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.

 

 
 

 
 

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: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Can Germany Be Made Great Again?
      When Germany Was Great! Ever since the start of the deliberately conceived “migrant crisis,” orchestrated by NWO elites, the news out of Germany has been, to say the least, horrific. Right before the eyes of the world, a country is being demographically destroyed through a coercive plan of mass migration.  The intended consequences of this – financial strain, widespread crime and property destruction, the breakdown of German culture – will continue to worsen if things are not...
  • Yanking the Bank of Japan’s Chain
      Mathematical Certainties Based on the simple reflection that arithmetic is more than just an abstraction, we offer a modest observation.  The social safety nets of industrialized economies, including the United States, have frayed at the edges.  Soon the safety net’s fabric will snap. This recognition is not an opinion.  Rather, it’s a matter of basic arithmetic.  The economy cannot sustain the government obligations that have been piled up upon it over the last 70...
  • Prepare for Another Market Face Pounding
      “Better than Goldilocks” “Markets make opinions,” goes the old Wall Street adage.  Indeed, this sounds like a nifty thing to say.  But what does it really mean?   The bears discover Mrs. Locks in their bed and it seems they are less than happy. [PT]   Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on.  Moreover, if the market goes up for...
  • What Went Wrong With the 21st Century?
      Fools and Rascals   And it’s time, time, time And it’s time, time, time It’s time, time, time that you love And it’s time, time, time… - Tom  Waits   Tom Waits rasps about time   POITOU, FRANCE – “So how much did you make last night?” “We made about $15,000,” came the reply from our eldest son, a keen cryptocurrency investor. “Bitcoin briefly pierced the $3,500 mark – an all-time high. The market cap of the...
  • Seasonality: Will Patterns that Worked in the Past Also Work in the Future?
      Historians of the Future Every investor makes trading decisions based on what happened in the past – there is no other way. What really interests us is the future though. After all, what happens in the future ultimately determines investment success.   When in doubt, you can always try to reach the pasture...  In Human Action, Ludwig von Mises described stock market speculators as akin to “historians of the future”. This is without a doubt the most trenchant definition of...
  • Bitcoin Forked – Precious Metals Supply and Demand Report
      A Fork in the Cryptographic Road So bitcoin forked. You did not know this. Well, if you’re saving in gold perhaps not. If you’re betting in the crypto-coin casino, you knew it, bet on it, and now we assume are happily diving into your greater quantity of dollars after the fork.   Bitcoin, daily – adding the current price of BCH (the new type of Bitcoin all holders of BTC can claim at a 1:1 ratio), the gain since the “fork” amounts to roughly $1,000 at the time we...
  • Czar vs. Pope
      Vladimir the Great Sums Up Pope Francis the Fake Vladimir Putin has once again demonstrated why he is the most perceptive, farsighted, and for a politician, the most honest world leader to come around in quite a while.  If it had not been for his patient and wise statesmanship, the world may have already been embroiled in an all-encompassing global conflagration with the possibility of thermonuclear destruction.   Vladimir Putin is sizing up Pope Francis with his “good...
  • The Future of the Third World
      Decolonization The British Empire was the largest in history. At the end of World War II Britain had to start pulling out from its colonies. A major part of the reason was, ironically, the economic prosperity that had come through industrialization, massive improvements in transportation, and the advent of telecommunications, ethnic and religious respect, freedom of speech, and other liberties offered by the empire. The colors represent the colonies of various nations in 1945,...
  • Bitcoin Has No Yield, but Gold Does – Precious Metals Supply and Demand Report
      Bitcoin and Credit Transactions Last week, we said:   It is commonly accepted to say the dollar is “printed”, but we can see from this line of thinking it is really borrowed. There is a real borrower on the other side of the transaction, and that borrower has powerful motivations to keep paying to service the debt. Bitcoin has no backing. Bitcoin is created out of thin air, the way people say of the dollar. The quantity of bitcoins created may be strictly limited by...
  • Is Historically Low Volatility About to Expand?
      Suspicion Asleep You have probably noticed it already: stock market volatility has recently all but disappeared. This raises an important question for every investor: Has the market established a permanent plateau of low volatility, or is the current period of low volatility just the calm before the storm?   All quiet on the VIX front... what can possibly happen? [PT] - click to enlarge.   When such questions regarding future market trends arise, it is often...
  • Why There Will Be No 11th Hour Debt Ceiling Deal
      Milestones in the Pursuit of Insolvency A new milestone on the American populaces’ collective pursuit of insolvency was reached this week. According to a report published on Tuesday by the Federal Reserve Bank of New York, total U.S. household debt jumped to a new record high of $12.84 trillion during the second quarter. This included an increase of $552 billion from a year ago.   US consumer debt is making new all time highs – while this post GFC surge is actually...
  • Will They Haul Off Trump’s Statue, Too?
      Confused by Shadows POITOU, FRANCE – This week, we are talking about theperishable nature of gods. Yesterday, the city fathers of our hometown of Baltimore let it be known that it was time to toss out the old deities.   The Robert E. Lee and Thomas. J. “Stonewall” Jackson Monument in Baltimore, which the mayor inter alia wants to remove. Suddenly it has become fashionable to erase the memory of an important part of US history all over the country. By experience, this...

Support Acting Man

j9TJzzN

Austrian Theory and Investment

Own physical gold and silver outside a bank

Archive

350x200

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]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com