The leaves are not the only thing changing as we move into fall. The market too is shifting, like it does every fall. And these changes provide some compelling opportunities. In fact, the fall market has some tasty treats for buyers in its candy bowl.
These “treats” include less competition from other buyers. The pace is less “we have to make an offer today”, and more “let’s make an offer this week.” Less “we’re competing with six other offers, and two are cash”, and more “we’re the only offer submitted.”
Another treat for buyers is that sellers in the fall market are typically realistic and motivated. There’s a reason they’re not waiting until Spring to list. (BTW sellers, the same goes for fall buyers- they’re serious).
But the tastiest treat of all for buyers in the fall market candy bowl is the ability to purchase a home at a bargain price – to buy a home “on sale”.
Now for those thinking of Black Friday discounts of 20-30%+ off regular price, you may need to recalibrate for housing, where the discounts are more in the 1-3% range. That may not sound like much, but 2% of a $400,000 house is $8,000.
How do we know that homes are discounted 2-3% in the fall? The market data clearly shows it. Looking through the lens of price per square foot for the entire Front Range, from the peak in the Summer to the low point in the fall/Winter, the price per square foot dropped 1.6% in 2014, 1.5% in 2015, and 2.1% in 2016. We’re already seeing this predictable pattern play out in 2017 as price per square foot shifted lower in August.
Another place where we see the 1-3% fall discount is in the metric of Close Price vs List Price. In each of the last three years along the Front Range, the percent of the closing price to list price fell 1-2% from a peak reached in May/June to a trough in December. In 2014, the market peaked in June when homes sold for 99.5% of list price, compared to the low point in December of 98.3%, a “discount” of 1.2%. In 2015, the peak was 100.8% (yes over list price on average) in June compared to 98.5% in December for a “discount” of 2.3%. And 2016 saw the same “discount” of 2.1% with the peak in May at 100.7% and the December trough at 98.6%.
The consistency of the data and the pattern show just how predictable seasonal market patterns are. Takeaway: if you want to buy a home at a discount, you should look to go under contract in October or November with a December closing.
Knowing this pattern, guess who typically buys in the fall? For lack of a better term, the smart money buys when the first snow falls. Folks who own multiple properties and it’s not their first rodeo. Specifically, investor activity picks up in the fall as properties are purchased for rentals and flips.
Does this mean you should never sell in the fall? Absolutely not. The figures cited above are averages for all properties sold along the entire Front Range. Sellers who work with their agent to prep, merchandise, and price their home properly can easily defy these averages and get top dollar in the fall. Some homes show amazingly well when the grass is still green and the leaves are vibrant reds and yellows.
Every market and every time of year has its advantages and disadvantages, its tricks and treats, for both buyers and sellers. My mission as an 8z Realtor is to ensure that my clients understand the tradeoffs so they can make informed real estate decisions that, above all else, enhance their lives.
Enjoy the fall colors!