One of my active buyers told me today, “Well I think we’re just about to pack it in for the year,” and I was confused. I asked him why, and he said, “Nobody buys real estate in November and December, do they?”
We’re talking about houses here, of course. Condos sell 24/7, 365. But in the residential housing market, is it still possible to be an active buyer in December?
And if it is…..what is the market like?
Is it true that prices are down? Let’s take a look…
Yes, like anything and everything else in life, we could formulate an argument either way.
“Is December a great time to buy a home?”
Let the debate begin.
Now if we were to use actual statistics to back up our opinions, well that changes everything! Wait…..no it doesn’t. I regularly admit that my favourite line in life is, “You can make numbers say anything you want.”
But let me present some numbers during the course of this blog post, and you be the judge.
So from a completely subjective standpoint, and in my professional opinion, is December a great time to buy real estate?
It depends. On several things.
Sorry, I know, that’s not the “easy” answer some people are looking for.
But it all depends on the objectives of the buyer.
I was in Starbucks on Tuesday with a new buyer, and they seemed to put appreciation at the forefront of their search. It was all about how much a house would appreciate, in a given area, over a given time period, in relation to another house. While I think potential appreciation is an important factor in the decision-making process, it’s not the only decision, and dare I say, it’s not what I’d put first.
Would you live in a dumpster for five years if that dumpster appreciated more in value than a house or condo? Crude example, but you get it.
Location, interior style and finishes, size, number of beds/baths, outdoor space, access to transit – perhaps all these things are more important than simply “how much the house will go up in value.”
So excuse that long tangent, but the point I’m trying to make is that the question “is December a great time to buy real estate” has a relative answer.
It would seem, as the numbers will show, that strictly numerically, the prices are cheaper in December than in the preceding months, and if “is December a great time to buy real estate” you mean “are prices lower in December,” then the answer, it would seem, is yes.
Let’s look at the average house of a Toronto home over the fall months of the last four years:
December – $556,602
November – $577,936
October – $587,505
September – $573,676
December – $520,398
November – $538,881
October – $539,058
September – $533,797
December – $478,739
November – $485,328
October – $503,479
September – $503,662
December – $451,436
November – $480,421
October – $478,137
September – $465,369
The one constant here is that the average price of a home is at the lowest point in December. And a second constant, which stems from this obviously, is that in each year, there is a drop in price from November to December.
The average drop in home price from November to December, as a percentage, looks like this:
2014 – 3.7%
2013 – 3.4%
2012 – 1.4%
2011 – 6.0%
Those are some pretty big numbers!
Six percent? Really? That’s insane, especially considering the average price of a home!
Now of course, these are averages, so it’s not like a $900,000, semi-detached house in Bloor West Village is always going to cost $864,000 in December, relative to October or November.
But I do think that there’s enough sales data here to give us an accurate picture. One might argue, “The really high-end properties don’t sell in December, since those people can afford to wait.” That’s anecdotal at best, and is a bit of a generalization.
The bottom line is – I do think there’s a bit of a drop-off in price from October/November to December.
That’s what the average tells us.
Now, to go back to anecdotes and experiences, I’ve seen some crazy things happen in December.
I remember back in 2013, a house came up for sale in the first week of December on Hazelwood Avenue in prime Riverdale.
There were 15 offers, and it sold for an insane price. I think the Toronto Star did an article about it. Let me find it……..ah, HERE.
Right – the “Christmas Crunch.” I think I came up with that on the spot, and the columnist loved it. But as silly as the tagline sounds, I do believe that a lot of frustrated, disenfranchised buyers look at a house in December as their “last hope” of making a move before the great thaw sets in.
That house on Hazelwood really did represent the last chance for those 15 buyers, and 14 of them likely bought in January, or later.
So while the statistics might show the average price of a home is lower in the month of December than it is in the previous three months of the fall market, there’s always the wildcard house dangling over frustrated buyers who often “throw the boat” and pay a crazy price.
Even if we did determine that, somehow, prices are always lower, what about selection?
Picture a store with “low, low prices,” but they only have one item for sale. Across the street is a store selling wares at non-discounted prices, but they have an array of goods.
What’s more important to you: price or selection?
Does “getting a deal” trump being able to choose from a dozen houses, rather than one?
It goes back to my example earlier about the conversation I had with buyers at Starbucks: they’re obsessed with potential appreciation (which is an inexact science to begin with, but that’s another story), when I’m trying to advise them to focus on the home itself, and how their lives will be over the next 10-15 years in that house and location, versus a different house and location, irrespective of potential appreciation – which you can’t even predict.
So let’s take a look at active listings over the last four years:
December – 10,230
November – 14,717
October – 17,497
September – 19,165
December – 11,418
November – 16,092
October – 18,557
September – 20,194
December – 13,241
November – 18,311
October – 20,737
September – 21,621
December – 12,868
November – 15,551
October – 17,794
September – 21,818
The drop-off in inventory is massive!
In the last two years, we’re seeing only 53-56% of the inventory in December that we see in September!
And again, keep in mind – these are numbers that encompass the entire GTA, houses and condos. The ratio of condos to houses is far higher in December than in September, so if you happen to be looking for a “family home,” forget that 53-56% number. I’d say we’re probably looking at 25%; one family house listed in December for every four listed in December.
So let me ask this again – would you rather have more to look at, or slightly lower prices?
That’s the trade-off that we find ourselves with in December.
I won’t argue that prices are slightly lower, but I don’t expect any arguments back when I suggest that the same selection and dare I say, quality does not exist in December.
In the end, I think it’s the diligent, persistent buyer that wins out in December.
A lot of people are starting to act as though “the end is near” and that there’s no real estate market in December, so seeing as we’re in the second-half of November, we’re just about done. In my estimation, we have exactly four weeks left.
Four weeks. Now think about what you, as a very active buyer in a 2015 market, see in four weeks.
Maybe……..12 houses? Maybe three per week? I mean, you might see a dozen in your price range and/or location, but maybe three per week that really, truly, could work?
So if the market slows down a little, or even gets cut in HALF, we’re still talking about six properties between now and “the end” that are going to work for you and your family.
Now is not the time to put the search aside for the holiday season.
The market is slow as hell in December, and I know people’s minds begin to wander.
But if you’re an active buyer who didn’t find “the dream home” in September, October, or November, hang in there.
There might be an early Christmas present waiting for you…