Is Winter the Best Time to Buy SFRs?
Is winter the best time to buy single-family rentals (SFRs)? According to a new report from HomeUnion, the winter “off-peak” season is the best time of the year to acquire single-family rentals. In fact, they found that investors pay 7.2% less per sq. ft. during the winter versus spring & summer as well as seeing a higher average cap rate. They attribute this fluctuation partly to concerns about schools – with more buying activity in the summer months resulting in higher home prices.
“Based on seasonal cap rate fluctuations, our study conclusively found that early winter is the best time to acquire SFRs,” explains Steve Hovland, director of research for HomeUnion. “In many metros, median home prices drop substantially during the colder months, while rent losses were marginal for investors. Winter is the perfect time to acquire solidly performing SFR assets in cold-weather metros such as Pittsburgh and Chicago, as well as in the Sun Belt markets of Jacksonville, Tampa and Greenville, S.C. These markets all ranked among our top 20 metros,” he says. For properties that need a little TLC, a winter purchase can give contractors ample time to bring the property up to a level that maximizes rents as the spring renting season commences.
“We also discovered that school quality isn’t as important to investors in the winter: Buyers interested in neighborhoods with high-ranked schools make up a greater proportion of sales during the summer compared to the winter,” Hovland adds.