The severe shortage of homes for sale is upending the sales calendar for the whole housing market. Spring has historically been the busiest buying season, but as competition for homes heats up across the country, January is the new April. Spring starts now.
The numbers are telling. From 2015 through 2018, the peak month for average views per listing on Realtor.com was April. January lagged by a full 16%. In 2019, however, January was the busiest month on the site in 20 of the largest 100 metropolitan markets.
Those markets included New York City, Los Angeles, Chicago, Dallas, Houston, Seattle, San Francisco, Atlanta, Denver and San Jose, California. In 2018, January was the busiest month in just three of the largest 100 markets. This year, the expectation is that January will be the strongest month in even more markets.
“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” said George Ratiu, senior economist at realtor.com. “With housing inventory across the U.S. expected to reach record lows in 2020, we expect to see this trend continue into the new year.”
The home-buying season used to kick off sometime in spring, as the snow began to melt and people tried to plan for a summer move-in. But in recent years, the limited supply of homes for sale has spurred buyers to start their hunt earlier and earlier—and now, they’re jumping into the market en masse in January, according to a recent realtor.com analysis. Happy New Year, now start house hunting!
In about 20% of the nation’s largest housing markets, January was the month in which buyers logged the most listing views, the realtor.com team found. The analysis looked at the number of monthly views on realtor.com from 2015 to 2019—and discovered the extent of spring market creep, as buyers try to get ahead of the competition for the few homes on the market.
“As shoppers … [navigate] a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” says realtor.com’s Senior Economist George Ratiu. And as more homes aren’t expected to go onto the market anytime soon, ”we expect to see this trend continue into the new year.”
In three out of the last four years, our highest median sales price was in May – which are the sales that were decided in March and April:
I think we can expect a similar fast start to the selling season next year as pent-up demand that went unsatisfied in 2019 rushes in and grabs something just to get it over with while rates are still in the threes.
The average cost-per-sf is more choppy due to being skewed by abnormal sales prices, but this graph demonstrates the same – look at the hot start we got in Feb-May in both of the last two years:
Even if a few more are added in the coming days, Bb is our winner – congratulations! (Bb, contact me for tickets)
NSDCC New Listings Jan 1 to Feb 28 (as of March 11th):
There was enough concern about how the market wrapped up in the second half of 2018 that I thought we could see more sellers getting an early start in 2019. But there’s no panic – we didn’t even list as many homes as we did in the first two months of 2018, let alone more.
We’ve had a mini-surge in listings over the last few days! There will be a few more added to the MLS this week, but it looks like the total for the first two months of the year will wind up in the 760-785 range.
NSDCC New Listings Jan 1 to Feb 28 (as of March 4th):
Padres’ Tickets Contest – Guesses Under 800:
740 – Doughboy
755 – Neil
777 – Bb
785 – Recordsclerk
799 – TominLaCosta
We wanted to gauge whether there was any panic setting in among sellers, judged by how many more were rushing their home onto the market early in the selling season. If there would have been a surge of 5% to 10% more listings during the first two months of this year, it could have been a tipping point.
But as it turns out, we’ll be lucky to match last year’s total.
The 2019 median list price and sales price were the same $1.275M!
But the NSDCC Pendings are stalling, and now 19% under last year’s total at this time, so I’ll stick with my -20% guess on sales. We got off to a hot start this year, but the enthusiasm is slowing – based on this:
Weekly Total Pendings
The average list-price-per-square-foot of listings priced under $1,500,000 has been flat lately, and about the same as last year. But listings priced between $1,500,000 and $2,000,000 are averaging about 10% higher LP/$ than last year.
A sluggish selling season would probably end earlier than usual, but give us at least a couple of more months, please!
We saw yesterday that we had 5% fewer January listings year-over-year, giving the impression that sellers aren’t rushing their homes to market.
But we came into 2019 with more leftover listings from last year – and they are already starting to pile up:
Active Listings, First Week of February
Last year we were overdue for some slowdown, but were able to survive lower January sales because the inventory heading into the selling season was so thin that urgency was higher among buyers, which kept the party going.
This year we had fewer sales even with higher inventory, which means the selling-success rate is dropping steadily. Once more unsold listings start stacking up, the urgency among buyers will diminish.
This is the same data as yesterday, but over three years instead of five, and shows how the 2018 selling season didn’t pop like in previous years:
Click to enlarge
Mortgage rates went over 4.5% in May which helped to discourage sales, but you can see how the initial surge barely got past March. Even if rates stay where they are today, we could have a muted sales season just because we are already loaded with listings.
We were due for a surge in market activity with rates coming down, and the Chargers and rain both being done. Several agents are reporting increased activity over the last few days, and it seems like buyers are engaging.
We should see heightened activity for the next week, then a break for a few days around the Super Bowl as everyone grabs their guacamole, with the Spring Selling Season beginning in earnest on February 4th.
The weekend of February 9th and 10th should be huge!
It’s nice that we have somebody to talk to now, but what does it mean? It means people are looking around – that’s it. Those who find an incredibly-good fit might pounce, but most are going to wait-and-see how the season develops.
So far, we’re having about the same number of new NSDCC listings come to market as we did last year, so no panic among potential sellers. Their main focus is only on how high they can push their price – it’s the buyers who are paying close attention to the real market activity, and what they see is determined by their mindset.
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