There are many harbingers to the coming holidays. Beyond the lighted trees and tidal wave of craft fairs, there is the annual re-appearance of red and green M&Ms, half gallons of suspiciously thick eggnog, the ubiquitous boxes of clementines guests bring to our homes and, of interest to me today, the disappearance of real estate signs.
As I write today on the twelfth day of December, a total of 195 properties have been withdrawn from the market of nine towns I follow over the last thirty days. Of the 195 properties withdrawn, 150 were single family homes. With the current number of homes for sale at 1209, that activity represents a shrinkage in the inventory of 11%. As the month progresses another 5 or 6% of the inventory may withdraw from the market. The percent of withdrawals across the nine towns in ascending order is a follows: Hopkinton and Narragansett 8%, Exeter and South Kingstown 9%, East Greenwich and Richmond 10%, Westerly 11% and Charlestown and North Kingstown 15%.
In a typical year, the time between just before Thanksgiving until early in February is a pretty slow time for real estate activity. In times past it could make sense for some sellers to take their houses off the market because it couldnâ€™t be expected that much would happen during those two months. It is because I have been flat out busy the last several weeks that I thought I would check whether Iâ€™m the anomaly or whether there has been an uptick in activity which is causing an anomaly to the historical pattern.
When a house goes into sales agreement an agent can enter it into the MLS system either as pending or into a couple of categories that represent a hedged bet conditional pending. Four weeks ago, two weeks before Thanksgiving, 3 homes were changed from active to conditional pending and another 13 properties went pending. The following week activity jumped to 7 conditional pending with another 10 pending. Two weeks ago, right after Thanksgiving, 6 houses entered pending with conditions while another 17 homes were newly pending. In the last seven days 13 homes were entered into MLS as conditional pendings and 23 homes for sale went pending. In other words, almost half of the real estate sales activity of the last month took place in a single week in December.
Whatâ€™s up? Why is activity going up instead of down at the historically deadest time of the year? I would guess part of the explanation is that buyers are being pushed off the fence by the recent rise in interest rates. Instead of conventional 30 year fixed rates dropping below 4% as some experts forecast would be the result of the quantitative easing of the Fed, rates have gone in the opposite direction. The December 12th rate at The Washington Trust Companyâ€™s web page for a 30 year conventional is 4.75%. While it may be true that for most of the last fifty years, potential homeowners would have sacrificed the family pet for a rate below 5%, now 4.75% seems like expensive money for the short-sighted. For those with a better sense of economic history, or with an elevated sense of foreboding, the realization has come that now may be the time to lock in a relatively well-valued home with a relatively cheap mortgage rate. I believe that it is that feeling that is fueling some of the recent surge.
Owners who have recently withdrawn their homes from the market or who are considering doing so either because they think the market is dead or they donâ€™t want the hassle of showings during the holidays may want to re-think their strategy. Other than possibly having an area filled with paper, tape, boxes and ribbon, for many home owners, this is the best the interiors of their houses look all year. If a sellerâ€™s house is looking its best and if buyers are buying and feeling a little more pressure to get something done then they have for almost two years, and if a significant slice of the inventory has been removed, might it not be worth the inconvenience of a few ill-timed showings to consummate a deal now rather than two, three or four months from now?
Over the long run, selling oneâ€™s home it could bring more satisfaction than sitting slouched in a chair watching, en famille, A Charley Brown Christmas for the eighteenth time while surrounded by a scatter of clementine peels and glasses sticky with an unearthly yellow viscous ersatz-dairy substance.
C. N Hetzner is a Broker Associate in the Wakefield office of Randall Realtors assisting buyers and sellers of residential and commercial properties. He welcomes questions or comments. He may be reached at firstname.lastname@example.org or 401-742-3421.View more articles in: