Many people see the summer as real estate’s prime marketing season. Though there is a lot of truth to that, in large measure because parents want their children in place at the start of the new school year, homes sell year-round, and they sell in big numbers. According to the National Association of Realtors (NAR), 506,000 existing homes were sold in June 2014 but another 387,000 were sold in December 2013, during the dead of winter. Those December sales represented transactions worth more than $75 billion – not a number to be ignored. In fact, there’s a case to be made that selling during the holiday season – say from late November to mid-January – might well be a good and profitable idea. Here are six important reasons why.
The school calendar doesn’t matter to as many households as it did in the past. Figures from the Census Bureau show that between 1970 and 2012, the share of households that were made up of married couples with children under age 18 fell from 40% to 20%. Overall, the government says that 77.8 million U.S. households include no children under age 18. These figures tell us that tens of millions of potential buyers are perfectly able to move at any of the year without school schedule worries.
There may be less competition for buyers during the winter. The NAR says that in June 2014, there was a 5.5 months’ supply of unsold homes, a number that was up substantially from 4.6 months in December 2013. In other words, while there were fewer sales in December when compared with June, there were also fewer houses for sale, which in some cases meant less competition for sellers.
When people have to move, they have to move. We live in a changing economy. According to the Census Bureau, household incomes fell 8.7% between 1999 and 2013. Good jobs are hard to get, even for highly qualified individuals. No less important, they’re also hard to keep, in this era of downsizing and outsourcing. The result is that in addition to all the usual reasons people move year-round, there’s now a new incentive: If a good job opens in a distant location, would you turn it down, even in winter? The Census Bureau estimates that in 2013, 7.2 million people moved to a different state. It’s hard to imagine that such migrations didn’t involve many job-based moves.
Taxes may cause people to move. For some borrowers it may be important to buy and settle before December 31. The IRS says that you can deduct real estate taxes, as long as you’ve paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. Alternatively, if closing takes place January 3, the benefit of tax deductions may be delayed for a year. Speak with a tax professional for specifics.
You may save money by selling during the holidays. Let’s say you have a home with a $2,000 monthly mortgage. The prime selling time in your area is June and July, but what if you put the house up for sale in November, December or January? If the house sells, you may be able to avoid six months of mortgage payments which in this example is $12,000. That can be a good deal if it also means you can get into your replacement home more quickly.
Wallets are often brimming with cash during the holidays. It’s tough to assemble money for a down payment and closing costs, but for many households, the time when savings are strongest occurs at year-end. This happens because the holiday season is often associated with overtime, gifts, tips and bonuses, meaning that bank accounts can be a little fuller than they might otherwise.
So the next time someone says real estate doesn’t sell during holidays, remind them of that $75 billion in transactions as well as the many reasons buyers want to buy and sellers want to sell.