There is an expression that is often used in real estate, which is the dog days of summer. The typical connotation is the quiet period in real estate in July and August where there are fewer listings and sales. While you may think that’s because it’s a hot time of the year and dogs sit around panting in the sun, there is apparently a more nuanced explanation.
The reason behind the saying has to do with the fact that from July 3rd to August 11th, the Sun occupies the same region of the sky as Sirius, the brightest star visible from any part of Earth and part of the constellation Canis Major, the Greater Dog.
The earth’s tilt during this time (in the northern hemisphere at least) means these are traditionally the hottest days of the year. In real estate, we have traditionally seen a bit of a lull during these times. We don’t get a long summer in Ontario, so it does make sense that people take time off from buying and selling real estate to actually get out there and enjoy the nice weather.
We’ve seen traditional cycles of real estate upended due to COVID and it made us wonder if the dog days of summer are still a thing in real estate. We pulled the data and charts from the Toronto Regional Real Estate Board in order to get the answer. Let’s dive in.
While the slowest time of year for real estate is traditionally the dead of winter (December and January), we historically saw that the dog days of summer (July and August) had the second slowest period with fewer sales. Is that still true?
When we look at the monthly sales with the last three years as a comparison, this is no longer the case.
- In 2018, July and August were busier months for sales than September. October got a bit busier than things started to quiet down in November before slowing down tremendously in December.
- In 2019, we effectively saw the same story. July was only a bit quieter than June but still saw more sales than September. October was the only real “Fall Market” before November quieted down again.
- In 2020, we had the impact of COVID on the market, which meant a very slow Spring. July actually took off compared to June and it was literally exactly the same number of sales in July 2020 as in September 2020. October dipped a bit and then a bit more in December.
- In 2021 so far, we’ve seen huge numbers of sales, but we peaked in March. April dropped down and so did May. We would expect to see June numbers continue that trend.
What can we takeaway from the above chart?
In recent years, we reach our high for the year in May most of the time. June begins to drop a bit and July, August and September are fundamentally similar in terms of number of sales. October traditionally sees a bit of a spike in sales before things quiet down as we head into the holidays and the end of the year.
Do the dog days of summer exist from the perspective of number of sales? No. They are effectively similar in the number of transactions.
Let’s turn to our other key indicator, the average sale price.
Traditionally we see the highest average price in the spring with the fall market approaching a similar height. The lowest sale price is almost always at the start of the year in January.
When we look at the monthly average sale price with the last three years as a comparison, we are seeing the fall market taking the lead and a limited number of opportunities in the summer.
- In 2018, we hit our highest average sale price in May. October was just a couple of thousand dollars lower. July and August went down a bit but not a huge drop.
- In 2019, we achieved our highest average sale price in October. August was a bit of a buying opportunity as the average sale price dipped to the lowest it had been since March.
- In 2020, we had the impact of COVID on the market, which saw prices drop in the spring, and our lowest average sale price for the year in April. The highest average sale price took place in October. There were no buying opportunities in July or August and from May through to October, the average sale price increased each month.
- In 2021 so far, we’ve seen record breaking average sale prices in three of the five months on record. January was our lowest average sale price and May (the last month we have data for yet) is the highest average sale price so far.
What can we takeaway from the above chart?
July is still traditionally a bit cheaper than June and August is a bit cheaper than July. Last year bucked that trend but if we discount that data given the unusual circumstances, it seems likely that this year may return to the norm. If that takes place it means that, on average, July and August may see lower sale prices.
Do the dog days of summer exist from the perspective of average sale price? Yes. It isn’t always consistent, and it isn’t a huge drop, but August (and to a lesser extent July) do see average lower prices.
Our review of the latest charts and data tells us that the dog days of summer no longer follow the hard and fast rule they traditionally did. We don’t see a consistent strong slow down in the number of sales in July and August, but we do still see a bit of a drop in the average sale price, with August being the clearest month for buying opportunity.
If you’re considering buying or selling, then work with agents who don’t give you platitudes about what “traditionally” happens but instead look at the data to help identify opportunities in buying and selling. If that sounds appealing, please get in touch with us!