It is that time of the year when shorter days and thin rain are the norm. Kids are in school, and everyone is planning towards Christmas meals and presents. You might not be thinking of it, but planning a home purchase could also be taken into consideration. How does the market behave this time of the year?
There is little activity in the housing market – partly because it is simply more pleasant to attend an open house when the weather is fine and flowers are in full bloom, and sellers can show properties in their best light.
How Regular Patterns Affect the Market
We also notice that few annual patterns regulate the residential real estate market.
Pattern 1 – families: With kids being the heartbeat of family households, most parents consider their children, and especially their schools, when changing homes. So, spring is an ideal time for most families to shop around for the right home since they can attend open houses in the catchment of their choice, and then submit offers to be completed during the summer, so with sufficient time to apply to various schools and settle in the new home before the September start.
Pattern 2 – Chinese New Year: The Chinese New Year signals the start of the buying season for overseas buyers and local Chinese immigrants. With offshore buyers and locals’ culture, it is an appropriate time to trigger the process of selling or buying a home. Again, this means the spring months – February to June – are the best time to conduct a real estate transaction.
All of the above patterns are illustrated in the following chart from REBGV, displaying the total new listings in Greater Vancouver Area for all property types.
The seasonal effect pattern is obvious with the new listings peaking in the spring, and then dying down gradually till December, with a rebound in September.
When we study the chart of the total inventory of properties available on the market, the pattern is verified, combined with the clear visibility that there is less and less property available for sale. However, there was a slight change in this pattern in the last two years due to the implementation of the 15% foreign buyer tax.
Now we have the proof that they are fewer listings to choose from during the winter months, let’s investigate the price behaviour.
With the chart below showing us the median number of days on market, from listing date to contract date, again we confirm that properties stay longer on the market in the winter months.
With that data, it is safe to conclude that fewer properties are available on the market towards the end of the year. That means less activity, and if you are a seller, your property will take longer to sell.
A Buyer’s Opportunity
It can be a great opportunity for buyers on a strict budget to find the best value for their money as competition is not as fierce, and they can avoid bidding wars. There may be less inventory, but there are still lots of homes for sale, and fewer buyers for each home. You could get ahead of the competition and still plan your relocation with completion around the spring or early summer months.
Sellers might be more inclined to negotiate as they may need to sell within a specific period for tax reasons or because they may need to allocate the funds to their own urgent home purchase. You never know when life events motivate a seller to sell, and your opportunity might be on the next new listing.
It is important to be resolute about your search criteria from school catchment, square footage, bedroom size, exposure, layout, and so on, so that when the right property presents itself, you can complete your due diligence quickly and present a well-packaged offer that has a high chance of being accepted.
Enjoy the winter!
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