Now that the holidays are over, it is time for housing to shift to the Winter Housing Market, when the inventory is flat,
demand rises, and the pace of the market rapidly heats up.
Winter Housing Market
Mixing a chronically low inventory with rising demand has always resulted in a much hotter housing market as winter progresses.
Laguna Beach is renowned for its beaches, coves, coastal parks, art galleries, trollies, and spectacular ocean views. Tourists flock there year-round, but it becomes exceptionally crowded during the summer after the kids get out of school. To beat the crowds, many arrive for vacation in May or early June only to be greeted with a thick layer of coastal fog that has trouble burning off during the day. At times, it can be pretty chilly. May and June are typically the cloudiest days of the year, often referred to as “May Gray” and “June Gloom.” Vacationers during these months have preconceived expectations of bathing on sun-soaked beaches and admiring picturesque sunsets, yet the gloomy cloud cover can last a week without sunshine.
Similarly, buyers who start their home search have preconceived expectations. Many expect plenty of choices, less buyer competition, and a slow pace that enables them to take their time isolating a home. Yet, in Southern California during the Winter Market, from mid-January to mid-March, buyers find that the pace of housing is a lot hotter than they initially anticipated, with fewer choices and plenty of buyer competition. In addition, as winter rolls along, the market grows stronger and stronger.
Regardless of the year or economic situation, the housing market always revs its engine starting in mid-January. It continues to accelerate weekly, like a hot rod in a drag race. The inventory of available homes to start the Winter market last year was at 2,536, the second lowest mid-January reading since tracking began in 2004, only behind 2022. By mid-March, the start of the Spring Market, the inventory had dropped to 2,168, a small drop of 368 homes or 15%. Demand, a snapshot of the number of new escrows over the prior month, soared higher from January to March, increasing from its lowest levels since tracking, 939 pending sales to 1,567 in March, up 67%, or an additional 628. The Expected Market Time, the time between coming on the market and opening escrow, decreased from 81 days to an insanely hot 42 days by spring, a difference of 39 days.
Excerpt taken from an article by Steven Thomas.
