Wells: Seasonality creates more competition to start the year

One of the defining differences in the past two years of residential resale behavior across the country has been the lack of seasonality. While the pandemic continued to disrupt most aspects of life, the traditional bell curve of real estate activity (more sales in the warmer months and fewer in the cooler ones) throughout the year looked more linear than in years past. It didn’t matter what month it was; real estate demand and influx of quickly absorbed supply remained constant. 

One difference that we have seen emerge in the second half of 2021 was the signs that seasonality was returning to markets. Standing inventory and new listings started to decrease in the third quarter and fourth quarter. Meanwhile, the demand for properties has not decreased. 

In order to win out in a hyper-competitive housing market, buyers have faced tough circumstances with heavy competition from cash offers — and essentially blank contracts with terms highly favoring sellers. In fact, we have a bit of a perfect storm to start 2022 that is making the marketplace as competitive as ever. The historically low inventory, the seasonality of not much new listing activity to begin the year, and the increasing interest rate environment that is pushing some buyers to move a little quicker. We have seen very competitive multiple-offer environments in almost every market in Northern Colorado, and that has created some nervousness among real estate professionals and home buyers that this will be the market all year long. 

Month-over-month closed sales are down an average of nearly 30% across all Northern Colorado markets as a result of the seasonality and other factors. Loveland tops the chart with a 45% reduction in sales month-over-month but is actually up 19% compared to January of 2021.  The advice to buyers is to keep yourself in the game and work with a trusted adviser who can certainly help find some undiscovered inventory opportunities. In 2022, if more normal trends continue, spring seasonality will return listings to the market, but these first few months of the year are going to be very competitive. Buyers need to honestly and strategically align their expectations with the market realities on pricing and what it takes to write a winning offer today.  The help of a Realtor is crucial to navigating this market.  

Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with seven locations in Northern Colorado. He can be reached at bwells@thegroupinc.com or 970-430-6463.

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