The Super Bowl Kicks Off Selling Season
The Super Bowl is not just a monumental event in the world of sports; it’s also the unofficial start of the spring selling season in the real estate market. But what does that mean?
For many flippers, the Super Bowl means urgency: if their winter project is not quite done, it’s time to get it finished, so they can sell in the first “Spring wave”—then buy again, and flip the next property in the summer selling window.
Seasoned (pun intended) flippers know the best times to buy and to sell, and hence how long they have to do a reno, and hence the properties to choose. Let’s look at timing together…
Selling Season Means Game On!
Spring season is understood to run from Super Bowl Sunday through to Mother’s Day (some say Father’s Day), when it shifts into the summer season.
With the Market coming out of hibernation, it’s game on. Buyers are playing ball, stepping off the bench and into the action. Expect a positive shift in the coming months, with an increase in both listings and buyer activity. (This year there will be a lot of conversation around interest rates, so make sure you’re staying up-to-date with the latest news.)
The Phenomenon of Market Seasonality
Historically, the spring and summer months see a surge in both listings and sales. In a typical year, the number of active listings begins at a low point, starts to climb once spring arrives, and peaks in early fall before starting the end-of-year decline. Inventory tends to peak a bit later than prices.
According to data from the National Association of Realtors, the upward trend is attributed to the warmer weather, longer days, and the desire of families to move and settle before the new school year begins. Conversely, the fall and winter months typically experience a slowdown, thanks to busy holiday schedules and cold weather, with fewer listings and a decrease in buyer activity. Strategic investors bear the macroeconomics in mind.
Sample Cycle
Here’s an example of what the playbook might look for an investor who wants to follow this seasonality trend: If your goal is two flips a year, a typical cadence would be to have the place ready by the middle of April for a sale by Mothers Day, with cash in your pocket by Fathers Day to buy your summer deal. If you can turn that one around by October, you’ll likely snag the family looking to move into their new place by Christmas. And then you have the money available for a great winter deal to be ready by the following spring, and the cycle repeats.
As you can see, for residential real estate investors, recognizing seasonal patterns is crucial for making informed buying decisions.
Seasonality Matters to Investors
Seasonality matters for several reasons:
- Timing for Buying and Selling: Just as in the big game, knowing when to make your move can significantly impact your success. Being able to anticipate when the market peaks and troughs can help time transactions for maximum benefit. Spring and summer offer a larger pool of potential buyers, increasing the chances of fetching higher prices when selling an investment property. On the other hand, the cooler months might present buying opportunities, as sellers who list during this time may be more motivated to negotiate, possibly leading to better deals.
- Strategic Planning for Diversified Portfolios: We’ve covered when the ideal buying and selling times are. But seasonality impacts rental markets as well. Investors looking to fill vacancies might find more demand during the warmer months when people are more inclined to move. Scheduling lease terms to end during high-demand periods maximizes potential rental income.
- Market Analysis and Forecasting: Understanding seasonal patterns is crucial for market analysis and forecasting. A strong portfolio with the potential for long-term success comes from taking the time to analyze past trends to better predict future market movements and make good investment decisions.
Navigating Seasonality: Strategies for Investors
So how should you adapt your strategy to take advantage of these seasonal fluctuations?
If you know that home sales start to pick up for the spring selling season, you can strategically plan for times throughout the year when you should start your search, finalize deals, and start renovations to be ready to put on the market at the right time. Some flippers will pass on ‘nearly good’ deals if they know the seasonality cycle doesn’t line up, because it can mean that they’ll have a longer holding period and lose money. They’ll work quickly in the fall to get exterior renovations completed so they can spend the winter doing the interior work in time for the spring sales. They don’t often veer from this strategy because they’ve found it successful.
Analyze Your Situation
At the same time, good investors don’t put handcuffs on themselves. A great deal is a great deal. And it’s important to remember that real estate markets are highly localized, and seasonality can affect regions differently. For instance, markets in warmer climates may experience less pronounced fluctuations compared to colder regions. Take your research further by analyzing historical sales data in your geo to identify more specific patterns of peak and off-peak periods to help you anticipate the best times to buy and sell wherever you’re investing.
Be Ready to Act
Importantly, be prepared to act quickly and take advantage of seasonal opportunities. This means having financing in place to make a swift purchase, being ready to list a property as the market heats up, or even adjusting pricing based on the season. When you know selling season is on the horizon, you have the chance to prepare so you can act swiftly on any deal that comes your way and get a leg up on the competition.
Having immediate access to financing is crucial for seizing good investments. Start by securing pre-approval for loans. Here’s a quick flip tip: Backflip offers a pre-qualifying form you can fill out on our app, with a letter that can help strengthen your offers when the right opportunity presents itself. Spend just a few minutes filling it out now to avoid racing against the clock when you’re almost at the end zone.
Disclaimer: This article is for informational purposes only and is not legal, financial or investment advice. To obtain advice tailored to your particular circumstances, you should consult a licensed professional advisor.
