Did someone tell you it was a good time to sell? Were they an agent? Surprise surprise, a real estate agent wants you to sell your house... right now. I keep seeing articles on my news feeds about how selling in the Fall is a great idea, like this one, and this one, and this one… I'm not sure if they're trying to convince homeowners or themselves, but my experience has not been the same. In fact, my buyer clients have gotten some great deals on homes in the fall/winter. The theories in any pro list-your-house-in-the-fall articles typically refer to an abundance of buyers and low inventory, which makes perfect supply and demand sense. However, the data points in a different direction so what's the basis for these articles? They seem to be nothing more than selfish ploys that seller-heavy agents can use to convince homeowners to sell during the fall months. In addition to the fall months, the winter months are even worse. Despite my motives, and at the risk of being a typical "buy buy buy" agent, I would argue that the Fall/Winter is a great time to buy. This post is my view regarding the upcoming fall/winter markets specifically, and may seem contradictory to my other post Is it a Buyers’ or Sellers’ Market??? Neither, Here’s Why… I still believe the best homes (highly desirable and SuperFunction) would still outperform any general categorization of the market, while the worst homes (undesirable, impractical, dysfunctional) will underperform. I digress.
Let’s talk about the following in relation with the yearly cycles to see what really happens during the Fall/Winter and why there seems to be some confusion.
Supply and Demand
% of List Price
Average Sales Price
Supply and Demand
Everyone has seen the supply and demand graph. There are 2 pieces to this economic law (per say). If only one is moving, it’s very easy to predict a market. When both are moving, it’s still easy to predict the market… but the key is to know that both are moving. As I’m going to show with the graphs below, the articles and posts preaching “good time to sell” about the fall and/or winter markets are fallacious. They are solely looking at the supply piece of the “supply and demand” equation—did they forget about the “and”??? I believe that the demand changes as well as the supply during the fall/winter markets, which explains why a decrease in inventory does NOT result in an increase in home values.
...the number of consumers alone does not reflect the level of those consumers’ need to buy
Perhaps these pro-sell articles that pop-up in the fall/winter are not forgetting about the demand, but are misunderstanding it. There is data to support the increased number of buyers in the market (we’re not going to get that deep right now) but the number of consumers alone does not reflect the level of those consumers’ need to buy. As you look through the graphs below, I’ll give a brief synopsis and some interpretation because they may be hard to pinpoint the peaks the valleys. My theory combines both supply and demand—demand for sellers to sell and buyers to buy. This is a multifaceted theory so… read slowly and stick with me through my robotic writing below.
Sellers that don’t need to sell will begin to take their homes off of the market: these homes would have already sold if they were priced correctly and/or were more desirable. The sellers remaining in the market may also suffer from inflated pricing and undesirability; in addition, those remaining sellers and any new sellers in the market need to sell—they actually need to, otherwise they wouldn’t be in/have entered the market.
Buyers who were in the market during spring and/or summer months but haven’t bought yet do not have as strong of a need—this could be due to a lot of reasons: too picky, frugal, lack of ambition, etc. Buyers entering the market during the fall/winter are most likely preparing for spring: some may have a life-change situation and have a stronger need but not most.
Combining the seller and buyer situations result in low inventory AND low demand. The pudding, if you will…
This graph shows that inventory starts to decrease mid-late fall, around November, every year. Looking only at this piece of data would result in one assuming an increase in value. The following 4 graphs show the opposite.
You can see that starting July/August-ish every year, the average market time begins to increase. This would imply demand is decreasing and/or supply is increasing. But we know from the previous graph that supply is decreasing; therfore, proving that demand is lower regardless of how many buyers exist.
% of List Price
This graph shows the % of original list price (prior to any price changes). Again, at it’s lowest during winter months. I will admit that this piece of data alone would be somewhat inaccurate due to the fact that many of the homes could have been priced to high earlier in the year, and after several significant price drops, they sold during the winter. But looking at the next graph negates that.
% of Last List Price
This graph shows how much lower than the last list price the home sold for. Lowest in the winter months. These last 2 graphs show that sellers are having to come down from their original and/or current list prices the most during the fall/winter. I explain the last 2 graphs in my post Sellers are Panicked in Lake Forest, to You go the Spoils…
Sales PriceMy last point, to put the nail in the coffin… this is the Value piece at the end of the Supply and Demand equation. If this showed higher average sales prices, then my previous graphs could still be true, and my point also ring false. But... average sales price is down at the turn of the new year as well.
...in order to sell above the line, the homes need to be desirable
Sellers in the fall/winter are generally in a need to sell situation which puts them in a weaker position of negotiation; and their counter-parts, the buyers, are generally not in a need to buy situation, putting them in a stronger position of negotiation. The buyer-seller relationship combined with the market conditions in the fall/winter time make for a buyer’s market.
If you’re thinking of buying, the fall/winter can be a great time to buy. Get your hat, gloves, and boots on and let’s go shopping. If we don’t find a home that works for you, there’s always spring.
If you’re a seller who needs to sell in the fall/winter, then we need to list with proper expectations and listen to the market. The graphs above represent averages, which means there are homes that sell above and below those lines. I'm not saying never to list in the fall/winter, but in order to sell above the line, the homes need to be desirable—stay tuned for my post on SuperFunction. We can also try to spruce up the house with fall and holiday decor, which can be very enchanting for buyers if done well. I’m working on singing Christmas carols during showings to see if that helps sell homes for more money, I’ll get back to you with my R&D ;-)
Thank you for reading! Comments and Questions are welcomed!