Single women and millennials are increasingly entering the real estate market. Here’s what they — and the rest of us — need to know about negotiating deals
August is Black Friday for real estate.
That’s the conclusion of a new report from Trulia, released Wednesday, examining price cuts in the housing market. Indeed, price cuts are most common in August when 13.9% of all listings get their prices slashed, the report — which looked at the entire price history of every listing found on Trulia’s website for six years — concluded.
“The cuts are likely driven by sellers who have sat through the summer months waiting for a buyer and don’t want to keep waiting into the fall and winter months as selling activity declines in most places,” the report — which notes that May – October have higher price cuts in general – concludes.
Meanwhile, December has the fewest price cuts. “By the time December rolls around, only one in 12 listings, or 8.3%, will see a price cut. By this time, most sellers and agents are holding out hope for renewed interest in early spring as potential buyers ramp up their searches again,” the report notes.
This comes at a time when price cuts are en vogue. The rate of price cuts is at its highest level since the housing market bottomed out in 2012.
Weather severity plays a role in price cuts “With a few exceptions, there is a high positive correlation between the severity of winter and how much price cuts swing between summer months and winter months,” the report notes. For example, the places that have the widest swing in price cuts between high and low months are places like Fairfield County, CT, Albany, NY, and Madison, Wisc. “where the rates of price cuts in August or September are at least 2.2 times as large as the rate in December.” Meanwhile, places like Florida often don’t have such severe swings.
While price cuts may seem like good news for homebuyers — and certainly may signal that there’s room for price negotiation when you buy a home — they don’t necessarily mean you’re getting a great deal. Indeed, since recent years have seen rapid home price appreciation, these price cuts may be the result of sellers who too aggressively price their homes and then are “forced to dial back,” the report concludes — rather than a softening of the housing market overall.
Whatever the reasons for the cuts, knowing when price cuts are most likely to happen is useful to new home buyers looking to score the lowest price they can. Felipe Chacon, Trulia’s housing economist, notes that someone who has been shopping throughout the summer and sees a house lingering on the market in August without a price cut may be in a particularly strong position to negotiate the price down. Though, he adds, it’s also important to consider how long the home has been on the market (the longer it has sat on the market, the most leverage buyers often have) and whether it needs work (homes that need repairs typically have more room in which to negotiate prices) when you determine how low of an offer you might make. Here are more tips for negotiating a lower home price.
This information may be particularly useful to groups like single women and millennials, who are entering the housing market in higher numbers — often as new homebuyers. A study from Quicken Loans noted that “single women are dominating the real estate market like never before;” since 2015, single women ages 17-49 accounted for 27% of mortgage applications, while married women of that age made up just 17%, their data showed. And data from the National Association of Realtors noted that single women made up nearly one in five homebuyers in the U.S., compared to only about 7% for single men.
Millennials too are entering the housing market in growing numbers. Luxury homebuilder Toll Brothers found that about one and four of its buyers was under 35. Experts say that later marriage rates and the recession delayed millennials from buying homes, but that trend is beginning to remedy itself.
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