Tuesday, August 14 , 2018, 5:37 pm | Fair 75º

Real Estate

While the Market Cools, Now Is the Time to Purchase a Home

Year after year, a large share of home buyers tend to hibernate through the winter and wait until spring to purchase a new home, and this year appears to be no different.

The number of homes sold between September and October of 2015 in the city of Santa Barbara dropped from 106 homes sold in September to 91 homes sold in October.

Here are the top reasons you should let your competition hibernate while you capitalize on this opportunity and buy your next home before these buyers wake:

1. Fewer Buyers Means Fewer Bidders

When the market is really hot, you are usually not the only buyer interested in your dream home. This means that sellers often receive multiple offers, resulting in a bidding war that drives the price up further. With fewer buyers in the market, you avoid some of this competition.

2. Less Action in the Real Estate Market Makes You Your Agent’s Top Client

First of all, your agent should always treat you as their most important client. However, if you love attention and want an agent that has the extra time to hold your hand through the entire home buying process, shop in the winter.

With less activity in the real estate market, your agent will likely have fewer active clients and more time to devote to you and finding the home of your dreams.

3. Fewer Buyers Results in Less Demand and Lower Prices

It's basic economics: fewer buyers equates to lower demand, and lower demand results in a market equilibrium with lower prices. This theory is confirmed in the analysis below.

4. History Repeats Itself

Historical data shows that median home sales prices in Santa Barbara are typically lowest in the months of October, November and December.

With the exception of November 2012 and the booming winter of 2013, median home sales prices were anywhere between 0.7 percent and 18.5 percent lower in the months of October, November and December than they were over the course of the year for every winter analyzed since 2011.

For example, the median home sales price in December 2014 was $865,000, which is 9.5 percent lower than the overall 2014 median home sales price of $950,000.

And with the exception of a 1.2 percent drop in median home sales prices in 2012, the decrease in these months has not been associated with any market downturn in the following year. 

The median home sales price increased in 2013, 2014 and 2015 (to date) by 24.3 percent, 13.2 percent and 4.7 percent, respectively over the years prior; therefore, the decrease in median home sale prices during the winter months are not indicative of dropping prices the following year and are most likely a seasonal fluctuation.

As for 2015, the seasonal fluctuation is right on schedule. The median home sales price in October was 2 percent lower than the median home sales prices over the year to date. 

So why wait? Let everyone else sleep through the winter and find your dream home now.

— Eve Mitchell, a Santa Barbara CPA, works as a Berkshire Hathaway realtor. She graduated from UC Santa Barbara with a degree in business economics. She can be reached at 805.708.9972.

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