As the year comes to an end, holidays, children home from school and upcoming regulatory changes contribute to a seasonal slowdown in the housing market.
While local real estate professionals admit that activity slows in the winter, they say it’s still a great time to buy. And when they aren’t busy working with buyers and sellers, real estate agents find time for family, education and future business plans.
In previous years, an anticipated change in tax code has generated more closings in December, said Leslie Kilpatrick, branch manager and broker associate at Willis Allen and the Greater San Diego Association of Realtors’ (SDAR) 2014 president-elect.
“Last year we had many year-end closings because of the increase in capital gains tax rates from 15 percent to 20 percent and the looming 3.8 percent Obamacare tax. This year we do not have a major known change creating that level of urgency,” Kilpatrick said in an email. “It would be best to close any of the few remaining short sales prior to year end if possible because the debt relief has not been extended beyond 2013.
“That said, there are many factors at play in 2014 as the government takes a look at completely revamping housing policy in ways that will affect the markets leading us to anticipate rising interest rates. Now remains one of the best times to buy in recent history, given the still low rates and slight uptick in available inventory. Many agents are busy with buyers and sellers who recognize the opportunities in this market.”
Dee Marie Fisher, Realtor at Windermere Homes & Estates, said this year is different because “there are still many buyers looking for homes due to the low interest rates, low inventory … and the concern with what may come next year with the mortgages changes due to Dodd Frank.”
The seasonal slowing typically lasts from after Halloween through early January, Kilpatrick said.
“Yes, this is historically a slow time for real estate. ... First, because children started back to school in August or September and the families had moved over the summer and second, because of the holidays. However, for many years, the last quarter has been my best selling time. ... I was working while many Realtors, who believe it is a slow time, took time off. I just wrote a blog on selling during the holidays and wintertime. ... Wishing that more sellers would list their homes for buyers who are serious,” Fisher said in an email.
Linda Lee, SDAR’s 2013 board president, said there was a “big run-up” in inventory during the first half of the year and reached the lowest level around April.
There are 6,500 active listings and 2.7 months of inventory, Lee said; six months of inventory is considered a normal market. She said she encourages buyers to purchase during the slower winter months before activity picks up in the spring.
“There always is a natural slowdown at this time of the year, but this year I believe there is more of a slowdown for sellers coming to the market. I have several that just want to wait for the new year. If we had more inventory, I believe more buyers would come to the market,” said Marie Jebavy, broker and owner at The Real Estate Consultants and the North San Diego County Association of Realtors’ incoming 2014 chairman.
November and December historically hold the two slowest home sale weeks of the year – Nov. 20 to Dec. 5, said Jeff Campbell, Realtor at Jeff Campbell & Associates and president of the Pacific Southwest Association of Realtors.
“These are the seasonally slowest days because of one reason. People do not want to move on Christmas,” Campbell said in an email. “According to the SANDICOR MLS, beginning in September, the number of detached home sales declined throughout the county. September sales were 2,072, October sales were 1,927 and November sales were 1,744.
“It is not unusual to pack the ornaments and lights away after every Christmas. However, to pack them away before Christmas is unheard of. If an average escrow period is 30 days, buyers do not want to time a move during Christmas. Therefore, the number of tendered offers are traditionally lowest in November and December.
"However, moving just after Christmas is actually a convenient plan for many working families who have few personal or vacation days from work. Making the most of their non-working days by moving during the holiday break may prevent unnecessary days to be taken off work.”
Kilpatrick added that San Diego’s climate keeps the market open in the winter and attracts an “annual flock of snowbirds.” There are many sales of second and vacation homes during the winter months, she said.
Holiday decorations and natural home staging create an inviting curb appeal that could attract more buyers, Campbell said.
“A house shows its best and feels more like a home during the holidays than any other time of the year,” Campbell said. He added that the number of homes coming up for sale per month has increased from 437 in July to 1,469 in November, according to the MLS.
“Buyers who have had a limited selection over the summer now have more of a selection, giving winter shoppers the widest and best opportunities to show and purchase a home,” Campbell said. Kilpatrick said the spring is usually “very strong” for closings in San Diego.
Melissa Zavala of Broadpoint Properties said with a market that’s constantly changing, it’s important for real estate agents to identify the source of the changes and adapt their business plans.
“If it's a seller's market, search for buyers. If it is a buyer's market, search for sellers,” Zavala said.
Jebavy said she hopes the market will pick up in the first quarter of 2014, depending on the new Dodd-Frank regulations Jan. 14 affecting new loan requirements. The change in the market will be caused by “people feeling secure with economic conditions and easing of loan regulations,” Jebavy said.
“For me, the market is busy right now. However, many agents always wait until the third week in January to list homes. ... saying that is when people are focused on normal living and not the holidays or the aftermath of it. ... That is when I've noticed activity start to return and actually see an increase in February,” Fisher said.
Agents who aren’t as busy as Fisher may opt to spend time with family and friends, Campbell said, and should make time for education.
“And finally, as more agents take this time off, those agents still hitting the pavement may find themselves rewarded with more business as competition hibernates for a few weeks,” Campbell said.
“Another thing agents do this time of year is give back to the communities that have supported their efforts. Every year at Christmastime, our team, Jeff Campbell & Associates, spends the mornings prospecting and writing offers, and the afternoons collecting toys and food for neighborhood churches and community centers. We even set up a website for our holiday project called GiftBagDrive.com. Over the past 16 years, we have collected over 10,000 cases of food and hundreds of toys for the needy.”
Fisher named some of her own down-time activities. “If I am not busy with qualified buyers and sellers, I complete marketing projects, contact past clients, acquaintances and friends with holiday wishes, prepare my business and marketing plan for the coming year, and complete any continuing education requirements. ... Along with all the holiday parties and family obligations,” Fisher said.
“I reached my personal 2013 production goal in August. I up my production goal and [am] pretty much in cruise control for rest of 2013. I started my 2014 business plan in September and finished up in October,” Lee said.
“I give myself time to relax, reflect and enjoy life. I have many new clients [and am] working on new projects, so I anticipate I will be very busy as soon as I return from Asia on Jan. 1. I anticipate the market picks up right after the holiday as there are still plenty of buyers who want to move into their new homes while interest rates are still low.”
“Most real estate agents take what free time they have at this time of year to reflect on their past year's activity and formulate a business plan and goals for the coming year,” Kilpatrick said.
“It is a good time to reflect on what has worked well and what could be improved upon. Even when affiliated with a large company, each real estate agent is really an individual small business with all of the challenges and freedoms that come with attracting clients and maintaining a presence in the market. The work never stops.”
“This is a great time to do training and seminars at the North San Diego Association of Realtors. You can sign up for everything from MLS training to contracts, [and] also check new apps and software programs for real estate,” Jebavy said.
Jebavy also gets ready for the new year by contacting clients and informing them of the current market conditions, using information from the HomeDex report supplied by NSDCAR.
Zavala provided a few ways for real estate agents to be successful during the holidays. She suggested being aggressive in September, October and early November and putting as many transactions into escrow as possible; developing and improving marketing plans; and taking courses to learn new technologies and methods to be more productive; hosting a holiday party for clients; and reviewing marketing materials to make sure they are current.