Real Estate Market Update - Fall 2018
I’m often asked if there’s a fall real estate market and when it begins. I long assumed that there were two markets each year, the spring and the fall, as I'd been taught that for many years without stopping to challenge the assumption. The myth goes that there’s strong demand in the spring when the flowers come out; in the fall, after people are away and return after Labor Day, they will start looking for houses again.... but do they?
Contrary to popular wisdom, there’s only one market each year that’s exceptionally good, and that’s the spring market. In fact, the pattern in the Washington DC area is that real estate inventory typically picks up after Labor Day and supply levels increase each year to their peak in November. Buyer demand picks up a little, but only once in my career has it exceeded supply, driving prices higher, and that was in the fall of 2004. Why then? We were in a very heated market.
My prediction is that the macroeconomic cycle of demand over supply is going to see prices continue to rise by 3-4% per year for the next couple years, even if we see interest rates at 5% next year and 6% the year after, because there’s not enough housing stock to support the demand of new buyers. Many of those buyers, by the way, are millennials; they’re finally ready to buy homes. As they purchase real estate, it’ll unlock equity for sellers and allow them to purchase other real estate, reinforcing the cycle of demand.
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October, November, December, and January are good months to do your preparations for the market. If you’re not ready to sell now and you want to catch the best market, I highly recommend you shoot for the middle of February of next year. One quick example of the difference in the time of year is a home that I put under contract at five percent less this fall than it would have sold for just five months ago.
The property I listed for $800,000 would’ve sold for $800,000 in the springtime, but because of the demand difference right now, no one was interested except one buyer who offered $750,000. We were on the market for five weeks with only that one spark of interest, which my client let sit for five weeks without responding. Finally, with the lack of interest, we decided that rather than accepting that offer, we would lower the list price to that buyer's offer price. The strategy was to reduce it enough for a different pool of buyers to discover the property, in this case down to $750,000.
By making that adjustment, we quickly generated two full-price offers, one of which a buyer increased by $7,500 to seal the deal at $757,500. The difference between what we sold for at this time of year and what we could’ve sold for next spring is about $42,500. That’s a little over five percent less than what my client could sell it for if he was willing to wait six more months, but for him, there was value in getting the money now and having it available immediately. Sometimes, it’s worth waiting six months to sell for more, and sometimes it isn’t. The buyer of this property bought at the right time of year and got a good value for the money and my client sold and monetized his house when it was convenient for him.
In the fall of 2018, we’ve seen an encouraging tightening supply in almost every market around D.C., which is bullish for prices for next year in 2019. I recommend you interview agents now, choose one, and get his/her guidance to prepare for next year. Schedule a free appointment to have one of our agents help you prepare a plan for selling your home.
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About Eric Stewart
Eric Stewart started his real estate career in 1987 and each year he and his group sell over 150 homes in DC, Maryland, and Virginia. The Eric Stewart Group has completed more than 3,000 real estate transactions, placing Eric in the top 1% of Realtors® in the nation. With a comprehensive approach to marketing and a knack for negotiation, the Eric Stewart Group has built a reputation of trust and tireless persistence throughout the area.