“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in.” This coming from Lawrence Yun, the National Association of Realtors (NAR) chief economist in the recently released Existing Home Sales Report for September. Yun is referring to the consistent real estate cycle know as Seasonal Velocity. Whether due to kids in school, colder-wetter weather or holiday obligations, seller and buyer activity slows during winter months. Yun noted that as the days of winter approach, home sellers should be prepared to face a longer process. “It takes about 20 extra days to find a buyer in the winter — so about 50 to 60 days in the current market.”
In spite of the annualized slowing sales, the September NAR sales report shows that low inventories are keeping sellers in a good position.
But low inventories also make it hard on buyers. Many buyers in this intensely competitive market have been swept into bidding wars and have likely seen properties selling for significantly more than asking price. It can be tiring for buyers and for agents. Finding and then losing the perfect home over and over again is emotionally draining. This causes buyer fatigue.
As an investor with a property to sell, seasonal velocity and buyer fatigue are realities to account for in your planning. With the potential for a slightly longer sales cycle, you need to ensure that you budget accordingly and emphasize your marketing. Staging, lighting, curb appeal, good photos in ads are all things that should be executed well. Buyers who stay active through the winter months are looking for a motivated seller, so you may need to be willing to deal. For more advice, look at Veristone’s blogs on who to target, how to get top dollar and being social savvy.
It is also good to recognize that this seasonality will end. After his comments about the coming seasonal slowdown, Yun also shared, “…come spring of next year, all loosening of the market conditions will have disappeared and another year of intense buyer competition can be expected.” This positive vison is echoed by the Home Builders Association (HBA). According to September’s monthly Housing Market Index (HMI), builder confidence in the market for newly built, single family homes jumped to the highest level in a year. Of the components that go into this report, the gauge charting sales expectations in the next six months increased the most; and the West reflected a score of 75, the highest measure of this expectation in the country. The Mortgage Bankers Association also forecasts a strong 2017, as they foresee an annual jump of 11% in the volume of mortgage originations.If the market follows these forecasts, buyers could continue to face the same challenges as experienced in 2016. Bidding wars and above-list-price offers could be the rule, not the exception. Hopefully, they will recover quickly from any fatigue and make this a historically short, slow season.