You've been standing on your lawn with a "for sale" sign in hand wondering whether or not this is the right time to sell your home. Is it too hot? Is it too cold? Will more buyers come in January than in March? Well, fire the psychic, toss the crystal ball and put your sign up - here's some advice to take to the bank.
The old wisdom was to say that spring was the best season to put a house on the market. Winter snows are melting, trees and flowers are blooming and families are ready for new beginnings. But with the real estate market on fire lately, this way of thinking may no longer apply.
In fact, the nation as a whole has seen home prices increase on average over 48% from the third quarter of 1999 to the third quarter of 2004 according to the Office of Federal Housing Enterprise Oversight.
These old cycles have been thrown off further by a tight housing market. In many communities demand is outpacing new construction by a two to one margin.
"This is a great market to sell your home," says Paul Kitzner, an independent real estate agent based in Southern California. "If you can afford a new one."
Watching the value and equity of your home skyrocket over the last few years has been exciting for most homeowners. Many have watched their homes double or even triple in value.
Although it may be tempting to cash out of your current home, it can be a risky proposition, unless you're planning to downsize or move to a cheaper market (such as moving from Los Angeles to Phoenix). Remember, the value of your home is only relative because the next question you'll need to ask is, "can you afford to move?"
In this current market, real estate prices seem to increase on an almost hourly basis. The danger in such a market in leaving your current home is that you will often spend just as much, or more, to buy a new one.
When looking at annual home sales cycles, historically, the slowest months of the year are usually January and February. A lot of this can be attributed to the fact that fewer deals are made over the holidays according to the National Association of Realtors. December and January were sometimes referred to as "buyer months." Furthermore, there tended to be a spike in June as many families moved in relation to the school year.
But, in a hot market, trends change and sure enough, these patterns have eased. In fact, there are those who say such trends are at an end.
"Seasonality may no longer play a part in the real estate market," says Kitzner. "It used to be, wait until the market warmed up -- usually the hotter the weather, the hotter the market. Now, you stand to lose valuable appreciation by waiting."
With baby boomers still in their prime years, buying second or third homes and their kids buying earlier in life, demand will continue to increase. Furthermore, single women make up one of the fastest growing and largest percentages of homebuyers second only to married couples. Fannie Mae estimates that there will be over 30 million single female homeowners by the year 2010. Putting all of these demographics together means real estate will probably stay hot for a long time.
However, even with this kind of demand, there are still periods that sellers can be most aggressive with their pricing.
Locations with year-round climates and red hot demand like Southern California have proven that there really isn't one season that's better than the next to put a property on the market. But, a home located in a 'seasonal' area such as Boston or Buffalo will definitely be better off waiting until spring. After all, how many people do you know who want to trudge through an ice storm to go to an open house?
Snowbird cities like Fort Lauderdale or Palm Springs can usually wait until late November. It's just when the thermometer starts to drop that snowbirds start looking for their escape route.
Southwest areas like Arizona and New Mexico: make sure you avoid your late summer. When the weather is too hot, the market tends to cool. Save your big marketing push for the fall.
While no one can accurately predict whether or not prices will continue to rise at this pace, real estate continues to be one of if not the most dominant and profit-producing investments of the twentieth century. Thus, you'll want to be sure you know exactly when to maximize your gains while minimizing your losses.
