About a year ago I looked at the best time to buy or sell a home in Chicago from a supply and demand perspective. Theoretically, looking at the market that way should get you the best price for a home sale or purchase. However, what does the data actually tell us? Well, I’ve done this before – a long time ago and it’s time for an update.
The Case Shiller index folks produce two sets of home price indices for the Chicago area. The un-adjusted indices are what I report on every month. It’s just the regular indices that show price levels as they are without any seasonal adjustments. When you look at my graphs you can clearly see a seasonal pattern in the data. That’s why the Case Shiller folks also produce a seasonally adjusted set of indices, designed to remove seasonal effects. I compare the two to determine how much of a seasonal impact they think exists and we can look at that to figure out when prices generally peak or bottom out during the year.
They get their adjustment factors by feeding their un-adjusted indices into a software program maintained by the US Census Bureau – the X-12-ARIMA seasonal adjustment program. Sounds sexy, right? I have no idea how it works and my guess is that nobody else knows either, other than the people who built it. But we’ll trust it anyway. Here is how those seasonal factors have varied over time.
I have no idea why the seasonality would vary over time but I guess it’s possible. The people who created the black box that spit out these values would probably tell us that it’s just the way it is.
The most recent peak value occurred in August 2019 at 1.7% and the lowest point occurred in February at -1.8%, which is a 3.5% total swing. Also, keep in mind that the Case Shiller index is a 3 month average so the August number is more like July and the February number is more like January. Also, keep in mind that this is based on what closed at those points in time so the contracts were written 30 – 60 days prior and if you want to get a contract in one month you probably need to be on the market a month before that.
So, based on this data, I would say that to get the highest price when selling your home you want to hit the market in May and to get the lowest price when buying a home you want to start looking in November. Both of those time frames are shifted a little later in the year than my analysis last year would suggest.
#HomeSelling #HomeBuying #ChicagoRealEstate
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.