One of the biggest reasons is because of the seasonal change. An effort to get out of the usual calendar pattern and get into the principal trend. Real estate prices in the bay area generally pitch by May, and after this surge of seasonal adjustment, the prices experience a fall.
The researchers, media, and reports show that the property price in the bay area seasonally adjusted makes little sense. They are better for the people who want to understand the whole situation as for why predictable seasonal twists get into play.
Someone in the bay area who is trying to sell or buy a property cannot ignore the seasonal convention gyrations. However, no one pays the price that is adjusted because of the seasonal change. If you have paid $1,000,000 on a house in the bay area in February, the expected price of the property may reach $1,150,000 if you wait until August. Whether it is a season or not; the $150,000 are your benefits.
However, this raises a huge question. If prices typically show a rise in summers and decline in winter especially in the bay area, United Kingdom, United States, France, and Belgium- then why people still choose to buy houses in the summers? Why don’t they buy a house in the bay area at the beginning of the year or wait until the surge is over and prices are stagnated?
Reasons to Move
There two are the main reasons why people move to a new house during the summer:
- Generally, people feel that the summer season is the best time to purchase a property. It is the time when a family is preparing to drive their kids to a new bay area school, and it is also the wedding season. Besides, the house-hunting experience is better when there is the sunshine. However, these, of course, are not reasons to spend thousand dollars extra on the house.
- Another reason why people choose to buy the house in summers is that the rent or mortgage finance are cheaper during that time.
What do the experts say?
A new research paper by Silvana Tenreyro and L. Rachel Ngai of the London Economics School provides us with a solid solution to this conundrum.
The paper starts with a remark that unlike, laptop, car; all houses are different from one another. A specific house may go perfectly with the need of the family. The process of figuring out that how a certain house suits your need is a time-consuming as well as costly business.
This means that if you are a bay area buyer, you may prefer house-hunting in wide markets when there are tons of houses for selling and chances are that a perfect fit might come quickly to them. There is no excitement in house-hunting when the market is down, and the chances of finding your ideal house seem minimum. House hunting in the cold bay area winter does not seem fun.
If Tenreyro and Ngai are correct, then the dynamic of housing market goes like this- A Buyer prefers buying housing when the market has good options to offer. Thus the sellers put up more market on the sell, and with a good number of sellers and buyers, the market becomes wide. This means that there is a better possibility that the buyers find the house that they are looking for and this makes them shed a few extra money out of their pockets. With high prices, sellers put more houses on the market during summers and fewer in the winters due to the stagnated price. This self-emphasizing process can create a huge gap between the prices during winter and summer. In the UK, there is a regulation in which only fewer houses are put up on the market, and thus the current store is predominantly characteristic which is the main reason why particular seasonality strongly influences the UK market rather than other places.
So, if you want to get a bay area house at cheaper rates, then you should wait till the winter. However, keep in mind that a cheaper deal doesn’t mean that you are getting a better and a healthier deal. It's never black and white. That's why we recommend to always seek an expert real estate agent.
Trust your Real Estate Agent
At Omni Real Estate, we follow all the Bay Area trends to know the best time to sell, buy or rent. We can use our background data and experience to make sure you get the best real estate deal possible (whether its buying or selling).