April is the cruelest month, wrote T.S. Eliot in his poem “The Wasteland.” But the best time for a Real Estate IRA investor to buy a home might be October.
That’s according to a study by RealtyTrac, a real estate industry research and data firm. The company looked at some 32 million single family home sales and condominium sales since the year 2000. From all that data, they found that October was the best month of the year for Real Estate IRA and other buyers to be able find deals at a discount from the full market value of the property.
According to RealtyTrac’s research, October buyers were able to close deals at an average 2.6 percent discount from the estimated full market value of the property. February came in 2nd, at an average discount of 2.4 percent, followed by July, during which buyers would score an average discount of 2.3 percent, and then December, when discounts from estimated full market value amounted to 2.2 percent.
For Real Estate IRA investors, this can make a significant difference in long-term ROIs.
The worst month for Real Estate IRA Buyers
Nationally, the worst month, by far, when buyers had to pay a 1.2 percent premium to estimated full market value, was April. In fact, April was the only month during which buyers tended to pay a premium compared to the estimated full market value of the property.
So maybe T.S. Eliot was right after all.
It also appears that the National Association of Realtors overstates property values by about 2 percent.
“The start of the school year and the holidays influence our buyer decisions and serve as a strategic indicator of the most advantageous times for buyers to land their lowest-priced deal. Due to less buyer competition, October and November typically provide a dip in the SoCal real estate activity cycle,” said Mark Hughes, chief operating officer with First Team Real Estate, a California based agency, to RealtyTrac researchers. In his Southern California market, the best day to buy at a discount is October 1st.
There are, of course, significant seasonal factors in play, and these seasonal factors can vary widely by region and with the local economy. In Seattle, for instance, the best day for buyers to get a discount is April 1st, when days are still quite short.
The best single day of the year to buy? October 8th, on which buyers paid an average of 10.8 percent below estimated market value at the time of the sale. Next was November 26th, when buyers paid 10.6 percent below market value as estimated by RealtyTrac at the time of the sale, followed by December 31st, when buyers paid an average of 9.7 percent below market value.
The worst day to buy? January 19th. Buyers paid an average of 9.6 more than the estimated value of the property in those markets.
That said, there’s lots of noise in the data, and the best day and month for various markets can vary widely.
In the Charlotte area, the best single day for buyers to pull the trigger is October 15th. In Raleigh, it’s July 5th. In Greensboro-High Point it’s December 5th. And in Charleston it’s December 6th. Columbia’s best day for buyers was February 7th, Augusta-Richmond County’s best day for buyers was February 16th. Raleigh’s is July 5th.