Right now is the time to buy a house in Riverside County.
It’s not because of what’s specifically going on in the housing market. It’s not because of supply and demand, or interest rates, or a data point that indicates home prices will go higher.
Believe me, there are still plenty of reasons to be bullish on housing, as I’ve recently explained, but that’s not why you should consider buying this month.
It’s time to buy a house in February because home prices suffer from chronic seasonality, and winter is the best time to put your money to work.
Let me explain…
“Seasonality” simply means that an asset’s price tends to peak and bottom at certain times of the year, every year. Many assets are seasonal, but few assets move in seasonal trends as consistently as U.S. housing.
Home prices tend to bottom (for the year) in January. They tend to peak (for the year, again) in June. This happens year after year, like clockwork.
The chart below shows average Single Family Home prices since the housing bust. The pattern is consistent, and conspicuous. Take a look…
The lows always occur in the winter months (January), and the highs always ocur in summer months (June).
And this isn’t a post-crash phenomenon. Housing prices have followed this pattern for decades, as the chart below shows. Look at the consistent “up-and-down” price movement from year to year. It’s incredible…
What’s crazy is how extreme the swings in housing prices are from their yearly bottom to their yearly peak… In short, home prices typically make all of their gains from their January bottoms through their June peaks.
The table below shows what I mean..
Home prices have only increased 3% per year since 1989, and all of the gains happened from January to June… In that period, home prices tend to rise 9% on average. Wow!
Over the rest of the year – from June to January – home prices tend to lose value.
The benefits are greater than a small discount, though. The true benefit is the decreased competition level. Home Buyers come out of hibernation when the summer months arrive. If you can overcome the inconveniences of moving during the winter months, you won’t have to compete with as many buyers in the marketplace, which means your offer has a higher likelihood of being accepted in the first place.
Buying a home can feel like a daunting task, but remember, you’re looking at the mountain from the bottom, and the view from the peak is worth the climb.
Yours in the journey,
Ken Hall and Dillon Hall