The Silicon Valley real estate market tends to have seasonal pricing patterns. They are not rigid, and some years the typical or expected patterns don’t really hold. Generally, though, we expect the Spring market to be hot and the winter period to be cool. Is that true? Let’s take a look at the stats that I pulled today from MLS Listings.
Seasonal pricing patterns and today’s market
I spot checked the median sale price as well as the average sale price for houses in Santa Clara County, and they both followed the same seasonal pricing patterns. In the chart below, we have data from January 2013 (when the recovery really began) to November 2021. I’ve named the months with the peak prices and also the biggest dip each year. The pattern is a bit like the stock market – it does not only move up or down, but there are a lot of both with a generally upward trend.
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If you prefer a data table, here’s one with just the peak bolded (please click to view larger image):
The peaks and valleys in the seasonal pricing patterns are not binary – there is often not just one peak and just one valley. Some years there are 2 or 3 months with neck and neck high prices, less than a 1% difference from one four week period to the next. That kind of subtlety may not reveal the whole story, such as a free rent back given to the seller, or a home that needs substantially more repairs than what we’d normally see.
Generally, though, most years it seems that the highest prices land in March – June (think of offers being accepted as February – May), but sometimes with closings in November (sales initiated in October). That period from sometime in September after Labor Day through about Halloween is often a mini Spring and can be a great time to buy or sell. The low spots for pricing are usually in January or December (offers written in December or November).
Is there a best season to sell or to buy a home?
Does that make winter a terrible time to sell? Not necessarily, if you’re going to turn around and buy something else that will also have lower pricing. For some houses, the lack of competition as inventory plummets around the holidays translates to a greatly increased odds of selling. This can be the ideal time to market a house with issues, whether location related or property condition related, that may not get scooped up with more competition.
Something else sellers will want to factor in is what is happening in their exact market. If their competition is non-existent, that’s often a great time to sell, no matter when it falls with these seasonal trends. And the opposite is true: if one’s own neighborhood of 40 homes suddenly has 4 listings just like yours, that is not usually a good time to sell. Pay attention to the micro markets.
Buyers, does this pattern give you any insight as to the best time to buy? I think it points to the fact that pricing may be lowest now, so it’s a good time to keep your eye on what’s available. Often the lowest amount of inventory is found in December, but just as often, it’s the best price. If you can find what works for you, don’t wait! You may look back and decide that you lucked out, before the Spring market hits and interest rates rise (which they often do in mid-Feb, since that is also supply and demand driven).
On the other hand, if you don’t see the right home for you until May, I would not say to skip it because the price is too high. Just look at any of the past sales in Spring and look at the prices this year. The main takeaway I haver for buyers is to buy when you find the right home and can purchase it, and then hold onto it for at least 5 years. The annual patterns over time will trump the seasonal pricing patterns as long as you keep the home for a few years.