by Michelle L. Anderson, MBA, REALTOR, RE/MAX Metro
Most of the year, Florida enjoys an active real estate market. Unlike states to the north that are not active in cold winter months, Florida benefits from our fabulous winters and our snowbirds. The short answer to this question is that late winter – early summer are the BEST times to put a house on the market. But the only time I advise sellers to NOT list a house is the 2nd half of December through the first week of January. The reality is that real estate activity slows to a crawl during the holidays. However, at any given time there are lots of people who need to move and homes sell all year long. There are a few things to consider when defining what is the “best” time, because is it best to sell the fastest, or at the highest price or do these factors coincide?
I looked at the numbers for Pinellas County for 2014 – October 2018* to see exactly what the sales trend looks like by month. Below is a graph that shows the number of closed sales for each month. Keep in mind that homes that closed likely went on the market two months prior. The average days homes have been on the market in the past year is 26 days and on average, most contracts close in 30 days.
You will see that sales consistently spike in the spring and summer. They also consistently die down in the fall and have a short spike again right at the end of the year. I hypothesize the end of the year spike is due to people making purchases prior to the end of the year in order to qualify for homesteading or investors looking to acquire a tax deduction. Another factor may be people from up north looking to buy in time to enjoy their new home for the winter.
The absorption rate is pretty much what it sounds like. It is the rate that listings are selling and it is calculated by dividing the number of closed sales by the number of active listings. A lower rate means that homes are selling slower (buyer’s market) while a higher rate means that homes are selling quickly (seller’s market). One of the highest rates in recent years was 44% in June 2016 and I can attest to encountering numerous bidding wars for homes at that time.
When the absorption rate is going up, sellers can list their homes at a higher price. However, when the absorption rate is declining, homes shouldn’t be listed at a higher price. In other words, a declining rate indicates that it isn’t a time to “push the market higher,” and that demand is decreasing.
From 2014 – 2018, the absorption rate has been trending upward. The rate also seems to follow a similar pattern with the number of listings, the number of sales and the median sales price. Homes that are on the market over the holidays sit the longest and the absorption rate tends to peak for the year in the spring and summer.
Home appraisers do factor absorption rate into their valuations. This means that when the rate is climbing, they may add additional value to a home. However, when the absorption rate is declining, they are less likely to increase value for market factors.
While the median sales price has been trending upward at a high rate over the last few years, the trend is not a perfectly straight path. Below are some charts that show the median sale price by month. Interestingly, each year the highest median price for the year occurs in the spring/early summer and dips down in the fall with another small spike prior to the year end. This trend mirrors the trends of the number of closed sales, number of listings and days on market.
How much difference in price does it make? An article on CNBC says that on average, homes that sell at peak times sell for $1,500 more. The article also says that the best time to list homes in warm weather markets like Florida is March.
Days on Market / Median Time to Contract
The median number of days homes were on the market prior to going under contract follows a similar trend with the longest average time falling around the holidays and beginning of the year and then declining until reaching a low point in early summer.
Want to know what day of the week is best to put a house on the market? Visit my previous blog: Best Day to List a Home
*Numbers as reported from the Pinellas Realtor Organization. Statistical calcualations and analysis conducted by Michelle L. Anderson
Graziosi, Dean. “What Is Absorption Rate in Real Estate and Why Is It Important?” Huffington Post 12/6/17 0
Olick, Diana. “Homes sell fastest during these two weeks” CNBC. 3/2/2017
This question actually has many layers, because the answer is different when you ask, “How do hurricanes effect the economy in the short-term,” “the long-term.” Or, “How do hurricanes effect the national economy,” or “how do they effect the area that was impacted?”
In the months following a storm, the local economy will initially see huge losses of wealth. But following that, thriving areas will actually see a bump when insurance checks are cut, and rebuilding takes place. Spending also gets shifted around regionally. People evacuate and spend money elsewhere. Hardware store, gas stations, grocery stores and hotels see increased business while local business are shuttered. The national economy sees a small dip in GDP.
LONG-TERM – NATIONAL ECONOMY
According to an article in Florida Realtor “On net, storms tend to subtract from gross domestic product in the early months and add to it in later months – leaving the economy, on balance, with few overall effects after a year.”
LONG-TERM – LOCAL/REGIONAL ECONOMY
“Hurricanes impose huge losses of wealth and initially slow regional economies, but over time they can be a tonic that creates more prosperous communities,” According to Florida Realtor.
What the data shows here is that thriving communities rebuild, and often in a way that enhances the area and results in a better community. New buildings improve the area and are often built to better withstand acts of nature. “Some areas see a bump in growth from the rebuilding,” according to an article in the New York Times.
However, in poorer areas, most damage falls on the uninsured and rebuilding doesn’t take place. These areas may never fully recover.
Each storm and area has its’ own nuances. Was the damage mainly for flooding or wind? What percentage of the effected had insurance? How much damage occurred to the local industry, such as were oil refineries impacted? My short answer to a complex question is that in most cases, areas hit by hurricanes come out stronger in the long-run and so does our national economy.
For more information on this topic, read my Blog Post, “The Florida Keys 1 Year After Hurricane Irma.”
“Hurricanes make us poorer but don’t slow the economy” Florida Realtor, 9/26/18.
“Hurricane to Cost Tens of Billions, but a Quick Recovery Is Expected,” New York Times, 8/28/17.