What is seasonality in New Jersey?
Seasonality affects the market every year in New Jersey. In order to fully understand the New Jersey residential single family housing market, one has to understand seasonality.
It’s an effect similar to something else New Jerseyans should be familiar with: Traffic. If you’ve ever driven on the Garden State Parkway, this is a word you know. Essentially, traffic is the result of a lot of people doing the same thing at the same time. A lack of traffic results from the same thing – a lot of people doing (or not doing) the same thing at the same time. Why does traffic occur? Well, everyone tends to leave for the office at the same time and everyone tends to leave to go home from work at around the same time.
The same effect is seen in the housing market. Three things are the main drivers of this effect: holidays, weather, and school calendars. These are things that tend to get people doing the same thing at the same time. Cold temperatures have a direct effect on people’s willingness to buy a home. Simply put, when there’s a foot of snow on the ground, only those who must buy a home due to circumstance are out in the market. Those who can hunker down and wait for better times to change housing tend to wait. Holidays tend to have a psychological effect as well, where people tend to want stability during November and December and also tend to lessen the numbers of people willing to change housing. For families with school aged children, school calendars provide a logistical roadblock to buying from September to June.
What does this look like graphically?
Above is a graph of median prices for single family homes in Bridgewater, NJ in 2013.
Not surprisingly the months with the lowest average sales price went under contract in January, December, and November. The highest median sales price months went under contract in July and August. This is a relatively common pattern in NJ, and this type of seasonality tends to show up in all types of markets, increasing, declining or stable.
If I am considering listing my home, does this mean one is likely to receive a higher offer for my home at certain times of the year? The answer is definitely yes. Seeing as most of us selling a home will be buying another at essentially the same time, this knowledge is not likely to be something one can exploit…