Winter is typically a slow time for home sales, when sellers might wonder if they have any hope of finding a buyer. But will that be the case this winter?
Normally this is a boring question, but this year it’s anything but, although the housing market tends to freeze up once snow falls, I predict that this post-pandemic winter season will be different: Sellers can expect to see plenty of buyers.
Compared to other past winter seasons, this winter season’s sales activity will be stronger. This winter, there will be more sales compared to pre-pandemic winters going back all the way to 2006.
This optimism stems back to (you guessed it) the COVID-19 pandemic lockdown, which created a pent-up demand for homes throughout much of 2020 that completely swamped the usual spring rush, winter lull rhythm of the real estate cycle.
And that overwhelming demand for housing is still going strong today.
We had unusual seasonality in 2020 due to the pandemic shifting timing around for many buyers and sellers. While 2021 had much more normal seasonality—homes sold fastest in summer and slower in fall and winter—this year has been a standout for its own reasons.
So what makes 2021 so special? For one, consider that, from March all the way into October, homes were selling faster than the fastest-selling months in any previous year. That demand won’t just suddenly dry up once the temperature drops below freezing, or even once the holidays kick into high gear.
Although there are fewer buyers in the winter months than in the competitive spring and summer period, all signs suggest that housing demand remains high.
Another factor is that, with supply chain issues slowing new home construction, many buyers just couldn’t find their dream homes in the spring, summer, or fall—and will still be looking into the cold winter months.
Due to this high demand and limited inventory, I think Winter is likely to be a better time to sell than winter typically is. Many sellers should not feel the need to wait until spring, especially in high-demand areas.
So if you’ve all but written off the idea of selling your home until spring ’22, think again! Here are a few things to know about selling your home this winter.
Inventory is low—and homes are selling fast
Although the number of homebuyers house hunting this winter may be slightly lower than during the busy spring and summer seasons, these homebuyers mean serious business. As such I think Sellers can expect to see homes sell quickly.
How quickly? In October, U.S. homes spent an average of 45 days on the market—eight days fewer than the previous year, according to recently released data. In the 50 largest metros across the U.S., homes sat on the market for just 39 days. In the hottest and most competitive towns and cities, it was substantially less.
Home prices may have peaked
Another reason sellers may want to list their homes now is that prices are at an all-time high. Median home prices in the U.S. now hover at $380,000, up 9% from a year earlier.
But there are signs that these high prices are leveling off.
The days of fast price gains are over. I believe there will be few pockets of the market where bidding wars do occur, but sellers should expect much less than what was occurring the past 12 months. Home prices generally will be higher price compared to one year ago, but maybe a bit lower compared to what occurred in the summer.
Given that prices seem to be softening, I’m advising sellers to check their local market to see if other homes are lingering on the market a little longer than in previous months, and then we can talk about adjusting their price accordingly.
A greater share of sellers may find that they have overreached on their initial asking price and need to adjust lower.
Interest rates are creeping up
The all-time-low interest rates of the past 20-plus months inspired many buyers to shop for real estate. As of Nov. 10, interest rates were 2.98% for a 30-year fixed-rate loan, according to Freddie Mac. But these rates may be going up.
The Mortgage Bankers Association estimates that rates will rise to 3.1% by the end of 2021 and 4% by the end of 2022.
These increasing interest rates could discourage buyers from being as bullish going forward.
I feel sellers should be aware that higher mortgage rates mean reduced purchasing power for buyers and may eat into potential buyers’ ability to offer top dollar.
If you are planning to buy or sell in the near future please give me a call right away. I can help you get preapproved with Stanford Mortgage. When you are ready to sell your home, call me and I will work to ensure you get maximum value. If you know anyone in the market to buy or sell, I would be honored to take care of their Real Estate needs.