What to Expect When Buying or Selling During the Winter Months

winter sales comparison
winter sales comparison

From the graph above, even though the real estate market has been a mess these few past years, it’s easy to see new listing and buying trends: lots of new listings in March followed by peak selling a couple months later, then a dramatic drop in everything around November. (Check out our prior post going more in-depth on market cycles.) Off hand there’s a couple good reasons for this. Though it may not be as pronounced here in the Silicon Valley, cold and rainy weather play a role in how attractive a property looks and keeping it presentable for potential buyers. Also it’s the holidays, when many people are with families or travelling. Lastly, it’s harder for families to move once school starts for their children.

So what do those remaining buyers and sellers see in the winter months?

As a homebuyer in the spring and summer months, you are approached with a large selection of new listings but an equally large group of competing buyers. These months are to the sellers’ advantage. The market turns in favor to buyers once the temperature drops and competing buyers thin out. During this period, sellers are usually more motivated to sell the house over getting the best price. For the buyer it is a great time to push for a deal, albeit you are looking at 50% less listings than there are in spring and summer.

The main reason against listing a home in the winter time is that the chance to get a high selling price on a home is reduced because buyer competition is reduced -- expect to make some compromises with buyers who already understand the importance of timing. Though this is not the case for every new listing during winter, since a desirable house will always draw attention.

But the tradition of only selling in the summer months is being influenced by the wake of the real estate crisis that started around 2007. With a depreciated housing market and mortgage rates at record lows, many buyers are aware that no matter the season this is an opportunity to buy a house they might not have been able to afford five years ago.

Reasons to sell near the end of year can be tax related, examples include 1031 exchange, which defer capital gain taxes, or inheritance taxes. And there is always personal reasons, including relocation for a job or divorce.

Whatever the reasons for selling in the winter, the biggest worry is having a high days on market (DOM), which makes an otherwise fine property look stale. One way to avoid this is to drop the listing price and excite interest. And if a seller can afford to have patience, they can take the home off the market until an allocated number of days before putting it back on the market with a restarted DOM. And then you are back to the excited spring market.