As we approach the winter real estate market, I want to look at typical patterns for this market in terms of the number of active listings, sold listings and median prices—with implications for buyers and sellers.
The chart above shows 8-year monthly averages for the number of active and sold listings for Washington, DC, along with the average median price for each month. These are average numbers. (The median price in September 2015 for sold homes in DC was actually $512,000.) What I want to focus on here is the yearly pattern of home listings in relation to median price.
As you can see, there are two selling seasons, with peaks corresponding roughly to the height of spring (May-June) and fall (October). The highest median prices are actually about a month behind these peaks, with the highest median prices for the spring season being recorded in July and the highest median prices for the fall season being recorded in November and December—reflecting the average 30-45 day time between contract signing (when the property goes out of active status) and the actual closing settlement (when the price is recorded).
There are three important conclusions to draw:
1. There is actually a proportional relation between the amount of housing inventory and median price. It’s kind of the reverse of the law of supply and demand, which states that there is an inverse relationship between supply and price (a more limited inventory drives prices up). In contrast, for the spring season at least, the greater the inventory of active listings and sold listings (contracts), the higher the median price.
2. With this first point in mind, it’s interesting to note what happens in the fall season: Even though the number of active listings climbs to as high (and sometimes, a higher) peak as in the spring, there are fewer sales in the fall (and winter), so the median price is lower. (And in the dead of winter in January and February, with the lowest levels of active and sold listings, the median prices are the lowest of the calendar year.)
3. Since these are average numbers for all housing types, we can fairly say that the sold price for any home will vary according to the season in which it is sold. We’re talking about the same home: Using the numbers in the chart above, the same home that sells for $407,000 in January will sell for $466,000 in June, before dropping back down to $427,000 in December.
What are the implications for buyers? You will pay less for a home in the fall and winter than you will in the spring and summer, but you will have less selection from which to pick. So get ready to start looking.
And sellers? Unless you really have to sell in the fall or winter, you will do better to sell in the spring and summer. Although you will have more competition from other active listings, it appears from these numbers that a rising tide lifts all ships, and you will still get a higher price than you would in the fall or winter.
Ted Smith is a licensed Realtor with Real Living | at Home specializing in mid-city D.C. Reach him at TedSmithSellsDC@rlathome.com and follow him on Facebook, Youtube or Twitter. You can also join him on monthly tours of mid-city neighborhood open houses, as well as monthly seminars geared toward first-time homebuyers. Sign up at meetup.com.