…or why the real estate market does not need to lose a few this year…
If you’re like most people, the holidays are not exactly a time for self-control, eating in moderation or slimming down. It’s true that an impending summer vacation is the most common motivator for dropping those extra pounds, while year-end events afford an excellent opportunity to throw caution to the wind. Something about the difference between tank tops and wool sweaters can have that effect on us.
It occurs to me that our market operates in reverse. For the next 6+ months, the real estate market will be “bulking up” on inventory, ballooning from a winter seasonal low to an annual high by mid-July. At that point, we’ll begin to experience a “shedding” of sorts, until we end another year at our trimmest and slimmest. (Let’s just say it’s a good thing the real estate market doesn’t have to fit into a revealing new swimsuit every summer.)
So what does that look like (pause while you try to envision the real estate market in an actual swimsuit…) in terms of real numbers? Let’s use 2014 as an example, as the data most clearly reflects the peaks and valleys. Below are the number of available properties on a specific day (usually the 10th) of each month in that year:
January – 1518
February – 1607
March – 1630
April – 1700
May – 1831
June – 1863
July – 1855
August – 1918
September – 1907
October – 1837
November – 1786
December – 1667
In short, you can see how the available inventory on a specific day of the month grew from a low of 1518 to a high of 1918 (or 400 homes). However, the year ended just about where it began, with available homes back within 10 percent of where it started. (PS: aren’t you glad YOU don’t gain 400 pounds every summer?)
This reflects what most agents and consumers feel throughout the course of the year. But here’s where it gets really interesting. Over the past five years the peaks and valleys have noticeably flattened. If you remember that bell curve from high school geometry class (the one you were hoping to take advantage of when you didn’t study for your mid-terms), that’s what things used to look like. Now they resemble more of a neighborhood speed bump.
To really get a sense of how this plays out, I’m going to throw a lot of numbers at you, but stick with me. We’ll go back to our original set of numbers from 2014, but now we’ll add the figures for the subsequent three years (2015-2017). Now it looks like this:
Month 2014 | 2015 | 2016 | 2017
January 1518 | 1547 | 1408 | 1205
February 1607 | 1584 | 1397 | 1190
March 1630 | 1560 | 1348 | 1194
April 1700 | 1630 | 1443 | 1176
May 1831 | 1693 | 1491 | 1176
June 1863 | 1701 | 1539 | 1185
July 1855 | 1714 | 1569 | 1177
August 1918 | 1728 | 1504 | 1186
September 1907 | 1716 | 1493 | 1149
October 1837 | 1705 | 1477 | 1124
November 1786 | 1657 | 1420 | 1112
December 1667 | 1567 | 1312 | 1013
Take a look at just January for a second. The number of available homes on a specific date in January has dropped by over 300 properties (or 20 percent). And the seasonally high month of July has seen an even bigger dip—678 homes over four years, or 36.5 percent!
Now look at the highest inventory month of 2017—January. From that month on, the available stock of homes has been almost completely flat, except for a minor bump or divot. The change from January through November was just -7.7 percent. And as of this writing in early January, the number of active residential properties has dipped to 926—the first time in 8+ years it has fallen below 1000.
I give you these numbers to highlight some specific statistics, but more importantly to give you a broader view of where our market is now, where it has come from and where its heading. For buyers, it has often been the case that from January through July, the inventory increased as did their options. If you didn’t see a home you liked in late winter, you could keep watching and waiting. There would be more to choose from as the spring wore on. That no longer appears to be the case, and if you ask any active buyer, they’ll tell you that’s exactly how they feel.
For sellers, though, this can and should be great news. Would you rather put your home on the market and compete with 1900+ other homes or 1100? Do you think your chances of selling, and selling faster, are better or worse now than they were in mid-2014? Now, keep in mind all the old adages of real estate still hold true—your home must to be priced right and in great condition. And of course, location still matters.
While we’re all hitting the gym, counting calories and snacking on carrot sticks, remember—the real estate market could actually stand to gain a couple pounds…I mean, listings. So buyers: be ready to jump and run when you see the house you’ve been waiting for hit the market. And sellers: start packing those boxes, and when moving day arrives, remember to always lift with your legs and not your back…