This regularly scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Video summaries of some articles can be found on YouTube on the Eli Residential channel. Enjoy!
Question: Is it better to buy a home in the second half of the year?
Answer: The second half of the year is almost always easier on buyers than the first half. With the exception of 2020, when we had a delayed spring market because of COVID lockdowns, nearly all market metrics improve in favor of buyers in the second half of the year. The only issue… it gets harder to find what you want because listing volume drops significantly.
The table below compares first half market data to second half market data, and I’ve calculated the change of each year’s first half to second half market metrics. A few quick notes about the data:
- I did not include 2020 because it was not a normal market due to COVID lockdown during the spring/summer
- Net Sold = Sold Price less any Seller Credits
- The data is based on when a property was listed (first half or second half of the year), not when it closed, so we can have a true indication of market metrics based on when a property hits the market
Prices Drop in Second Half, Not as Much as Data Suggest
The data point that most people will focus on is the drop in average net sold price from first half to second half with an average decrease of 4.8%. This is a combination of buyers being able to negotiate more and home values actually dropping and less expensive homes being sold in the second half than first half. So yes, market values weaken in the second half, but they are not dropping by 3-7% like the data suggests.
Buyers Negotiate Much More in Second Half
A great metric is the second column, the average net sold to original ask percentage which shows how much buyers are negotiating (or paying more) relative to the initial asking price. On average, buyers are negotiating 1.1% more off the original asking price in the second half of the year compared to the first half. Last year it changed by 3% when interest rates spiked at a historically fast pace from late spring through the fall and the market did a 180.
Sellers Giving More to Secure Deals in Second Half
In transactions that included a seller credit (seller paying buyer closing costs), buyers negotiated an average of 8% more in seller credits in the second half compared to the first half.
Market Significantly Slower in Second Half
From 2015-2022, the number of homes going under contract in the first ten days decreased by an average of 22.3% in the second half of the year to an average of 37% of homes selling within ten days compared to 48% in the first half of the year. The average days on market for homes listed in the second half of the year increased by 26.8%.
Buuuutttt… It’s a LOT harder to Find What You Want
The number of homes hitting the market for sale decreases by 1/3 from the first to second half of the year, making it much harder to find that perfect home. What I usually advise clients is to focus on the first half of the year if you’re looking for the perfect home and focus on the second half of the year if you’re looking for value.
Market Differences Within the Second Half
The market also differs within the second half of the year, with July/August slowing significantly from the preceding months, followed by a pop in supply and demand after Labor Day, until really slowing down for the holidays in November/December.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C A