Is real estate really cheaper in the winter?
I have often heard it said that if you wait until the winter to buy a beach property, you can get a better deal. Traditional wisdom says there are fewer buyers here in the winter and therefore less competition, hence a lower price. While it's certainly true that the volume of sales decreases in the winter months, how does this affect SALES prices? Or does it? Does this theory hold water? It's an interesting question. I wanted to know. And if so, to put an exact number on it.
Even a cursory glance at this chart will show that in the winter months, VOLUME is significantly down. (Volume declines by nearly 50%) But what about sales price as compared to asking price? Does this reduction in volume indicate significant discounts are available? By comparing asking prices to selling prices in the summer months vs. the winter months, we can quantify this number accurately.
OCTOBER 2016-FEBRUARY 2017
Average Sales Volume: $283,892,597 Sale Price to List Price Ratio: 96.9%
MARCH - SEPTEMBER 2017
Average Sales Volume: $424,695,136 Sale Price to List Price Ratio: 97.3%
OCTOBER 2017 - FEBRUARY 2018
Average Sales Volume: $318,627,185 Sale Price to List Price Ratio: 97.1%
MARCH 2018 - JULY 2018
Average Sales Volume: $492,148,279 Sale Price to List Price Ratio: 97.5%
So what is the lesson to be taken from these numbers? We have 2 winter examples and 2 from summer. (The summer numbers for 2018 are PARTIAL) It is clear that the volume ramps up significantly in the summer months. I doubt any of you reading this would find that a surprise. What IS surprising, however, is how little the near 50% decrease in volume over the winter months affects sale price as compared to asking price. Here is how the math works out. The winter months average a 97% Sale to List price ratio. The summer months average 97.43%. So yes, in the strictest sense, there is a better deal to be had in the winter months.
But how much will you save? Let’s take the purchase of a $350,000 condo as an example. The 0.43% savings translates into $1505.00 lower selling price. From this, we can conclude that prices are truly better in the winter. However, are the savings are so significant you should pass on the perfect condo in August just to hope its still available in January at a $1500 discount? There is also the possibility that by January, sellers have made it through the bulk of winter and spring break is right around the corner. Perhaps they will hold out for the “better sales prices” forthcoming. All of these are interesting calculations. So, do May December (or in our case October - February) relationships really work? On the Emerald Coast, it all boils down to how important a 0.43% savings is to your overall purchase decision.