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: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • What Do “Think Tanks” Think About?
      “Russiagate” WEST RIVER, MARYLAND – We’re back at our post – watching... reading... trying to connect the dots. And we begin by asking: What do “think tanks” think about? The answer in a minute. First, there is a dust-up in the Washington, D.C., area. “Russiagate,” it is called. As near as we can make out, some people think the Trump team had or has illegal or inappropriate contacts with the Russian government.   It's all very obvious, if one looks...
  • Parabolic Coin
      The Crypto-Bubble - A Speculator's Dream in Cyberspace When writing an article about the recent move in bitcoin, one should probably not begin by preparing the chart images. Chances are one will have to do it all over again. It is a bit like ordering a cup of coffee in Weimar Germany in early November 1923. One had to pay for it right away, as a cup costing one wheelbarrow of Reichsmark may well end up costing two wheelbarrows of Reichsmark half an hour later. These days the question is...
  • Quantitative Easing Explained
      [Ed. note: This article was originally posted in November of 2010 - we have decided to republish it with updated charts, as it has proved to be very useful as a reference - the mechanics of QE are less well understood than they should be, and this article explains them in detail.]   Printing Money We have noticed that lately, numerous attempts have been made to explain the mechanics of quantitative easing.  They range from the truly funny as in this by now 'viral' You Tube...
  • The Three Headed Debt Monster That’s Going to Ravage the Economy
      Mass Infusions of New Credit   “The bank is something more than men, I tell you.  It’s the monster.  Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath   Something strange and somewhat senseless happened this week. On Tuesday, the price of gold jumped over $13 per ounce.  This, in itself, is nothing too remarkable.  However, at precisely the same time gold was jumping, the yield on the 10-Year Treasury note was slip sliding down...
  • Jayant Bhandari on Gold, Submerging Markets and Arbitrage
      Maurice Jackson Interviews Jayant Bhandari We are happy to present another interview conducted by Maurice Jackson of Proven and Probable with our friend and frequent contributor Jayant Bhandari, a specialist on gold mining investment, the world's most outspoken emerging market contrarian, host of the highly regarded annual Capitalism and Morality conference in London and consultant to institutional investors.   As soon as Jayant touches down in London, he is accosted by...
  • Monetary Madness and Rabbit Consumption
      Down the Rabbit Hole “The hurrier I go, the behinder I get,” is oft attributed to the White Rabbit from Lewis Carroll’s, Alice in Wonderland.  Where this axiom appears within the text of the story is a mystery.  But we suspect the White Rabbit must utter it about the time Alice follows him down the rabbit hole.   Pick a rabbit to follow...   No doubt, today’s wage earner knows what it means to work harder, faster, and better, while slip sliding behind. ...
  • Central Banks – Tiptoeing Toward the Exit
      Frisky Fed Hike-o-Matic We haven't commented on central bank policy for a while, mainly because it threatened to become repetitive; there just didn't seem anything new to say. Things have recently changed a bit though. A little over a week ago we received an email from Brian Dowd of Focus Economics, who asked if we would care to comment on the efforts by the Fed and the ECB to exit unconventional monetary policy and whether they could do so without triggering upheaval in the markets and...
  • The Anatomy of Brown’s Gold Bottom – Precious Metals Supply and Demand
      The Socialist Politician-Bureaucrat with the Worst Timing Ever As most in the gold community know, the UK Chancellor of the Exchequer Gordon Brown announced on 7 May, 1999 that HM Treasury planned to sell gold. The dollar began to rise, from about 110mg gold to 120mg on 6 July, the day of the first sale. This translates into dollarish as: gold went down, from $282 to $258. It makes sense, as the UK was selling a lot of gold... or does it?   Former UK chancellor of the...
  • The Valium Era
      Don’t Be Fooled by These Calm Markets What is happening in the world of money? Well - the most striking thing is: nothing. It doesn’t seem to matter what happens. Dysfunction in Washington. Meltdown of the techs. No matter how rough the seas get, the markets glide along... scarcely noticing the storm-tossed waves below.   Thankfully the world's central planners are so well-versed in egging on the creation of an ever greater mountain of debt and seemingly limitless asset...
  • Is Trump a Modern Caesar?
      Putting on the Purple   Mayor: Drebin, I don’t want any more trouble like you had last year on the South Side. Understand? That’s my policy. Drebin: Yes. Well, when I see five weirdos dressed in togas stabbing a guy in the middle of the park in full view of 100 people, I shoot the bastards. That’s my policy. Mayor: That was a Shakespeare in the Park production of Julius Caesar, you moron! You killed five actors! Good ones. – The Naked Gun   Laura Loomer,...
  • The Fed Rate Hike and Gold – Precious Metals Supply and Demand
      Shrinking the Balance Sheet? The big news last week came from the Fed, which announced two things. One, it hiked the Fed Funds rate another 25 basis points. The target is now 1.00 to 1.25%, and there will be further increases this year. Two, the Fed plans to reduce its balance sheet, its portfolio of bonds.   Assets held by Federal Reserve banks and commercial bank reserves maintained with the Fed – note that while asset purchases and bank reserve creation are connected,...
  • How to Discover Unknown Market Anomalies
      Seasonax Event Studies As our readers are aware by now, investment and trading decisions can be optimized with the help of statistics. After all, market anomalies that have occurred regularly in the past often tend to occur in the future as well. One of the most interesting and effective opportunities to increase profits while minimizing risks at the same time is offered by the event studies section of the Seasonax app.   A recent event that had quite an impact on certain...

Support Acting Man

Austrian Theory and Investment

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

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]

 

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

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com