As builders know, home prices fall in the cold, dark days of winter as buyers stay inside and wait for spring to house hunt. Now, one study has pinpointed the day of the year when prices hit rock bottom.
According to sales data analysis of the Toronto housing market by TheRedPin.com realty service, Jan. 20 is the day when builders will make the least amount of money on their homes. Research shows from 2010 to 2014, home prices averaged $22,338 less in January than in the next least expensive month in any given year. (Click here for full-size infographic.)
"Looking back over the past five years, the trend holds year after year, with average home prices significantly lower in January than in every other month," said Rokham Fard, CMO of TheRedPin.com. "There might be less inventory, but sellers at this time are generally highly motivated. This creates a buyer's market … but, buyers have to move fast, it's a short window."
TheRedPin.com's research points to several reasons for this phenomenon:
Those opting to sell in January are generally doing so out of necessity; given the numbers, they would wait if they could. Therefore, buyers have leverage to negotiate.
If a house is on the market in January, it may have been listed for an extended period of time. This could mean, the sellers are asking too much, and buyers may have more success with a lower offer.
There is less competition for homes in January, as the majority of people are facing holiday debt and the first credit card bill of the New Year. Big purchases are not generally in the cards for most people at this time, so savvy home buyers can avoid the bidding wars that spring is well known for.
- TheRedPin.com Realtors generally agree that Tuesdays are the best day of the week to begin the buying process; everyone is back in the work-week routine, and making the offer Tuesday allows for several days of negotiating before people get into weekend mode.
WHAT DO YOU THINK? Do you find sales stalling in mid January? What do you do to keep profits up?