When is the Best Time of Year for Buying Real Estate?
In a high-velocity market, the race and competition to purchase a quality property at a reasonable price in Toronto can often feel overwhelming. Buying real estate here can even seem impossible to most. Sure, preparing, keeping informed and being proactive can always set you on the path to success. But another critical factor to consider is strategy and timing.
As potential purchasers take these sentiments into consideration and plan for the biggest transaction they will likely make in their lives, there is one question they often ask, “what is the best time of year to buy?”
Before we go any further, truth be told, there is no indisputable, reliable, and one-size-fits-all “best time of year” for buying real estate. The best time to buy is specific to the purchaser’s end goals, financial situation, type of home they are looking to acquire, and interest rates.
However, there are opportunities for those looking to get into the home ownership market at the best possible price. Savvy investors will typically analyze demand trends in the market and think outside of the box by going against the status-quo to find these opportunities.
Buying Real Estate in January
Historically considered a slow month for inventory, it is little wonder why January is often overlooked to purchase real estate. There is far less options out there for potential buyers. However, seasons that herald less inventory typically result in far less demand. And in any market around the world, the less demand or competition you face, the more leverage you have as a buyer. This can make the difference between underpaying or overpaying for a property.
Here are just a few contributing factors that illustrate why January is a great time for buying real estate. You’ll also notice there’s a greater chance to score a quality property at a fair price, due to lower demand levels.
Winter “Wonderland?”
Most potential purchasers gear up to start their home search endeavours in the springtime. This is not just because of inventory levels. Rather, it’s because the days are longer, temperatures are warmer, and the roads are free of snow and ice. Additionally, most individuals prefer not to move when they face threats of -30 temperatures and blizzards. Or, they choose to escape it all together by jet setting to warmer temperatures. This clears the path for motivated buyers who are in a position to submit offers while everyone else is hibernating.
Holiday Debt
After December, January is a notoriously slow month across all industries as consumers recover from the holiday gifting season and accumulated debt. As credit reports and bank statements begin to roll in, some are still reeling from erratic spending habits. Of course, this deters many from making any significant purchases, let alone the biggest purchase of their lives. Preparing and planning ahead can ensure you don’t end up in the same pool of people. It will also prove advantageous when shopping for a home.
Strategic Sellers List in Line with Demand
The other item to consider is that sophisticated sellers and their listing agents often aim to list a property in line with the marginal demand levels that come in the Spring and Fall markets. The purpose being, to maximize the marketing and exposure the property receives. Properties for sale in the dead of winter may indicate high momentum on a seller’s end to sell quickly. This means more leverage and potentially dollars saved for the purchaser.
By the Numbers
A personal analysis of home sales in the City of Toronto over the past five years reveals that the average price of a home was on average $89,000 cheaper in January than the months that followed. Also, we consistently saw the longest days on the market and some of the lowest percentages of sale price to listing price y/y in January. This five-year analysis studies all home sales reported through MLS in the City of Toronto from (2015-2019). Take a look:
While conventional wisdom tells buyers to wait for Spring when an influx of new listings hit the market, this is also the time when you are meeting the highest level of demand. Higher demand levels equal an increase in competition, lower days on the market, and a higher likelihood of bidding wars. Ultimately, this contributes to hasty decisions and undue duress for purchasers clawing their way into the resale market.
Who Should Consider Buying Real Estate in January?
So, January might not be the standout month for high-quality inventory. However, savvy purchasers (and renters!) who are looking to acquire property at the best possible price can benefit from purchasing this time of year. This is especially true if you can keep an open mind and remain flexible. For example, looking at homes that require some level of repairs, upgrades, and/or updates.
Questions?
If you have been considering making a move on property acquisition or looking for that diamond in the rough, reach out to us today. We’ll put together a custom strategic plan to get you into the home ownership market. Remember, the best time to buy was yesterday, but the second-best time is NOW.
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This article is written by Urban enthusiast and food/travel junkie, Jessica Elizabeth Spillas. As the firm’s multi-talented Business Development Manager and Sales Representative, she is able to pair her passionate approach to buying, selling and investing in Toronto Real Estate with her flair for design and digital marketing. With this in mind, Jessica delivers unparalleled service with every interaction and works hard to keep her clients and colleagues organized and working at top-notch efficiency.
