How one family is playing the market

This post tells the story of how one family in my market is putting a plan in place to buy later this year. This family is leveraging the dynamics of the slower season - knowing that high inventory and low sales in the coming months will lead to highly motivated sellers and lower prices. Although this post is specific to Madison, Wisconsin, the seasonality of the Madison market is shared by many other markets around the country. Here goes:

Here's a story about one family that is implementing a very deliberate home-buying plan.

Last springs this family decided to sell their condo on Madison's west side. When they put their condo on the market, they listed it at a good market price and it sold very quickly. They actually lost $10,000 on the sale, but they were happy to take that loss. Since that time they have been saving money every month by renting another condo in the neighborhood (which is on the market, but not at a market price). Their monthly rent is only half of the their previous mortgage payment, and by renting they've eliminated their property taxes.

Now I'm helping this family implement a buying plan that we'll start later this fall. Why this fall? Because this family knows that sellers tend to become very motivated during the fall and winter months when sales volume dips (see chart below).

And motivated sellers leads to better deals and better prices. Take a look at the graph below. Note how prices tend to be lower during the months that span from January through April. People who end up buying (i.e. closing) during these low-price months are the ones who are out shopping, negotiating and making offers in October, November, December, January and February - the slowest months of the year. These are the months when sellers tend to be nervous and more willing to be flexible when it comes time to negotiate.

Even prices are seasonal in real estate, which means the fall and winter months can be a great time to shop for a new home. Inventory is high, so there will be plenty of homes to choose from in the coming months.

I'll provide an update on this family later this year.

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