Question: I’ve noticed that the market has slowed down quite a bit in the last few months. Do you expect that trend to continue into next year?
Answer: I’d be remiss not to mention the Thanksgiving pie poll results from last week! With 1,043 votes as of last night, ARLnow readers overwhelmingly prefer pumpkin pie (45%) for Thanksgiving, followed by apple (29%), and then pecan (26%). That’s exactly the order I eat my pie on Thanksgiving! Now back to your regularly scheduled programming…
Will The Slow Market Continue into 2024?
Like clockwork, the second half of the year is slower than the first half (except when COVID flipped 2020 upside down) and it gets especially slow in the 4th quarter as the focus shifts to holidays, family/friend time, and travel. This period of seasonal slowness consistently succeeds in lulling the market to sleep, resulting in predictions that the prevailing economic/housing headwinds (whatever they may be at the time) will result in a slower/down housing market the following year.
These predictions are consistently wrong and the market usually proves that within the first 2-3 weeks of the new year.
The Data Says Prepare for a Rapid Increase in Demand
The data in the chart below is collected from Arlington sales going back to 2017, sans 2020 data. It shows market performance based on the week that properties go under contract – the percentage of properties selling above the original ask, the percentage of properties selling at or above the original ask, and the percentage of properties selling with 1-10 days on the market (my preferred measure of market speed).
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The highlight of the chart is how rapidly the market shifts in January, relative to the previous 3-4 months. By the second week of January, the market is moving faster than it has in over four months, and by the third week of January, both pricing metrics are higher than they’ve been in roughly six months.
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Only about 21% of properties that go under contract in the second half of the year are over the asking price, but by the third week of January, 1/3rd of properties sell above the asking price and that price pressure remains in place until summer hits.
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For buyers in the market, it’s important to also prepare for just how quickly homes will start selling. In the last two months of the year, only 28.5% of homes were going under contract in the first ten days, but that jumps to over 46% by the second week of January, and by early/mid-February well over 50% of homes sell within the first ten days on market and the pace hovers around 60% through May.
These percentages will vary significantly based on the market conditions of a given year, but the important takeaway is how quickly demand shifts in the new year relative to the end of the prior year. As a reminder, Q4 ’22 to Q1 ’23, a period many predicted would result in a continuation of a slow/down market, delivered us the most significant whiplash effect through the new calendar year we have seen.
You can see a similar rapid shift in annual market conditions from this chart from Altos Research showing the percentage of properties in Arlington on the market that have had a price decrease. The steep drops you see start when the calendar turns to January.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Real Estate Agent in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
