Is it possible we see a surge in home listings this winter? According to different sources, the possibility is very real. In at least two different locales, some agents have visceral expectations that this winter season will be far more active than usual.
The pending election, coupled with the Federal Reserve’s recent interest rate cut, may create a confluence of events that drive the market toward greater activity, breaking away from the usual pattern of cooled activity during cold months, according to new data and agents who spoke with RISMedia.
The Real Brokerage’s September monthly survey found that a significant portion of agents expect to see increased activity. When asked if they felt more optimistic or pessimistic about their local market over the next 12 months, 47% felt more optimistic. That contrasts with 15% feeling more pessimistic, with the remaining 38% of agents feeling neutral.
Though this data shows far more agents expecting increased activity compared to agents expecting a decrease, the index calculated by The Real Brokerage survey showed that the Canadian market may be marked by an opposite expectation.
According to the study, optimism in the Great White North fell significantly, and is now almost exactly split between pessimistic and optimistic outlooks, though the study authors noted there is some volatility in Canada’s reading due to small sample sizes.
Qualitatively, the sentiment in America differs, with agents weighing in on the side of a busier winter than usual.
“I believe that we’ll see an uptick this fall and winter compared to last (year) because of interest rates and because of the election being over,” said Chris Speicher, owner of the Speicher Group with Long & Foster Real Estate, which serves the Washington, D.C., metropolitan area. “I think maybe not the fall but maybe the late winter is gonna be a much better market for people than it was last year because all of those external forces—the interest rates and the election, and all that will be done…the markets are still digesting the rate drops.”
The prevailing expectation seems to be that it will take some time for people to recover from “election shock” and the holidays, but that they will be out earlier this year in something resembling full force for what’s usually a slow season. Speicher predicted that late January or early February would begin a buying frenzy, as opposed to a season usually marked by barren levels of interest in home buying and selling.
While Speicher’s expectation for the East Coast was somewhat atypical (in keeping with an election year), the West Coast had a slightly different take on the question of seasonal divergence. Jason Mesnick, principal broker of the Mesnick Dalto Group, which serves the Seattle metro region, says things will open up once consumers are no longer preoccupied with regular seasonal occurrences.
“I think people will be done with the typical distractions of the holidays,” said Mesnick. “(When) I put the menorah away or the Christmas tree away and New Years is over, I’m ready to start exploring what’s gonna be in it for this year. I don’t have this election hanging over my head, so I have more clarity on what I want to do.”
While the general expectation remained the same from coast to coast, the demographics of the expected early thaw were marked by different consumer categories. Speicher expects first-time homebuyers and homeowners with low interest rates, while Mesnick predicted that the “baby boomer generation (will) have a little bit more movement than we’ve seen in the last few years.”
“As interest rates start to come down, I think we see a lot more sellers hitting the market so they can relocate,” says Speicher. “Whether it be a downsize or whether it is just a relocation or whether it is moving from a cold climate to a warm climate, or whatever the case may be—closer to kids and grandkids. And then the first-time homebuyers who the combination of high interest rates and extremely high home prices have kept on the sidelines—now that interest rates are starting to tick back down, I think that group comes back into the market.”
Mesnick says that interest rates will be a determinative factor for the older generation, coupled with the fact that many of the sellers from that income bracket are close to being finished paying their mortgage, and so are more willing to relocate.
“I do think when interest rates come down and they have less of a concern about what those interest rates are gonna do, you might be trading a 3% interest rate for a four point something, but you’re buying a lesser or smaller house, but at least it’s less expensive than selling a big house, buying a smaller house and paying the same or more.”
Speicher reified this dynamic, stating that “the interest rates are in the 6’s and 7’s, so it’s gonna cost you roughly twice as much in mortgage payments to move because the interest rates have doubled. Now that interest rates are starting to tick down, the willingness of those people to sell their home and move into something else increases.”
Though first-time homebuyers and homesellers who’ve been waiting for the right time to list compose a significant amount of the expected activity, Speicher and Mesnick urge agents not to discount certain X factors that will govern buyer and seller behavior just as strongly as the election and interest rates.
For Speicher, this X factor was the untapped wellspring that is the imminent return of city-dwellers to D.C. in the wake of the pandemic. “What’s gonna be interesting for us is during COVID we saw so many people leave the city, but I think we’ll see a return to the city. I think the Washington, D.C., market itself will be extremely hot. I think people will come back into the city. I think the people who wanna come in and get outta that city will be where the magic happens.”
In the Seattle metro, this X factor is the stock market: “We’re so heavily dependent on Boeing, Amazon, Microsoft, Meta, Google. They’re all major employers around here, so when the stock market is doing great, and even a first-time homebuyer might be working at these companies, and they’ve got $500,000 they are putting down…as a down payment. And if the stock market gets corrected, and some of that might be politically dependent and whatever else is happening in the world, and if that changes and they lose some money in the stock market or a bump up in the stock market, that dramatically changes buying power outside of interest rates,” Mesnick said.
Mesnick’s claim is timely, with a specific example of a listing that went south quickly, even after earnest money was involved: “It was on one of my listings, someone was buying a $4-million-dollar-plus house and the stock market had a big (bump), and he put $150,000 of earnest money to buy the house. One day he said he lost a million dollars in the stock market and the day before we were supposed to close on the house. He walked away from $150,000 because he said that would be less painful than moving forward with the purchase.”
Stories such as these illustrate the volatile nature of some factors that remain outside of the locus of control of policymakers that affect housing markets and individual transactions.
“I’ve never seen anybody walk away from $150,000 in the 11 years I’ve been doing this,” Mesnick stated. Though a simple observation, it is still a powerful one.
With so many factors swirling in various markets across the country, Speicher cautioned: “I think that for the most part, people are influenced by what they see and hear.”
But what folks see and hear may not always give a fully accurate picture, or even be the right decision for their specific situation.
Identifying the source of the buzz isn’t all that difficult. “I think the mechanism is the media,” Speicher opined. “Whether that’s traditional news like a newspaper or CNN or Fox, or they might get something about interest rates online. I really don’t think it’s social media posts from real estate agents.”
That’s where the agents’ opinions split from each other, contrasting the X factors in their markets, with Mesnick saying he “still wouldn’t ignore when you see the chatter online of, ‘interest rates drop by a half point.’ The news media picks it up.”
“But then you also have like 2 million real estate agents saying it, just echoing it over and over again on whatever social media platform,” he added.
