SOURCE: Atlantic & Pacific Real Estate

Atlantic & Pacific Real Estate

January 22, 2013 06:00 ET

Does Real Estate Really Sell in the Winter?

SANTA ANA, CA--(Marketwire - Jan 22, 2013) - The long-held myth is that a magic switch shuts down home sales after Thanksgiving. In fact, there are a number of reasons why the colder months are a good time to sell -- especially in 2013 when several trends suggest new-found real estate interest.

Let's start with the old tale that homes do not sell in winter. It just isn't true. Hundreds of thousands of homes sell each month during December, January and February. According to recent data from NAR, the average number of existing home sales during these months last year was 4,537,000.

"The real estate marketplace is open and active year-round," said Wendy Forsythe, executive vice president with Atlantic & Pacific Real Estate, a full-service real estate brokerage with offices in more than 20 states. "In a mobile society there are always people ready to buy and sell."

2013 Winter Real Estate Sales

For 2013 it seems likely that the winter real estate market will be especially active. Here's why:

First, mortgage rates remain near historic lows.

"Mortgage rates started the year near record lows which should continue to aid the ongoing housing recovery," said Frank Nothaft, Freddie Mac's chief economist.

Second, home prices in many markets have begun to rebound. According to the National Association of Realtors existing home prices in November were 10.1 percent higher than a year earlier. For homebuyers waiting for the market to reach bottom, these price increases are a signal that it's time to start looking for a home again.

But while prices are generally rising it's also true that for the most part they remain below the highs seen in 2007. In general, bargains are still available, and in many markets the cost of making monthly mortgage payments is actually lower than the cost of rent.

Third, pent-up demand remains in the marketplace.

"Household formation is growing for the first time in several years, rental occupancy rates are at all-time highs, and everyone needs a place to live," said Forsythe. "Many people who ran into tough economic times several years ago are again looking at real estate ownership. Enough time has passed so that many of these individuals have re-built credit, built up their savings and now qualify for FHA, VA and conventional financing."

Fourth, large numbers of distressed properties remain available for purchase. Short sales and foreclosures represented 22 percent of all existing home sales in November according to the National Association of Realtors and such properties typically sold with a deep discount -- 20 percent off for foreclosures and 16 percent off for short sales.

Forsythe noted that "foreclosures and short sales continue to remain available in significant numbers, meaning that many buyers still have access to a large array of local properties at discount prices."

Demographic Shifts

We traditionally associate linen sales with January, new car clearances with August and holiday mark-downs with late December but in real estate there tends to be more marketplace balance year-round. It is true that there are fewer home sales during the winter, but it is also true that there are fewer buyers. Without such a supply-and-demand balance, home prices would be expected to plummet every February 15th, or January might be the month associated with two-for-one real estate sales. Such annual events, of course, do not happen.

Part of the reason for year-round real estate marketing is that household dynamics have changed. The greater volume of real estate sales traditionally seen in the summer is associated with the desire of parents to get children into classes at the start of a new school year. But now households with children are a smaller part of the mix. Demographer William Frey with the Brookings Institution says that 80 percent of all households in the U.S. do not include children.

"The changing composition of our households impacts the real estate marketplace," Forsythe observed. "The Census Bureau says people are marrying later and that household size has declined. One result is that household moving schedules are less tied to school terms."

Put it all together -- rising rentals, demographic changes, tax preferences, low mortgage rates plus the availability of distressed homes -- and it comes as little surprise that the real estate marketplace is open for business year-round.

For additional information concerning your winter real estate trends in your local market contact an Atlantic & Pacific Real Estate sales professional near you or visit apreus.com.

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