Seasonality in the Market
It’s common knowledge in the real estate industry that the market is seasonal. But does it really matter to buyers or sellers? If there are fewer homes on the market, and there are also fewer buyers, could supply and demand stay aligned? Let’s check it out for the Denver metro area.
Using data from REColorado, I compared April-June (spring) vs. September-November (fall) from 2014-2018 to see if there was a difference, and if so, how big was that difference? Why did I pick those months? Because when I talk to people, those seem to be the months they are wondering the most about whether it’s the right time or not.
Spring Fall Change Advantage
Active Listings 6,697 5,208 -26% Seller
New Listings 5,301 3,691 -30% Seller
Showings per Listing 18 12 -34% Buyer
Sold Listings 4,166 3,598 -14% Buyer
Days on Market 19 25 34% Buyer
Median Sales Price $336,456 $326,716 -3% Buyer
Sold Price : List Price Ratio 101% 99.5% -2% Buyer
*Stats calculated using data From REColorado and Centralized showing service. Some analysis performed by First Alliance Title
Some of the numbers above show a benefit to the seller: i.e., there is less competition because fewer listings are active, and there are less entering the market. Some of the disadvantages to sellers are fewer showings on their listings, a slightly lower median sales price, more days on market, and greater chance of negotiating downward on price.
However, many of the numbers favor the buyers. There are a lower number of showings and fewer closings, so there are likely less buyers in the market. We can see that they’re able to negotiate more to their advantage (sold vs list price ratio) and are less likely to get in a bidding war. Additionally, they’ll have more time to look at homes and make a thoughtful decision before submitting their offer (Days on Market).
That said, the median sales price only average about 3% lower in fall, and there’s only about 2% more negotiating power. Is it worth holding off on selling or buying to take advantage of the seasonality? Of course that depends on your situation. For a major life change it of course might be worth it, but sellers if you want top dollar it might benefit you to wait until spring.
Buyers, if you want the most negotiating power, fall is the time for you! However, in these past 5 years prices have continued to gain in the Denver Metro area, so any savings from negotiations may be offset by the general price increases.