Housing Market Fireworks on 4th of July?
Housing activity on July 4th follows a similar trend every year, with people taking time off to celebrate or leave town. High buyer motivation and coronavirus restrictions could make this year different.
The 4th of July falls at that time of year when people start thinking about what they need to do before summer’s over. If you need to move, you better do it before school starts and weather begins to change. Motivation is high, but supply of home listings is low.
Historically, holiday weekends have a strong impact on real estate. People want to take advantage of extra time off by traveling or spending time with friends and family. This often causes listing activity to slow down for a few days. But 2020 is not like normal years. With supply already tight and homebuyers physically prevented from big travel or party plans, we may see more offers. Will housing activity explode this 4th of July?
Traditional July 4th housing trends
Most American holidays follow three important trends that have a profound impact on the housing market:
- Listings go down. As a general rule, very few new homes hit the market in the week leading up to the July 4th holiday. That is, unless they’re re-listed homes that expired on June 30. But even if a large number of new homes is available, many agents hold off on listing until after the holiday. It’s not worth the effort when so many home sellers, buyers, and realtors take time off. Low inventory is the norm around all holidays.
- The number of price reductions goes up. There is almost always an influx of price reductions with the midsummer mark approaching. With the best homes already moving off the market, the pressure to sell everything else increases. The longer a seasoned listing delays cutting its price, the more likely it is to not sell before summer ends.
- Motivation remains high. When buyers skip the holiday BBQ to go house hunting, that means they’re serious about making an offer. Buyer motivation is key to housing activity. For many families, 4th of July is the deadline to buy a house in a desirable school district. Entering escrow after the holiday weekend cuts it very close to the start of the school year.
Star spangled shutdowns?
The country is re-opening slowly despite impatience to return to normalcy as soon as possible. Most annual July 4th parades from California to New York have been turned into virtual celebrations. Authorities canceled live carnivals, festivals, and fireworks extravaganzas way ahead of the holiday. With pandemic fears still fresh in our minds, this year’s 4th of July will be different than that of previous years.
But should we expect different real estate behavior this year? Not across the board. Some things will change, while others stay the same.
- Listings volume should remain steady. Having missed so much time due to shelter-in-place, agents won’t hold listings until after the holiday. Buyers and sellers are making up for the slowdown during spring and early summer.
- There won’t be many price reductions. Per Redfin data, the percentage of active listings with price drops varies greatly by geography. In 2019, the Seattle grater area had 36% of active listings drop prices. Los Angeles recorded 19.5% of active listings with price drops. The national average hovered around 17%. With nearly 10 new pending contracts for every 10 new listings over the past few weeks, sellers are getting the prices they want without the need to drop the price.
- Multiple offers. People are staying put but their motivation to buy hasn’t changed much. The deadline to find a house before school starts is just as important this year as in any normal year. With the already tight housing inventory, we are likely to see multiple offers on properties in better school neighborhoods.