Michiganders probably have a good idea about how seasonal changes can affect their day-to-day lives. The seasons can also affect things like the demand for real estate and home prices. By understanding seasonality in real estate, you’ll be better able to understand trends and avoid getting distracted by click-bait headlines.
What is Seasonality in Real Estate?
Seasonality in real estate refers to the ebb and flow of home prices that correlate with the seasons. The housing market follows regular trends based on the demand for homes. Spring is considered the peak homebuying season, with activity remaining strong throughout the summer. The increased homebuying activity during peak seasons can affect home prices, as high demand causes appreciation. The demand for houses generally decreases in the fall and winter, and price growth slows, but prices usually still appreciate.
Why Headlines Can Be Misleading
Chances are, if you’re entering the housing market, you’ve probably seen headlines touting the negative outlook for home prices. However, many of those negative headlines compare abnormalities, like record highs that weren’t sustainable, to typical seasonality in real estate. With prices normalizing, looking at the long-term home price index can actually give a more reliable and balanced approach that reflects the usual ebb and flow of the market. S&P Dow Jones Indices has an interactive graph that shows the national home price index for multiple years. You can see how the long-term price index balances out by clicking through the options. In contrast, the short-term index has sharper changes, which could lead to misleading headlines.
Viewing the Real Estate World With a New Lens
Once you know that the short-term price index quoted reflects the higher demand of the season, you can learn to see through the headlines to make critical decisions about moving forward. Remember it’s normal to see a deceleration of appreciation, slowing home price growth, throughout the year.
Homebuyers should also know that options are available during peak seasons. By consulting with a mortgage lender, you can learn about mortgage programs available to you and potentially get pre-approval to help you snag your dream home, even in a competitive market. Expanding your home search can also provide relief. In fact, some mortgage programs, like USDA Loans, offer incentives like low-interest rates and zero downpayment options for purchasing homes within specific rural areas.
About Michigan Mortgage Lender, Julie Krumholz from Superior National Bank
Julie Krumholz from Superior National Bank is no stranger to the change of seasons in the mortgage industry. For over 35 years, she has helped homebuyers with different financial backgrounds to make the dream of homeownership a reality. Julie has worked in processing, closing and loan origination, underwriting, QC auditing and has even co-owned a mortgage brokerage firm. Her passion for helping homebuyers has made her a trusted resource for those navigating the homebuying process.
