Nothing says fall like changing leaves, crisp air and apparently, homebuying. Despite the spring season holding a staunch reputation for ultimate real estate activity, new data shows that autumn may be the best time to launch your starter home search.
According to a new Trulia study, national starter home inventory is 7 percent higher between September and November than it is from March through May.
House hunting when for-sale inventory is high is especially important under the current market conditions, where affordability for first-time home buyers has been deteriorating. The number of available starter homes in the U.S. dove 20.4 percent in the past year alone. The lack of options and high competition causes home prices to surge, pricing many aspiring homeowners out of the market.
Homebuying Costs More Today than Ever
Today, starter home buyers need to spend 2.3 percent more of their income on a home purchase than they did last year. They also spend the largest share of their paychecks on a home purchase at 39.7 percent.
Moreover, the median list price for in the starter home category ($171,624) lifted 6.5 percent year-over-year – a steeper jump than median prices for both trade-up (4.8 percent) and premium homes (6.2 percent).
Seasonality Affects Homebuying Trends
Generally, October shows the biggest jump in for-sale inventory. This allows list prices to then decrease, coming in 4.8 percent lower in the winter compared to the summer. Seventy percent of the largest 100 metros follow this same seasonal trend.
For the most part, markets that see bigger seasonal swings in starter home inventory tend to experience bigger seasonal swings in starter home list prices, too.
When it comes to both inventory and prices, markets out West see the largest seasonal difference in both starter price and inventory. Consider how seasonality impacts entry-level home buyers in Seattle, San Francisco and Denver:
Seattle’s Drastic Seasonal Pricing Shifts
Of all metros, Seattle ranks no. 2 – behind Wichita, Kan. – for most drastic list price discrepancy depending on the time of year. Seattle home prices are 12.1 percent lower in the first quarter (winter) compared to the third quarter (summer).
Inventory, too, shifts quite a bit throughout the year in the Emerald City.
There are 26 percent more starter homes listed in the fourth quarter (fall) compared to the second quarter (spring) – the latter of which is formerly known as the “prime” home buying season. In a neighborhood like Greenwood, where home prices rose 10.5 percent in the last year, timing is everything.
San Francisco’s Seasonal Inventory Swing
Although the City by the Bay is known for its mild climate, San Francisco’s real estate market sways dramatically throughout the year. Starter home inventory jumps 33.7 percent in the fall compared to the beginning of the year.
Even so, starter home prices are 8.7 percent cheaper early in the year than they are at their peak in the summertime.
Denver’s Fall Surplus & Winter Deals
In Denver, 30.3 percent more starter homes hit the market in the fall compared to the spring. But, first-time home buyers in Denver tend to get a better deal in the first quarter when home prices fall to their lowest of the year.
Denver starter homes listed in the winter are 9.3 percent less expensive than they are June through September. In a popular area such as Stapleton, where the median home price is $533,000, homebuying in the winter is often worth the hassle – just don’t forget to bring a heavy coat.
Fall Starter Homebuying Peaks
Overall, starter home buyers in markets like Seattle, San Francisco and Denver may benefit from seasonality the most, but remaining patient is key. With most markets nearing their starter home inventory peak in the next few months, typically followed by lower list prices at the beginning of the year, now is a good time to get serious about your home search.
Written by Jennifer Riner on behalf of Trulia.