The other day, I heard a commercial on the radio that I found particularly unnerving. The spokesperson said that now is a great time to sell your home. He talked about how the record high prices we’ve been seeing in the Austin area may not be here forever, and that the uncertainty of a continued upward trajectory is reason enough to list your home for sale now. Everything that he said isn’t completely wrong, but what really bothered me was that I was listening to this recommendation in early December. One thing I know for sure is that the holiday season is historically the worst time to sell your Austin area home.
Just think about it, does it really make sense to sell your home in December? You’re worried about what to buy your Aunt Jan, what to wear to the office holiday party and how the hell you’re going to be able to handle four whole days with the in-laws. Most people aren’t thinking about buying a new home in the midst of all this craziness. Like most markets, a housing market with less buyers results in lower prices.
In order to fully understand this phenomenon you need to know a little about the real estate sale timeline and how it is statistically reported. First of all, we use the term days on market (DOM) to discuss the amount of time between the day a home is first listed for sale on the MLS and the day the home goes under contract. After a home goes under contract, there’s usually about 30 days before that home officially sells. That’s because lenders usually need about a month to get the funding squared away. Now, that number could be less if you are dealing with a cash sale or more if the buyer and seller agree to a farther out closing date, but 30 days is a good estimate. Now, when we are looking at the median sales price for a given month, we must look back the total amount of time ( days on market + 30 days) in order to determine the best or worst month to list your home for sale.
If you look at the median sales price per month for homes in the City of Austin over the past ten years, the January median sales price is almost always the lowest monthly median sales price for the year. In 2015, we saw the lowest median sales price in February, and the February median sales price was the 11th lowest in every other year. Now, if we look at the ADOM during January, we see it was about 30 days for January sales from 2017- 2020. Thus, homes that first hit the market in late November or December sold for the lowest amount.
If you think you absolutely have to list your home for sale in December, you may be wondering how much money you would be missing out on by not waiting to list your property. Assuming it still takes 60 days from the day you list to the day the home actually sells, you could be missing out on 20-65k. In January of this year, the median sales price for single family homes in the City of Austin was $471,000. Fast forward two months, and that figure went up to $536,000. You may want to really think about your carrying costs, and if there’s a better way for you to accomplish your goals that allows for postponing your home sale just a little.
The bottom line is that December has historically been the worst time to list your home for sale. Don’t believe everything you hear on the radio, and feel free to contact me anytime with your real estate questions.
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