HOMES DO SELL DURING THE HOLIDAYS!
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 as those homes sell or people begin taking them off the market, inventory decreases. This was proven true in 2022, despite inventory levels remaining well under pre-pandemic levels. Now, in 2023, the market has changed, and the landscape looks different than it did at this time last year. Firstly, mortgage rates have been steadily increasing, currently sitting at 7.45%. The continuing increases 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. Sellers, who often tend to be buyers at the same time, have hesitated to list in the volume we tend to see in the fall, so this year’s inventory hasn’t risen as much as previous years, but it’s still the best time this year to buy.
Rates were closer to 8% recently, and now that they’re currently around 7.4%, this is a good time to buy and offers buyers a much-needed reprieve from the constrained affordability they’ve been seeing this year. 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 rising costs to buy and borrow, 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.
Folks who are still out there looking for a home 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, they are likely 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 because they’re propelled by these life events. It is a known fact that although the quantity of buyers is lower during the holidays, the quality of the buyer is much greater. Anyone taking time to look at homes during the holiday season is often a very serious buyer.
Show Me the Facts
If you are skeptical, here are the stats for Massachusetts from 2017 – mid November 2023. Each year in early September (week 35) we see a dip in inventory levels. However, after this dip, inventory trends upwards for several weeks before turning back down again through the end of the year. In 2023, inventory levels started above 2022 but struggled to keep the momentum further into the year where we see levels drop well below previous years. Inventory has now recovered a bit, surpassing 2021 levels. Regardless, 2023 is trending just the same, with an early September drop to 6,321 homes on the market to then increase to its current level of 8,301, after which point, it has continued to rise slightly and so far hasn’t began it’s descent like it usually does in October. The winter slow down may just be delayed, or we could see inventory stay relatively flat for the rest of the year. If that’s the case, January of 2024 would start right around the 7,000-8,000 mark, closer to where 2021 started. It depends on rates which drives affordability. Inventory is still historically low, so even if it doesn’t drop like previous years, supply is constrained and it’s competitive out there for buyers.
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 decrease in homes that are going pending (UAG), but you may be surprised at how small that decrease is. In September and October 2022 an average of 16.45% of the homes for sale went pending (under agreement) every week. In November and December 2022, an average of 13.34% of homes went pending. That is a decrease of only about 3.11% 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 14.03% – 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 2022:
Pending Sales Per Week This Year
This year, September and October average amount of pending sales per week was 17.37% which is slightly higher than the same time last year. In the current market, buyer affordability has decreased with rising mortgage rates, 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 11th:
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.
Joselin Malkhasian is a leading REALTOR® with Lamacchia Realty and she shares this story with many of her clients when they bring up the myth about buyers:
Joselin’s experience is all too familiar. 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 between 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. The scale is not tipped nearly as much in the favor of sellers since, but the market we are in now is ever-changing and attempting to rediscover balance, so it is crucial to be well-informed and proactive if you are looking to buy this holiday season.
The deceleration of market activity is driven by higher-level forces such as the FED raising rates, inflation and to a certain degree, economic uncertainty driven by headlines regarding rates and upcoming 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!
Hang in there, and if you have any questions about listing in the winter, buydowns, or mortgage assumptions, contact one of our local expert REALTORS® and we can help guide you through this process!
Curious to know what your home is worth in the current market?