Just like anything in life, the real estate market is cyclical. Real estate experiences ups and downs over the course of many years, as well as within the microcosm of a year.

The Real Estate Cycle

There are four widely accepted phases in a real estate cycle - expansion, over supply, recession, and recovery.

Expansion historically coincides with overall improving market conditions (after all, real estate is around 21% of GDP in the US). Confidence in the real estate market is high, and demand increases accordingly. 

Eventually, the market will provide an over-supply of homes, whether from existing homeowners capitalizing on the high demand or builders over-producing new homes beyond demand. This is often more colloquially known as a “buyers market,” when there are too few buyers for the amount of available homes.  

Oversupply leads to recession. At this point home prices begin to stabilize or decrease in value. 

The night is always darkest before dawn, and every recession is followed by a recovery. The same is true in real estate. Demand begins to increase. Optimism returns to the market. It might not always be evident we are in a recovery until we hit expansion.

Today’s market is a little confusing, and certainly not one size fits all. It’s incredibly valuable to have an understanding of the local market. Greater Boston often performs quite differently than the National benchmarks. For example, even during the 2008 housing bubble Greater Boston real estate didn’t experience the same level of depreciation other cities and towns around the country did. Greater Boston experienced significantly less depreciation, and in many cases held value. 

It’s pretty clear that if we are not currently in a recession, that is where we are headed (although perhaps a soft landing is looking more and more realistic).. And even with weaker economic data and inflated mortgage rates, demand for housing remains high in and around Boston. 

Seasonal Greater Boston Market 

The Greater Boston Area experiences its own seasonality over the course of the year. The busy season typically begins in early spring - whenever we first begin to experience consistent warmer weather. The busier market usually lasts from this time until the summer gets into full swing. At this time activity begins to taper off until Labor Day when there is a small uptick and a gradual decline from there until its lowest point around the winter holiday season. If warmer weather persists beyond the summer months, often the real estate market activity does too.

The peak Spring market is characterized by a larger buyer pool, greater inventory (although not something we experienced in our local market Spring to Summer the past few years), greater number of transactions, and more movement in homes priced right. 

After the holidays, and especially once the weather begins to turn, we start to see a slow down in new listings to market. The slowest time for the real estate market is between Thanksgiving through New Years. 

The slower months of the Greater Boston real estate market are characterized by fewer listings paired with fewer buyers (which can often result in less competition among buyers). These month’s can bring out “bargain hunters” among buyers. I often caution my buyer clients searching in these months against this mentality while house hunting. Below market “deals” in real estate are very far and few in between. If something is purchased for a perceived below market value, there is often a good reason why.

The Best Time to Buy

With all of this being said, when is the best time to buy a home? My wiseacre answer is:

The best time to buy a home is when you need somewhere to live, and do not wish to rent.

Maybe you need more space. Maybe you’re tired of living at the whim of your landlord. Or maybe you’re ready to move into a new lifestyle. After all, you’re not just buying a home - you’re buying a neighborhood, a community, and local amenities.

But let’s break that down a bit. 

If you’re in the majority of house hunters during the Spring to Summer months you may experience extraordinary competition for your dream home and lifestyle, especially with historically low inventory and high demand. Sellers during these months may have the ability to request waived contingencies and higher prices due to the significantly increased demand. However, buyers in this period will certainly have a greater selection to choose from.

If you choose to wait until the Fall or Winter months, you may be frustrated with the lack of inventory. However, you may experience less competition for the more limited quantity of homes. I emphasize “may,” as I think we’ve all been surprised to see - even at a 7% 30-year-fixed mortgage average - that well marketed, correctly priced, desirable homes were selling quickly, with multiple offers above asking. 

This information may seem demoralizing - but please do not fret! My initial statement holds truer than ever. Homeowners create wealth through time in the market. The best time to get into the market is when you are ready. Trying to time the market is for speculators, not investors. 

One hundred percent of homeowners who pay their mortgage (unless you have an interest only mortgage) are building equity in their home by paying down principal. Homeowners, on average, plan to stay for 7 or more years in the home they purchase, with average tenure currently at around 13 years depending on your source. Planning on appreciation is, again, for the speculators among us. However, it is very unlikely to experience no appreciation over the course of ten years - especially in such a booming metropolitan area as Boston. 

I hold true to my initial response - the right time to buy is when you are ready.