You might soon be noticing your neighbors taking down “For Sale” signs and putting up Christmas lights instead. The holidays are typically the time when buyers and sellers take a break and regroup for the new year. But there are several reasons why staying active during a seasonal slowdown can be to your advantage.
The ideal time to buy or sell your home usually falls in the spring months when it comes to real estate. After all, many people hunker down during the winter months or are too busy with the holidays to think about purchasing a new home. And don’t forget, people like to start shopping in the spring to make sure they are settled in their homes before the start of a new school year.
But what if you can’t wait until the weather warms up to get your house on the market? Should you consider putting your home up for sale around the holidays? If you are a buyer, should you take advantage of the lack of competition out there after the wild, wild west that has been the real estate market for the last year and a half?
It may not seem ideal for buyers or sellers, but the holiday season has its benefits. For Sellers, you might not get in the middle of a bidding war, but you will likely be dealing with serious buyers who are ready to close. For buyers, you might not get into the middle of a bidding war.
So here is a little perspective of what a Holiday Season generally looks like in real estate and how it might be different this year.
Less Inventory – Serious Buyers
Conventional wisdom says sellers should wait until the spring to get the most from a home sale. After all, inventory typically picks up in the spring as the weather gets warmer. This often leads to price wars breaking out in coveted neighborhoods. But that doesn’t mean people don’t look—or buy—at other times of the year. And as realtors who have helped buyers navigate this the craziest part of this past summer selling season, we know there are probably going to be more buyers out there this winter than usual.
In any real estate market, winter buyers are usually serious buyers. While sellers do like the spring selling season’s exposure, much of what they get are lookers and contemplators who are not yet committed to purchasing. We recently closed two listings, one in Simi Valley and the other in Oxnard. Our open houses revealed a critical distinction between October and earlier in the season. Almost all the buyers were serious and ready to go. They knew what they wanted, were realistic about their priorities, and had their financing in place. They were also buyers with stamina. Over and over, we heard stories of how they had missed out on previous offers, but here they were, still in the game. And right now, many of them are still out there, ready to buy.
Interest Rates Ready to Push North of 3%
A few years ago, that above headline would have been too weird even to contemplate. But today, it makes both buyers and sellers nervous. And understandably so. Those of us who have been around awhile remember double-digit interest rates and can appreciate how incredible it was to watch when rates dipped below 5%. Yet these types of rates are all Gen-Zers know, and even Millennials would have difficulty getting their heads wrapped around a rise back above 4%. But please don’t miss my point here. There is a vast difference between buying power at 3% as opposed to 4%. But we’re headed for rates north of 3%, and that isn’t lost on the experienced buyers out there. Both Buyers and Sellers understand that current rates mean there is still value at both ends of a real estate transaction. They also know that though low inventory will persist through the coming year, there will likely not be as much buying power come the spring season.
Sellers are Still in the Driver’s Seat
Yes, sellers are still driving the bus. With even less inventory out there than even this past “low-inventory” season, they can feel confident that if their home hits the market, it will attract attention. Will it garner the 6-8 or 15 offers it may have gotten in July? No, but it probably won’t this coming July either as rates creep up. It will, however, still receive offers from qualified, serious buyers. Unless desperate to sell, sellers can take their time to carefully vet any offers they receive and hold on until they get what they want.
Buyers have time to Negotiate
Negotiations have gone by the wayside in this seller’s market, and sellers have had the upper hand. Around the holidays, this imbalance is expected to level out. Fewer active buyers mean fewer feeding frenzies on available listings, and sellers may be more willing to negotiate contract terms and closing dates, if not price.
Every season, every circumstance, and every home is different. There is never a crystal ball to perfectly predict how a home will perform with potential buyers once it hits the market. But, of course, we are suggesting there will be more serious buyers out there than usual during this Holiday Season. We know that every projection on interest rates indicates they will climb incrementally over the coming year. And, of course, we know that housing inventory will be limited at least until spring. Now could be an excellent time for sellers to list and buyers to keep themselves in the game. This Holiday Season could be a win/win for both buyers and sellers.