How to Save Money When Buying or Make More When Selling a Home

In your professional capacity and perhaps also in your private life, you may be closely involved with financial and commodity markets. Trading in stocks, bonds or futures is part of your daily routine.  Occasionally you probably have to deal with real estate as well though – if you e.g. want to purchase an apartment or a house, or if own a home you wish to sell.

 

The people who took this photograph probably want to sell… how do we know? Read on…

Photo credit: vantagedesigngroup.com

 

Today I want to show you that on these occasions, you can either save quite a bit of money, or realize greater proceeds with the aid of seasonality. Here is how easily you can save money when purchasing a home, or earn additional money when selling one.

The first chart below shows the seasonal pattern in US home prices, i.e., the average trend based on the price performance of residential real estate over the past 64 years. In other words, on this chart you see the average progression in home prices in the course of a year.

 

US home prices: seasonal trend, 1953 – 2016 – prices tend to advance strongly between springtime until late in the summer Source: Seasonax, data source: Robert J. Shiller

 

As can be seen, prices typically rise much faster between March and August than in the rest of the year.

However, there is no distinctive seasonal pattern visible, similar to those displayed by listed financial instruments such as stocks, currencies, commodities or bonds. This is due to the inertia of real estate price trends.

Thus, in order to show the details of the seasonal trend in residential real estate more clearly,  a different method of presenting the data is used in the next chart.

 

A Clearer  Depiction of the Seasonal Pattern in Home Prices with a De-Trended Chart

In order to improve the visibility of the seasonal price pattern in home prices, the following operation is performed: as a first step, the data are de-trended. In order to do so,  the average price increase per year is determined and the same pro-rata amount is deducted from every month (except for the first month), so that the year’s ending value is equal to the beginning value. The result of this is a de-trended seasonal pattern index.

In the next step, the average of these 12 values is calculated, i.e., the de-trended mean is determined. As a final step, the difference between the monthly values of the de-trended seaonal pattern index and the de-trended mean is calculated.

The next chart shows this result, i.e., the seasonal divergence of US home prices from their de-trended mean over the past 64 years.

 

US home prices: seasonal divergence from the de-trended mean, 1953 – 2016 Prices are at their peak in midsummer.  Source: Seasonax, data source: Robert J. Shiller

 

On this chart one can discern seasonal effects on relatively inert real estate prices much more clearly. Between June and September, home prices reach their highest seasonal levels, between December and March they reach their seasonal lows. As a result of the inertia of real estate price trends the difference between these is relatively small in percentage terms, but in view of the high absolute value of homes, it still represents fairly sizable amounts of money.

What causes this difference though?

 

Sunshine Makes Home Purchases More Expensive

One is immediately reminded of another well-known curve when looking at the chart: namely the seasonal pattern of temperatures. In summertime, temperatures are higher, in the winter season they are lower. The same obviously applies to the number of sunshine hours.

The seasonal trend in home prices is indeed correlated with the weather. In the summer, bathed in sunshine, homes appear far more inviting and friendly  than they do in the darkness of the winter season. That makes buyers more willing to pay higher prices; it is the other way around in the winter.

 

A well-informed home buyer on his way to make a bid for his dream mansion…

Image credit: Guillermo del Toro

 

Naturally, properties are always perceived as similarly drab and colorless in the darkness of the cold season, regardless of whether they were bought in the winter or in the summer.

Nevertheless, at the time of the purchase, when the decision to buy is actually made, buyers are taken in by the perception created by sunshine and are willing to pay higher prices.

 

Conclusion – Use your Knowledge of Seasonal Trends to Save Money

As you can see, knowledge of seasonal trends can help you improve your financial situation. Preferably purchase a home in the dark winter season until March at the latest, and sell between June and September.

 

Charts by: Seasonax

 

Image captions by PT

 

Dimitri Speck is the founder of Seaonax and Head Analyst of Seasonal Insights. He is a well-known financial analyst and book author and the former manager of Stay-C, one of the most successful commodity funds ever listed in Germany.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The Great Debasement - Precious Metals Supply and Demand
      Fiat Money Woes Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week.   Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT]   So, naturally, what is getting play is a story that Bank of England governor Mark Carney said the dollar’s influence...
  • Hong Kong - Never the Same Again
      Freedom Rock Hong Kong ranks among the freest societies in the world. Not only economically, but socially it is a very liberal place. It was marinated in British ways until 1997, much longer than Singapore and other colonies. Then China took it over as a special administered region, which according to the agreement with the UK meant that it was only nominally to be under Chinese control for the next 50 years. It was possibly the only colony in which a vast majority of citizens did not...
  • Suffering the Profanity of Plentiful Cheap Money
      A Case of Highway Robbery What if the savings in your bank account lost 55 percent of its value over the last 12 months?  Would you be somewhat peeved?  Would you transfer some of your savings to another currency?   USD-ARS, weekly. For several years the Argentine Peso has followed a certain pattern: it declines mildly, but steadily, with little volatility for long time periods, and then spikes in crash waves whenever a crisis situation comes to a head. In early 2011, it...
  • Don’t Be Another Wall Street Chump
      The Future and the Past Securities and Exchange Commission Rule 156 requires financial institutions to advise investors to not be idiots. Hence, the disclosure pages of nearly every financial instrument in the U.S. are embedded with the following admission or variant thereof:   “Past Performance Is Not Indicative of Future Results”   “Buy and hold”... “The market goes always up”... “No-one can time the market”... “Buy the dip” “With what? You...
  • A Wild Week - Precious Metals Supply and Demand
      Paying a Premium for a Lack of Default Risk The price action got pretty intense last week! The prices of the metals were up Monday, Tuesday, and Wednesday. But Thursday and Friday, there was a sharp reversal and the silver price ended the week below its close of the previous week.   The net speculative position in gold futures has become very large recently – the market was more than ripe for a shake-out. [PT]   Silver made a round trip down from $18.35 to...
  • Will the Nikkei Win the Next Olympic Games?
      Listless Nikkei On 24 July 2020 the Olympic Summer Games will begin in Tokyo, the capital of Japan. Olympic Games and Soccer World Cups are among the largest sporting events in the world.  Do you perhaps also think that these events may affect the performance of local stock markets?   Olympic Summer Games 2020 – official logo (left), and a fan-made logo (right) by designer Daren Newman [PT]   Let us examine whether and in what way such major sporting events impact...
  • The Weird Obsessions of Central Bankers, Part 3
      Inflation and “Price Stability” We still remember when sometime in the mid 1980s, the German Bundesbank proudly pointed to the fact that Germany's y/y consumer price inflation rate had declined to zero. It was considered a “mission accomplished” moment. No-one mentioned that economic nirvana would remain out of sight unless price inflation was pushed to 2% per year.   CPI, annual rate of change. During the “stagflation” period of the 1970s, Congress enacted the...
  • The Weird Obsessions of Central Bankers, Part 1
      How to Hang on to Greenland Jim Bianco, head of the eponymous research firm, handily won the internet last Thursday with the following tweet:     Jim Bianco has an excellent idea as to how Denmark might after all be able to hang on to Greenland, a territory coveted by His Eminence, POTUS GEESG Donald Trump (GEESG= God Emperor & Exceedingly Stable Genius). Evidently the mad Danes running the central bank of this Northern European socialist paradise were...
  • The Weird Obsessions of Central Bankers, Part 2
      The Negative Interest Rates Abomination Our readers are probably aware that assorted central bankers and the economic advisors orbiting them occasionally mention the “natural interest rate” (a.k.a. “originary interest rate”) in speeches and papers. It is generally assumed that it has declined, which is to say, time preferences are assumed to have decreased.   This is actually an understatement...   Although interest is generally associated with money, the...
  • Why Are People Now Selling Their Silver? Precious Metals Supply and Demand
      Big Moves in Silver Last week, the prices of the metals fell further, with gold -$18 and silver -$0.73. On May 28, the price of silver hit its nadir, of $14.30. From the last three days of May through Sep 4, the price rose to $19.65. This was a gain of $5.35, or +37%. Congratulations to everyone who bought silver on May 28 and who sold it on September 4.   The recent move in silver [PT]   To those who believe gold and silver are money (as we do) the rising price...
  • Fiat Money Cannibalization in America
      An Odd Combination of Serenity and Panic The United States, with untroubled ease, continued its approach toward catastrophe this week.  The Federal Reserve cut the federal funds rate 25 basis points, thus furthering its program of mass money debasement.  Yet, on the surface, all still remained in the superlative.   S&P 500 Index, weekly: serenely perched near all time highs, in permanently high plateau nirvana. [PT]   Stocks smiled down on investors from their...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!