First I want to mention that the headlines for the latest Case-Shiller update are all over the place.
- Strong. The Wall Street Journal says, “U.S. Home-Price Growth Remains Strong in July, Case-Shiller Says.”
- Steady. The Economic Times says, “US home price growth steady in July: S&P/Case-Shiller.”
- Fall. Business Insider says, “Home Prices unexpectedly fall in July.”
That’s why I love my Case-Shiller graphs. It takes me time (mind-numbingly boring time) to update the graphs each month but I love being able to see for myself the changes in the index for each of the 20 cities because you just can’t trust the headlines.
Back to the main topic!
Seasonality and Off-Season Home Buying and Selling
Since we’re entering the slowest season for home sales in most every city in the United States, I want to talk about the seasonality of home prices.
In some U.S. cities, the prices of homes fall very reliably in the second half of the year.
Home buyers. If you’re a home buyer, this is good news. A lot fewer people are out shopping for homes which means you have less competition from other buyers and generally stronger negotiating leverage with sellers.
Home sellers. If you’re a seller, the news isn’t so good. You get fewer showings and buyers can be more difficult to deal with. The odds of selling the house at all go down and in strongly seasonal markets, home prices tend to fall in the off-season.
A home seller has to decide whether to keep their home on the market through the slow season or to take it off the market until the high season begins next year. If you have to sell, it can be a tough time emotionally.
Strongly Seasonal Markets
I pulled out the most seasonal real estate markets covered by Case-Shiller.
Home prices reliably fall in the autumn in Boston, Chicago, Cleveland, Minneapolis, New York and Washington D.C.
Chicago is amazingly seasonal!
Rollercoaster. Clearly home buyers gain a lot of negotiating leverage and home sellers lose a lot of negotiating leverage in the second half of the year in these strongly seasonal real estate markets.
Home sellers should focus on getting their homes sold before the real estate market starts to weaken in the second half of the year, if at all possible.
Others metro cities are less seasonal like Atlanta, Charlotte, Dallas, Denver, Detroit, Portland and Seattle. They don’t have such large swings in home prices within each year but prices tend to fall in the off-season.
Weakly Seasonal Markets
In some real estate markets, the Case-Shiller Home Price Index doesn’t usually fall in the second half of the year but prices do tend to level off in the second half of the year. For example, check out these graphs for Las Vegas, Los Angeles, Phoenix, San Diego and San Francisco.
No biggy. It’s not such a big deal for home sellers what time of year they put their homes on the market in these cities with weak seasonality. Sure, during the slow season it’s harder to get a home sold but the average seller shouldn’t get dinged on price.
Not Seasonal Markets
And finally, Miami and Tampa have shown little or no seasonality at all in the last few years as far as prices go.
- U.S. cities vary tremendously in the seasonality of their real estate markets.
- Buyers and sellers in highly seasonal real estate markets face complications that buyers and sellers in cities with low or no seasonality don’t face.
- But if you’re buying a home and selling a home at the same time in the same city, it’s a wash, it doesn’t matter what time of year you buy and sell. The slow season is good for buying but is not so good for selling. The high season is good for selling but is not so good for buying.
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One Response to 6 Cities Where Home Prices Fall in the Fall
“From peak price in August and September, home prices decline by 0.51 percent by January closings, according to the Case-Shiller index. On a typical home price of $220,000, that discount could equate to about $1,122, Yun writes.” http://www.forbes.com/sites/lawrenceyun/2015/12/02/best-season-to-buy-a-home/
That’s nice but it ignores the difference between cities. As I discuss above, some cities are far more seasonal than others.
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