Mythbuster: Homes actually DO SELL during the holiday season!
Quite often, too often, in fact, REALTORS ® hear home sellers say that they want to take their home off the market for the holiday season. Their concerns usually stem from the misconception that buyers are not looking during November and December because they’re halting their search for the holidays. In many cases, this is not correct.
Historically, for home sellers who list in the late summer and early fall, their home can stay on the market longer than anticipated because the inventory during that time is typically at a higher point for the year. September and October are usually the months with an increased number of homes on the market, and then as those homes sell or people begin taking them off the market, inventory decreases. This was proven true in 2021, despite inventory levels remaining well under pre-pandemic levels. Now, in 2022, the trend will continue again, but the market has changed, and the landscape looks different than it did a year ago. Firstly, mortgage rates increased significantly in March to 4.72%, a rate higher than we have seen since 2018. Since then, rates have only continued to increase. This increase in mortgage rates, coupled with rising inflation and sky-rocketed home prices, dramatically decreased buyer affordability, and as a result, many buyers exited the market. Despite the rate increase, this is still a good time to buy and offers buyers a much-needed reprieve from the frenzied market they are so accustomed to. Fewer buyers mean less demand which translates to more availability and more time and room to negotiate on things like price. Sellers should take note of this change as well and understand that pricing your home this winter will be more important than ever.
As we head into the holiday season, take a second and think about the buyers still currently looking for homes. There is a large pool of buyers who want to buy before the end of the year but have not for the following reasons:
- Increased mortgage rates, housing prices & rising inflation have impacted a buyer’s overall budget
- Because of these factors, many buyers have opted to renew their leases or rent for another year, but this has saturated the rental market, and rent prices are rapidly increasing
- Despite less demand and rising inventory, this is still a competitive market, and buyers could still potentially miss out on a home or face a bidding war situation if they hesitate.
These folks are still out there looking for a home and are eager and motivated to find a home by the end of the year. These buyers are very dedicated and are the most likely to make serious offers if they’re interested in your home. Generally speaking, these buyers are moving due to life changes such as relocation for a job, to be closer to family, divorce, empty nesting, or a growing family. Those who are buying during the holidays are serious when they’re propelled by these life events. In the end, a seller is better off with 5 of these motivated buyers over having 20 ‘tirekicker’ buyers who aren’t under the gun to make a move.
Show Me the Facts
If you are skeptical, here are the stats from 2017 – 2022. You can see in September 2020 (week 37) that active inventory reached 11,253 homes on the market. 2021, while in an incredibly tight and competitive market, still saw a slight fall spike occur that week as well, reaching 9,452 homes on the market. In both years, inventory increased for a few more weeks before falling again through November and December. In 2022, inventory levels started well below previous years, but as the market cooled and shifted toward the latter half of the year, inventory levels surpassed those of 2021. Regardless, 2022 is trending just the same, with a September spike of 9,051 homes on the market, and it’s beginning to depict a similar downward trend as the years prior.
Pending Sales Per Week in Previous Years
One of the many metrics we track on a weekly basis at Lamacchia Realty is the number of homes that are listed compared to the number of homes that go pending each week. It provides us and our clients with very telling data about how active the market is.
Throughout November and December, there is a slight decrease in homes that are going pending (UAG), but you may be surprised at how small that decrease is. In September and October 2020 an average of 19.94% of the homes for sale went pending (under agreement) every week and at the same time in 2021, the average increased to 23.34%. This increase in the percentage of listed homes compared to the number of pending sales is reflective of the red-hot frenzied market experienced from 2020 to early 2022. In November and December 2021, an average of 22.96% of homes went pending. That is a decrease of only about .4% compared to the two months prior! If we remove Thanksgiving week and the week between Christmas and New Year’s, the average goes up to 23.85% – which means MORE people are making offers during the holidays than before!
This data shows homes for sale and pending in Massachusetts per week from September to December in 2021:
Pending Sales Per Week This Year
This year, September’s average amount of pending sales per week was 16.65% which is 6.69% lower than the exact same period in 2021 when it was 23.34% but that is to be expected given the market climate. Buyer affordability has decreased, and sellers are hesitating to list because the thought of losing their low mortgage rates is questionable. Fortunately, for those very motivated holiday buyers and sellers, there are creative ways to get the deals done. Buydowns and mortgage assumptions are making it possible for buyers and sellers to leverage lower rates than what’s currently available and homes are still selling. Furthermore, less competition for buyers is keeping them in the game, and sellers are able to take advantage of the lower inventory to create more demand for their homes.
This chart shows homes for sale and pending in Massachusetts per week from the beginning of September to November 19th:
The Buyers Still Looking in November and December Want a Home!
Year after year home buyers do look for homes during the holidays. Buyers who look during that time tend to be more serious because the casual lookers tend to delay until after the holidays.
Buyers want a home during the holiday months and there is no better gift than the keys to a new home. Throughout the year, the market typically shifts in the buyer’s and seller’s favor. However, COVID-19 era policies artificially inflated the market and gave seller’s a significant amount of power over buyers over the last few years. However, the market could not continue in this manner forever, and by mid-year 2022, buyers got a much-needed reprieve with a lessening of bidding wars, waived contingencies, and the overall frenzied nature of the market. The market we are in now is ever-changing, so it is crucial to be well-informed and proactive if you are looking to buy this holiday season. There are several ways to successfully buy a home in this changing market!
The deceleration of market activity is driven by higher-level forces such as the FED raising rates and inflation and to a certain degree, economic uncertainty driven by headlines regarding rates and the mid-term elections. The point to remember here is that despite all of these factors newly introduced to this year’s market, buyers are still buying and sellers are still selling. Don’t miss your chance to capitalize on the motivated buyers and sellers in this current market before the new year hits and the spring frenzy takes off!