For most people, choosing to buy property is one of the biggest purchasing decisions they will make. With this in mind, they understandably want to make sure they are making the right decision and getting the best deal possible. A big part of that is timing.
Most buyers are well aware that the real estate market is constantly moving and changing. As a result, buyers usually fall into one of two camps: buying after being advised to (by friend, family, and the media) or waiting for the perfect time. Neither of these approaches is ideal. The former means they will be buying in a peak time (and probably paying a premium!) and the latter means they may never take the plunge and buy.
So when is the best time to buy a property?
Some things to note before we start…
While there are certain factors that impact how hot the market is, and certain times when the market is stronger (or quieter), picking the ‘right’ time is ultimately a personal decision. This is particularly true if you are an investor, as there are always opportunities out there – you may just need to look around or consider different locations. As such, the right time to buy is whenever you are ready.
However, if you are considering buying in a market you are not familiar with, a buyers advocate can be invaluable. For example, if you were to consider investing in the Australian property market (which has seen consistently strong returns over the last couple of decades), a trustworthy buyers advocate will know the best time to buy and advise you on local market performance. They can also help you navigate the buying process (which can vary slightly from location to location) and make sure you are getting the most for your money.
The Right Season for Buying
The property market is seasonal. As any market watcher will tell you, the time of year you’re looking to buy will impact how many properties are available and possibly even the most likely final purchase price.
Generally speaking, the warmer months are the best time to buy if you like having plenty of choices. Market activity usually begins to peak in late Spring and remains strong through to the end of Summer. This is because many people want to avoid the inconvenience of moving in the colder months, so there is more both supply and demand. However, while this is unquestionably the busiest time, it may not be the best.
Conventional industry wisdom is that savvy buyers start their search in late summer, with a view to buying in early fall. During this period there tends to be less buyers in the market (they have either found a place or put their search on hold for the year), but the supply of properties still remains fairly strong. This means that the chance of finding a great property is still high AND you should be able to get it at a good price as sellers are usually looking to offload their property before the winter lull.
Other, more enterprising investors believe that the true bargains are to be found deep in the depths of winter. Given the slower market, most sellers tend to avoid listing during this time, which means the properties that do come up usually have motivated sellers (i.e. they’re being foreclosed on, they have to move urgently, etc.). Generally, there are less people looking at this time too, which give interested and cashed-up buyers much greater negotiating power. It should be noted though, property stock in the colder months tends to be limited, so looking at this time may not be suitable if you are particular about your requirements.
Timing the Market
While both supply and demand tends to be seasonal, the ebb and flow of real estate is not purely driven by the calendar. Also, while prices generally trend upward, there are peaks and troughs that can span months or even years. As such, finding the perfect time to buy isn’t as simple as waiting for spring to roll around.
Homeowners and investors alike spend hours trying to understand the current state of the market and forecast where it’s heading, but it’s far from an exact science. Market moves may be largely cyclical, but there are no guarantees and there are a range of economic, political, and social factors that can quickly bring a boom to a grinding halt (like the recent coronavirus crisis) – and vice versa. As such, trying to time your purchase to avoid a short term peak or capitalise on the absolute bottom of the market can be a futile exercise.
There are also some that believe that, when viewed in the long-term, market moves should not be a major inhibitor of purchasing decisions. This is particularly true if you are selling one property to buy another as, even if you’re investing at a peak, both your selling price and buying price will be influenced by the current state of the market. The general upward trend in prices should also mean that, even if your property’s value softens after you buy it, it should recover within a couple of years.
That being said, the potential for capital growth is an important consideration in any real estate purchase. As such, not buying at the peak of the market should be avoided (if possible) and you should always make sure the property is not overpriced compared to others available in the local area.
The concept of there being a perfect time to buy is a myth. The right time is actually whenever best suits you, your situation, and your goals. So long as you have your finances in order, a clear idea of what you’re looking for, and are willing to ride out any dips in the market, you should come out on top in the long run.