Winter is the time for hibernation, and the Washington real estate market typically shuts down from Thanksgiving through the middle of January. There is less inventory for sale and fewer buyers willing to brave the cold to go out viewing.
This winter of 2015-2016 doesn’t seem much different, so in this article I thought I’d look at what the trends have been for the last eight winters, and to extrapolate what that shows us about the winter that we’re in now.
First, some words of explanation: the graph shows data for November through January of each winter since November of 2008. Although the time frames are discontinuous (i.e. there are no values plotted between successive winters), nevertheless the “trend” shown by the line graphs approximately follows the 12-month trend for that particular year. So here are the big lessons:
First, the inventory of available homes (“active listings”) has been declining since 2008, while the number of sold homes has been relatively constant each month (right at about 500). Given that figure of 500 homes sold per month, that means that each additional 500 homes on the market represents another month’s worth of inventory to sell. In the winter of 2008, with about 400 homes sold and about 3200 active listings, we had about an eight-month supply of homes. (3200/400=8. Remember that even the sold inventory counts as part of the active inventory before it is sold.) Most Realtors consider that a balanced market between buyers and sellers is represented by a six-month supply of homes. So we could say that the winter market in 2008-2009 was slightly tilted in favor of buyers.
However, the market began tilting toward sellers, when the supply of available homes fell in the winters of 2009-2010 and 2010-2011 to five months of inventory, then 3.5 months worth in 2011-2012. Since the winter of 2012, we have been in a sellers’ market, where the available supply of homes has held fairly steady at two months for four winters (1,000 active listings divided by 500 sold listings).
What about median sold prices? Median sold prices in the winter markets typically lag somewhat behind those for the whole year. However, as you can see from the chart, sometimes they did and sometimes they didn’t during the last eight years. For this last winter, median prices did lag a bit behind, which suggests that this winter may be a better time to buy if you can brave the cold and accept the limited inventory of homes for sale. But if you’re selling a home, you’ll do much better to wait for the spring market, when the large inventory of homes and increased number of buyers actually drives prices up.
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 and @TedSmithSellsDC. 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.