The Case-Shiller Index for April wasn’t as gloomy as predicted, and offered the usual expertise:
“In a welcome shift from recent months, this month is better than last – April’s numbers beat March”, says David M. Blitzer, Chairman of the Index Committee at S&P Indicies. “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.”
Is he suggesting that warmer weather might cause people to pay more for a house? Normally we’ll see sales increase during the “spring/summer selling season”, but do prices go up too?
They said that the “seasonally-adjusted numbers” reflect that April’s improvement in the index was due to normal seasonal increases, but it’s hard to notice any calendar trends in San Diego’s Case-Shiller Index after the recent downturn.
It dropped 37 months straight, and a whopping -42%, from April 2006 to April 2009, and has been bumping around since. The index is blended over three months, so the monthly rate of change isn’t as obvious:
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The monthly changes in the index are so small that these charts just give us longer-term pricing trends.
Is there a better time of year to buy or sell a home?
Theoretically, you would think that more of the elective sellers would try to sell during the spring/summer, warm weather or not – people believe that it’s the season to sell.
With more of those better-quality homes selling, there should be an uptick in pricing around springtime, but it depends on the quality blend. With today’s lower sales counts, there is more chance that a bulk of inferior properties could get dumped in any month, and potentially skew pricing downward even during the “season”.
Link to the S&P Case-Shiller Index data here.
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San Diego’s Case-Shiller Index changes:
Feb. to March: -0.8% (seasonally adjusted = -0.9%)
March to April: +0.4% (seasonally adjusted = -0.09%)
1-year change: -4.3%
2-year change: +7.0% (April, 2009 was the trough for non-seasonally-adjusted index)
I’ve followed the Silicon Valley market for a long time.
Every Spring there is a runup in asking prices. In a bull market, the buyers can get those prices and the whole market gets lifted. In a bear market, the inventory just sits there until autumn when those with “wishing prices” just take their properties off the market.
Asking prices fall almost every autumn.
IMHO, if you’re a seller the best strategy is to sell in the spring. Do your market analysis carefully and list 5% below your competitors. Sell early and get out.
If you’re a buyer the best strategy is to buy in the late fall or early winter. You won’t have much competition. The only problem is that there won’t be much inventory, so if you’re looking for something very specific you might not find it. If you do find something, though, your chance of getting a good price are much higher than in the spring.
I think it was May when we won’t be YoY comparing directly against the home buyer tax credit,
I think we should fairly soon start to see YoY price increases which will be much hyped,
(media loves anything they can hype out of proportion).
Anyway I think it will be a long slow crawl.
“I think it was May when we won’t be YoY comparing directly against the home buyer tax credit.”
Probably later than that, there was this piece of the law that said you only had to sign the contract by April 30th and close by June 30th to get the credit.
“The $8,000 first-time home buyer credit and the $6,500 repeat buyer credit will expire on April 30. However, if buyers sign a sales contract by April 30, the IRS gives them an additional two months–until June 30, 2010–to close the sale of the home.”
Case-shiller works with a 3 month rolling average of closed repeat home sales that come out 2 months after the month of the report. You’d be looking at the September Case Shiller that will come out at the end of November for a YoY that has absolutely no tax credit incentive in it. The August report out in October will be pretty close as it would just include the late closers in June as 1/3rd of the average.
If you look at a median home price chart without a rolling average for San Diego, you do tend to see a slight spring bounce. 2008 was really the only year that there was nothing for a spring bounce (March to June). 2007, 2009, 2010, and 2011 all produced a decent spring bounce ranging from a couple percent in 2007 and 2011 to better than 5% in 2009 and 2010. This year’s bounce is more muted than we’ve seen lately and prices in San Diego are down YoY, but it’s still in that neutral range and we probably need another 4-5 months to see what that means for the housing market.
I always understood that houses sell better in the Spring and early Summer because families with children want to be in the new school district before classes begin, etc., so closing should be no later than about July 15-30th. Maybe this isn’t true? As for sales without school age children, then I don’t think there is any particular month that would be better or worse in SoCal. In the Midwest, no one want to move in winter and get caught moving in a blizzard.