Why It’s Cheaper to Buy a House in the Winter
Source: The Atlantic
Home prices can vary because buyers are unusually idiosyncratic—some people will fall for a house just because it has a walk-in closet, an extra bathroom, or a breakfast nook. These idiosyncrasies cause two different buyers to place wildly different values on the same house, which can produce some surprisingly rapid fluctuations in price.
Making sense of the story:
- There are seasonal differences in home prices. For example, the cost of a home is higher in the summer than in the winter. These seasonal shifts are well documented—most housing indexes provide “seasonally adjusted” prices—but many models of the housing market have failed to account for them.
- The reason for the difference? In the summer, there are many houses for sale, people find their ‘ideal house’ quickly, and they are willing to pay a higher price. While it’s true that homes generally cost less in the winter, that’s also when there are fewer out there to choose from—and thus when it’s harder to find a perfect fit.
- Because there is this critical mass that prefers searching in the summer, sellers list their houses for sale in the summer. And because there are more houses for sale, buyers also then prefer to search in the summer.
- People who move into new homes during the summer are often more satisfied with their purchases: They tend to live in those homes longer and spend a lot less money on remodeling. But, for those rare few who aren’t as picky about a house as everyone else, it makes sense to buy in the winter, when the pickings are slimmer but the prices are too.