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Winter May Be the Best Time to Invest in Real Estate. Here’s Why



In January and February, homes historically cost an average of 8.45% less than they do in June, July, and August. But low prices aren’t the only reason it’s a good idea to consider investing in real estate in the winter. There is also historically less buyer competition, time is on your side, sellers are motivated, and you may be able to take advantage of capital outlays. Here’s why you might consider investing in winter:


Historically Less Buyer Competition

In winter, there is historically less buyer competition. According to HousingWire, the warmer months of May, June, July, and August “account[ed] for 40% of an average year’s total home-selling volume” from 1999 to 2015. By contrast, the cooler months of November, December, January, and February “account[ed] for 27% of an average year’s total home-selling volume.” When you put in an offer on a property in winter, you’re potentially competing with far fewer people. That means you may be less likely to be outbid on an offer or rushed into a decision.


Prime Timing

Houses tend to stay on the market longer in the winter months. For example, from July 2017 to April 2019, here are the average Days on Market for homes in Orange County, California:

  • 51 days in December 2017
  • 32.5 days in May 2018
  • 64.5 days in January 2019
  • 40 days in April 2019

Of course, these trends aren’t always regular. If you look at the chart for Orange County, you’ll see Days on Market plunged down to 32 in February 2018. The state of the economy and accompanying interest rates influence how quickly homes are purchased. But the general trend is there. That’s partly due to the fact that, in winter, buyers may be busy with work, school schedules, and enjoying the comfort of their current residences. As a result, there may be less buyer competition, less interest, and fewer offers.


Motivated Sellers and Price Reductions

Realtors usually recommend that sellers list their properties in spring and summer. If a house goes up for sale in winter, that often indicates that the seller is under pressure to move because of family or finance issues or maybe a job relocation. These sellers are often willing to close faster and for a lower price.

Studies back this up. A NerdWallet study found that single-family homes have historically cost an average of about 8.5 percent less on in January and February compared to the summer months. Mashvisor combined national real estate data from the Federal Reserve, the Census Bureau, and Zillow: they found that in January, only 23 percent of properties sold above the listing price. They also found that “the median sales price was relatively affordable, and the Days on Market was high, putting more pressure on sellers.” The data compiled by Mashvisor confirms that January has historically been the best time to invest in real estate, followed by February, October, November, and December.


Tax Benefits and Capital Outlays

For sellers, offloading their properties at the end of the calendar year helps reduce their annual tax burden when it comes time to file their returns before April. This is potentially a good opportunity for investors who plan to make capital outlays before the end of their fiscal year. Additionally, tax prorations will be paid by the seller. This means lower out-of-pocket costs for the buyer in winter than in summer.

Is there a best time of year to invest in real estate? The answer, of course, is that it depends. But there are lots of potentially great reasons to invest in winter: there is less buyer competition, time is on your side, prices may be lower, sellers may be motivated, and you may be able to take advantage of capital outlays. As the temperature cools down, so could that market. And that might just make it the ideal time for you to consider investing.

Not an offer to buy, nor a solicitation to sell securities. Private Placements are speculative all investing involves risk of loss of some or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing. Any information provided is for informational purposes only.

Securities Offered By WealthForge Securities LLC. Member FINRA/SIPC.

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