Homebuying: Fall is the new spring
While most homebuyers and sellers recognize that spring is the traditional homebuying season, there are psychological and financial motivations that create a fall homebuying season. While the fall real estate market is not traditionally as robust as the spring market, there is a different dynamic that drives autumn sales.
"We've observed in seasonal household buyer patterns that there is a higher ratio of first-time buyers and childless couples in the fall," Walter Molony, economic issues media manager at the National Association of Realtors in Washington, D.C., said in an email. "Families with children time their purchase based on school-year considerations, so they peak in the spring and summer. Month-to-month median homes prices typically peak each June or July (purchases dominated with families with children buying larger homes) and decline each September (purchases of smaller homes by first-time buyers, etc.)."
ERA Real Estate, a global real estate franchisor, recently surveyed its network of over 30,000 brokers and agents about fall homebuying trends to see what drives real estate activity in that season.
"A lot of people see Labor Day as the beginning of a new year, when the summer holidays are over and everyone goes back to school and back to work," says Charlie Young, president and CEO of ERA Real Estate in Parsippany, N.J. "The real estate market picks up because buyers who are planning to move want to be done by the holidays. Some people are also driven by the idea that they want the tax benefits of homeownership this year rather than next year."
The ERA survey showed that 20 percent of buyers are emotionally motivated by being in a new home for the holidays, while 10 percent are motivated by tax benefits.
"People buy and sell homes mostly because of lifestyle needs that are present in every season," says Young. "Things like a job change, marriage, divorce, death, a growing family or a downsizing family are what drive a home purchase more than the season."
Who's buying during the fall?
According to the ERA survey results, the buyer mix in the fall typically consists of:
- First-time homebuyers: 27 percent
- Move-up buyers: 20 percent
- Buyers downsizing/retiring: 17 percent
- Investors: 14 percent
- Military relocations: 11 percent
- Vacation home buyers: 6 percent
- Other: 5 percent
Advantages for fall buyers
Shaun White, vice president for corporate communications for Re/Max LLC in Denver, Colo., says the advantages of buying in the fall include highly motivated sellers and less competition.
"Some sellers will opt to lower their price in the fall because they're afraid of missing the boat and being stuck trying to sell during the holidays," says White. "Buyer traffic drops in the fall, too, so buyers may have less competition as well as better prices. You find motivated sellers and motivated buyers in the fall, especially as you get closer to the holidays," he says.
In some markets, such as Florida and Arizona, the prime selling season begins in the fall, says White.
"You'll usually see a run-up in sales in those markets where the buyers are snowbirds coming from colder climates," says White. "They'll start looking to buy when they first arrive for the season."
But John Heithaus, chief marketing officer for Metropolitan Regional Information Systems (MRIS), the nation's largest multiple listing service covering much of the Mid-Atlantic region, says his firm isn't seeing a big fall resurgence this year.
"It may be that Washington, D.C. in particular is laying low because of the election, but mostly the problem is the lack of inventory," says Heithaus. "Inventory is down 25 to 30 percent over historically normal healthy markets and there's no indication that the shadow inventory everyone has been talking about is showing up."
Heithaus says the three markets that are showing a resurgence in sales volume and prices right now are Florida, Arizona and Atlanta, which normally see an uptick in the fall. Those are also three markets that saw a steeper decline than many other housing markets.
"All real estate is local, so buyers and sellers really need to understand their local demographics and look at things like how long homes are staying on the market and what's happening with local prices more than a seasonal market shift," says Young.
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Michele Lerner, author of "HOMEBUYING: Tough Times, First Time, Any Time", has been writing about personal finance and real estate for more than two decades for a variety of publications and websites including Investopedia, Insurance.com, HSH.com, SavingsAccount.com, National Real Estate Investor magazine, The Washington Times, Urban Land magazine, NAREIT's REIT magazine and numerous Realtor associations.