Updated: Nov 24, 2019
It's a common opinion that December is a slow month for real estate and more or less the beginning of a winter season slow down. Vendors will often suggest that they are going to "take the house off the market for the holidays, and leave it down until the spring when the market heats up again."
In the current buyer's market, I believe missing December and waiting for spring could be a costly mistake. Rather, I would suggest December presents vendors with a stronger opportunity to sell than most realize, and a strategic advantage for those with their home on the market as we near Christmas. Let me explain.
Elevated Supply - Look for the Lull
It's not news that inventory levels are high in the St. John's market. At the end of Q3 2019 we have just north of 14 months of inventory, which - on the bright side - is down from over 18 months of inventory at the end of Q3 2018. Nevertheless, inventory has been trending upward since 2014 and thus competition when selling is fierce.
As a seller, given the abundance of supply available for a potential buyer to choose from, any time that offers significantly less competition is worth some consideration.
It's easy to see in the adjacent chart that December certainly is at the lower end of the months with respect to supply of active listings. In fact, over the last 5 years, December offers a 30% drop in available listings from the high point of each annual market. But December is not the only month to offer low listing volume when compared against the annual high - so what's unique about December? It becomes more clear when we begin bringing sales volume statistics into the analysis.
Sellers object that "sales volumes also drop significantly in the winter months starting with December." That seems logical on first blush, but dig into the data and we find a different story.
Sales Volume in December: Let me SHOCK YOU!
Turns out, December is not the beginning of significant sales decline. It may surprise you to learn that since 2014, December has consistently outperformed the winter and spring months leading right up to June. That's right, June!
Months that December outperformed in sales volume look like this:
2014: Outperforms 6 months (Jan-May, Nov)
2015: Outperforms 6 months (Jan-May, Nov)
2016: Outperforms 4 months (Jan-Mar, Oct)
2017: Outperforms 6 months (Jan-May, Nov)
2018: Outperforms 5 months (Jan-Apr, Nov)
"Since 2014, December has consistently outperformed the winter and spring months leading right up to June."
So, if you're thinking you'll pull your listing in favour of the spring market thaw, recognize that this is Newfoundland, and spring basically doesn't exist. There is no thaw until May at earliest usually, so you could be waiting around until June for sales activity to really pick up again with warmer temps. All the while, other vendors just like you, with the same "wait until spring" mentality, begin listing at record high rates by April, drawing you back into a highly competitive buyers' market.
Impressive December Statistics - Sales to Listings Ratio
December outperforms other months 70% of the time over the last 5 years
December has performed as one of the most robust selling months of the year based on recent sales to listings ratios. Looking at this measure, it is eyebrow raising that December was THE top sales to listing ratio month of 2015, and only August outperformed December in 2017 on the same measure.
But perhaps even more impressive is the consistency that December has demonstrated for sales to listings ratio performance over the last 5 years. In that time, 39 months demonstrate a lower performance than the December of that same year. That's 70% of the time that December has outperformed the other months of that same year for the last 5 years!
Said another way, only 16 months have outperformed December of the same year in sales to listing ratio over the last 5 years!
Other Common Objections to Selling with Santa
These statistics, and the reality of the currently flooded market supply, make a compelling case for vendors to consider listing, or maintaining their active listing, through the Christmas season. But there are common objections to selling during the Christmas season beyond perceived market performance. Here are my reasons to forget about those objections and be the savvy vendor who takes the plunge into December, giving yourself the gift of a home sale this holiday season.
1. Nobody is looking for a home right now!
This is simply not the case, as we've demonstrated above. Simple sales volume indicates that plenty of people buy homes around the Christmas and throughout December. And you can be certain that if someone is looking at that time of year, they are likely very serious about making a purchase. We've also demonstrated that there is a drop in inventory at this time of year. So there’s less competition, and serious buyers looking to do something, isn't that precisely the kind of situation you want to be in as a seller?
2. Won't my home show better in the spring?
Showing and selling a home is often all about creating an emotional response in the potential buyer. And what better time to create an emotional response than during Christmas. Having your home decorated tastefully, feeling cozy, warm and inviting can make an impression with a buyer whereby they connect and begin seeing themselves making years of memories in your home. You can see how that may resonate with a buyer more than grass and flower beds, I'm sure.
3. I don't want to move during the holidays!
No problem. If your property sells before December, you can likely close before Christmas, or negotiate to defer the closing until after the holidays. If your home sells in December, the closing process for an average existing home usually take 3-4 weeks, resulting in your home closing in early January rather than over the holidays.
4. We don't want people showing our home during the holidays!
Nobody is going to want to show your home on Christmas Eve, Christmas Day, or Boxing Day. And if you have any special family events outside of those days, there is no issue to explain this to a potential purchaser and schedule a better time for everyone. It's far more likely that these serious Christmas time buyers will want to look at your home when they also have the time to do it, which would be during the week between Boxing Day and New Year. People generally take vacation time during that week and have time to view properties during the day, which are often easier to accommodate than evening viewings.
Clearly, there is something special about December. Statistics show it is a stronger selling month than generally perceived, reduced inventory offers a strategic benefit in a saturated market, and there's so much positive emotional energy related to Christmas that can be tapped into to a seller's advantage.
If you are a vendor who has been struggling to compete effectively in the current market, or have been considering selling but leaning toward waiting until "spring", we need to talk soon. December may provide a special window of opportunity to showcase your listing to serious buyers that you do not want to miss.