Game Plan to Optimize Cyclical Market Conditions


The seasonal sway of the Palo Alto real estate market is common knowledge to most local agents and individuals looking to sell or buy a home. The ebbs and flows of the market are best illustrated by looking at the number of days a home is on the market and the number of new listings that come on the market to help sellers and buyers make strategic timing decisions.The number of days a home is on the market is an important factor to consider when selling or buying a home. This number means different things to sellers and buyers. A seller should avoid listing their home in January, August, November, and December. During these months, homes tend to sit on the market significantly longer than during other months of the year. The average days a home is on the market for this time frame are 29 days in 2012, 27 days in 2013, and 28 days year-to-date in 2014. Compare this to the days a home is on the market for the rest of the year: the average in 2012 was 22 days, 14 days in 2013, and 14 days in 2014 year-to-date. During the slow season, homes sat on the market for over a week longer in 2012, about two weeks longer in 2013, and about two weeks longer year-to-date in 2014.

As homes remain on the market, they become stale and increasingly difficult to sell. Conversely, this is a great time to buy, as sellers become anxious when their home does not sell in a timely manner and are more likely to negotiate terms and accept a lower sale price.

Another good metric to consider when selling or buying a home is the number of new listings each month. Like the number of days on the market, the same data points have a different impact on sellers and buyers. The data again shows that, in January, August, November, and December, sellers should avoid listing their home. The holiday months and mid-summer doldrums result in fewer homes coming on the market. The average number of new listings during these months was 27 in 2012, 20 in 2013, and 23 year-to-date in 2014. Compare these results to the averages for the remainder of the year: 55 in 2012, 45 in 2013, and 43 year-to-date in 2014.

There are about half as many new listings during the slower months than during the busy time of the year. Sellers are tempted to take this single metric and conclude that less competition is better, but once the days on the market are taken into account, it becomes apparent that these are the months when homes sit on the market the longest. In addition, when there are fewer homes on the market, buyers tend to lose focus and make fewer offers. This means a home receives less overall attention and fewer visitors, which translates into a lower probability of a multiple-offer situation. Yet from a buyer’s perspective, it is again a good time to make a move since the market is slower, there is less competition, and sellers have fewer offers to choose from.

Both the days on the market and the number of new Listings, when taken together and examined in monthly increments, demonstrate that sellers may want to consider listing their home between the spring and early summer months or during the smaller September-to-October window, while avoiding the beginning and end of a year, as well as mid-summer. For buyers, the months that are worst for a seller become the best time to purchase. The obvious downside is that it is more difficult to find a suitable home.