For as long
as I’ve been in real estate, the biggest buyer surge relative to listings on
the market takes place between mid-January and the end of March.
I’ve always
felt it was because sellers tend to more beholden to the school calendar and
the “conventional wisdom” that the time to sell is in the spring.
However, the
numbers tell a different story.
Take a look
at these inventory shifts between January and February over the past few years:
January 2016
– absorption rate of 1.85 months, active-to-under contract ratio of 0.93
February
2016 – absorption rate of 1.07 months, active-to-under contract ratio of 0.73
January 2015
– absorption rate of 1.81 months, active-to-under contract ratio of 0.96
February
2015 – absorption rate of 0.95 months, active-to-under contract ratio of 0.67
January 2014
– absorption rate of 2.52 months, active-to-under contract ratio of 1.19
February
2014 – absorption rate of 1.45 months, active-to-under contract ratio of 0.85
In normal
months, these ratios will only move a few basis points… but the evidence
clearly shows that the buyers show up swinging after the first of the year,
while most prospective sellers are just starting to take down their holiday
decorations.
I’ve seen it
at street level as well. Already in
2017, I’ve written three contracts for buyer clients which lost out in multiple
offers.
While not as
intense as 2016, the surge is still real.
I’ve always
believed the psychology of the market is that buyers – especially first-time
buyers – spend the holidays formulating plans and making decisions about the
coming year. If they reach the point of
deciding to buy, they want to start sooner, not later.
And so as quickly as they can find a few new listings and an agent to show them
around, they start swinging.
As a seller,
the absolute best time to list is when the choices are limited and the buyers
are plentiful.
There are
other compelling reasons to list early in the year:
Relocations –
many relocations are on hold during the holidays, but those relocation buyers
hit the ground running in January
Landscaping –
if you have an older home with questionable landscaping, the time to sell it is
when there is snow on the ground and everyone’s lawn is brown
Lot Orientation –
by the same token, if your backyard faces due west and bakes in the summer,
buyers aren’t thinking about this in February
Air
Conditioning – if you don’t have it, it matters less in the winter
Driveways –
a south facing driveway is a more valuable asset in the winter than it is in
the summer
Noise – both
road and neighborhood noise are less of a factor in the winter, when windows
are closed and the focus is on indoor living
Of course,
diligent agents will note all these things, and with good representation a buyer
will know exactly what’s going on. But I
also talk to people all the time (who were represented by other agents) who say
“we never thought about that when we bought”, or “if we had known, we would
have reconsidered”.
The job of a
good agent is to make sure you know everything there is to know and that your
eyes are wide open – regardless of the time of year. I often tell my buyer clients, “My job is to
think winter all summer, and summer all winter.”
With the
being said, I know the odds of selling a home – any home – are a lot better in
the first three months of the year than in the last three months of the
year.
