Updated: Sep 5, 2018
Real estate is cyclical. Whether we’re talking about long term 7-8 year housing cycles or the seasonality of selling homes, timing matters. Some timing is within our control, others can be a result of local dynamics. In Boston, the most active seasons are [have been] Spring and Autumn. There are a few underlying drivers for this and one stands out head and shoulders above the rest: School seasons. We’ll first cover the rental market cycles and follow with the sales market.
We’ll start with rentals. It’s estimated that over 70% of leases are on a 9/1-8/31 cycle. Why is this? The students. With Autumn marking the start of the school semester, students come back in droves during late summer. As such, their desired lease start dates fall somewhere in the beginning of this time-frame (i.e. September 1st). As a result, landlords quickly picked up on the fact that demand is highest for this cycle. Where there is high demand, prices follow. A property with a September 1st start date will rent more than an off-season listing.
The second largest movement in Boston is for June/July. This is driven by the large medical constituency who are starting residency around this time. Some landlords prefer to have their leases start/end in June as they feel this better targets a more professional student body. Any rental listings outside of these two main cycles are considered off-season.
While the June/July and Sept 1st lease dates have been the norm, the past two years have seen an oversupply of luxury apartments that have depressed the rental market, especially during the Sept 1 time-frame. Adaptive landlords and agents advising them have put their cycles to an earlier Springtime, in an effort to hedge against the potential oversupply. Also, this allows time to adjust pricing if the original pricing was too ambitious and needs to be reduced. This is the seasonality driving the rental market timing. Of course there will be people moving throughout the year, mostly due to work relocation or entering/exiting the home ownership market.
Let’s talk sales. Schools provide a similar driver for the spring market. Boston proper is a large feeder market for the suburbs. We have a strong pool of family buyers and sellers who are looking to get settled prior to their kids starting school in the Fall. It’s not ideal to be relocating or making a transition and having your kids start 3rd grade, in a new school.
It’s a common cycle for people to purchase a home in a neighborhood like the South End, have a kid (or two) then make the transition to the suburbs to place their children in a great school and live out the suburban dream. A good majority of the 2 beds on the market in the South End have a crib or kids room as the second bedroom. On the flip side of that cycle are the empty-nesters who are selling their suburban homes and making the transition back into the city for the next chapter of their lives; that of an urban experience.
With this strong driver for settling before school starts, and the typical 3-4 month time-frame for listing and selling a home, April and May mark the start of the Spring season. We see a lot of inventory hit the market during this time-frame. More inventory typically means more competition for sellers, however we’ve seen demand outpace supply for the past few years, minimizing any significant impact to average Days On Market (DOM).
Pro Tip: Despite strong demand, pricing the property appropriately is of the utmost importance. Being overzealous or unrealistic when listing in a hot market can be the kiss of death for selling quickly and for the highest price. You risk giving buyers and their agents the impression you’re greedy, unmotivated or unrealistic (people are emotional creatures), despite your intentions or actual motivations.
The second strongest cycle, historically, is the Fall market and Labor Day marks the beginning. We always see a group of properties that were not sold during the spring/summer months, re-listed, often with another agency and with a price adjustment. Either the marketing wasn’t enough or the price wasn’t compelling, these properties are given a new chance to sell come Fall. This year, we’re experiencing the typical rush to market and have seen an average of 250 properties listed the first week back from Labor Day as New, Reactivated and Back on Market. We’ve seen a fluctuation between 60-120 throughout the year in a normal week by week period.
Is Fall the best time to buy? It depends. If you were not able to locate a property during the Spring/Summer, you’ll likely have a second chance come Fall given the increase in options. However, you also see more people re-entering the marketplace as buyers during this period as well. Supply rises, but also demand.
Pro Tip: If you received a pre-approval during the spring or summer, it’s important to have this updated as they usually are only good for 3 months. You want to have this in-hand when you locate the property you’re interested in.
So what about the other seasons? Boston has been low on inventory for a few years now. This is the same story that’s being told across the nation in hot markets. People are having to be in the market for longer, sometimes extending the life-cycle for up to a year. This is reducing the seasonality of real estate. More and more we’re seeing buyers who are particular about what they want (or can afford), go through numerous ‘seasons’ before ending up with the home they want. This is keeping alive all but the coldest, snowiest winter weeks and hottest and busiest summer weeks. We always say, any buyer who’s out in a snowstorm is a serious buyer! The same principles of supply and demand apply: less buyers in the market with less inventory vs more buyers and more inventory. If you’re looking to list a property, the proper marketing and pricing will allow you to sell any time of the year. Timing has to do more with what’s convenient on your end and the circumstances you’re working with personally.