Realtors Reveal the Worst Time to Buy a House, And Other Newsweek Nonsense

Like every degenerate gambler, Newsweek tries to help readers guess when is the best time to buy a house. Almost every Spring you will see these articles, and they never have any real data, just stories from a few select real estate agents.

Before we get into that, let's, as always, start with the data.

Mortgage rates continue their steady 6-7% bandwidth, closing this week slightly up at 6.90%, about the same as they have trended most of this year.

Inventory: nationally, housing stock continues at record lows for periods other than during the pandemic and has declined to match the rates of 2021. As I have repeatedly said, as long as inventory is low, prices cannot go down much.

Locally, in Los Angeles, the market grew slightly in the direction of a seller's market to a market action index of 44, higher than the last few months' rating of 43.

I want to share an amazing article by Black Knight, one of the biggest companies int he US in loan servicing and their hands on the pulse of the market. They wrote an article "SHORT HOME SUPPLY KEEPS PRICES HIGH, EVEN AS RISING RATES DAMPEN DEMAND."

The conclusion is something I have been saying for months, but the data shows some amazing details. 

First, it shows the direct correlation between months of housing inventory and pricing changes in the future. They reviewed 20 years of data and price changes, and it shows that the inventory level is the best prediction of future prices.

Another detail is that the lag is different in various markets, while on average its 2 month indicator, meaning changes in inventory predict the prices 2 months out, but the range is from immediate in Texas to 10 months in California. This matches my experience in real estate where inventory starts to rise, and prices nationally stop rising (or declined in 2008), but it takes almost a year for the market momentum in California to change.

When you overlay their statistics with the history, you see how inventory is the critical predictor of future housing prices.

The winner of the worst real estate news article this week is a regular topic the real estate news industry trot out every Spring. This one is particularly bad, 3was sent to me by my collogue Tim Allums who is similarly offended.

Newsweek's headline is "Realtors Reveal the Worst Time to Buy a House."

Now, who would not want to know the cheat code to know when the best time to buy is. Sounds like shopping for electronics on Black Friday, an easy way to save money, right?

Well, let's look at the data and try to find the facts. So, first we have a quote from Andrew Ragusa, a realtor in Long Island, New York, who says ""Well without a doubt the worst time to buy a house is the spring. When everyone else is out buying. It's a mad rush of properties being sold and as a buyer you are paying a lot more than you should if you're lucky enough to get one." OK, he may be a great agent, and all that may be true, but what if the reason that it is a rush in Spring is because its the best time? Maybe home prices decline from Spring through Fall, and the earliest in Spring gets the best deals.

To prove my point, in the next few paragraphs, Newsweek quotes another Realtor that says "Overall there is never a 'perfect' or 'worst' time to buy a home." 

So which is it? 

The truth is the market changes over time, and the best time for YOU is the best time for YOU!
--
Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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