How do the holidays influence the local real estate market?
'Tis the season ...for tight inventory
Traditionally, December is a slower time of year for real estate sales, with fewer buyers out looking for new homes. Since there are fewer buyers, some prospective sellers are waiting for the new year to list their home. If a home is already on the market, some sellers may consider taking it off for a month or two during the holidays.
That’s a good strategy if you’re a seller with no urgency and lots of holiday plans, company coming and scheduled parties, but it leaves serious buyers out in the cold.
“It’s tough for people to find something they really love, especially with the lack of new construction,” said Christi Reece, associate broker with Bray Real Estate. “You’re looking at 10-year-old homes that need updating.”
Inventory levels are lower than they were earlier in the year, which can trigger rising prices when demand remains strong. Since demand has also declined, the current lower inventory isn’t causing prices to rise.
“We’re not going to see 7-, 8- or 9-percent increases until we get job creation,” said Olan Clark, broker associate with Coldwell Banker Homeowners Realty. “Until we get substantial job creation, we won’t see an increase in prices.”
That said, the reduced inventory does have implications for how long homes typically stay on the market, especially in the lower price ranges.
“For someone who’s looking for something under $200,000, those sell pretty quickly,” Reece said. Although it’s not typical, Reece has seen a few instances where a home that’s priced well will receive multiple offers.
The number of foreclosures coming into the market has also slowed, which is good news because it will mean a more stable market. It’s also bad news for those who had cash and enough construction know-how to make lemonade out of foreclosure lemons.
“Fix and flips are getting harder and harder to find,” said Jan Kimbrough-Miller, broker associate with RE/MAX 4000.
According to the Bray Report, which is a monthly real estate newsletter analyzing the Grand Valley market, there were 76 fewer homes on the market in November compared to October. There were also 45 fewer sales in November than the previous month.
One of the signs of a healthy real estate market is a six-month inventory supply. According to the Bray Report, there is a six-month supply of homes priced between $200,000 and $400,000, but only a four-month supply of homes priced under $100,000 and a five-month supply of homes between $100,000 and $200,000.
Most professionals agree that the quickest way to sell a home is to have it priced correctly. Homes that come into the market at the right price generate interest and showings. A home that’s underpriced may generate bidding wars. A home that’s overpriced may sit with few showings.
Price isn’t everything, however. In today’s market, most buyers want a two-car garage and a master suite. Homes with a one-car garage or no garage and only one bath may not generate showings or they may not sell at a price the sellers like.
“If it’s an older home in the lower price range, it will sell, but you’ll pay a price,” said Dave Kimbrough, broker associate with RE/MAX 4000.
Whether you’re buying or selling, it pays to have the advice of a professional. They’ve been tracking overall industry trends and the local market and they can give an accurate assessment of where prices should be, regardless of inventory levels, seasonal sales fluctuations or winter storms.
There are buyers out there, even during the holidays and the deep freeze of winter. With slightly reduced inventory levels, it may be the perfect time for prospective sellers to consider listing.