Should you buy or sell a house in December? In this post we will explain the pros and cons of the December Housing Market.

The warmer months are when most people enter the housing market but there are some unique qualities to the December/Winter Housing Market that both buyers and sellers can take advantage of. From competitive list prices to quicker sales here are some factors you should consider if you are buying or selling a home in December.

Do House Prices Drop in December?

In general house prices are lower in December with some of the best deals for a few reasons. 

The winter market in general tends to be slower and sellers who list their properties now are very motivated to sell, which means they will be more willing to enter negotiations. To take advantage of this buyer you should find a realtor who is an expert negotiator.

The holidays are also approaching, which is a hectic time of year. Since there is less inventory in December this can lead to quicker sales if a seller has a competitive list price. Sellers are also more likely to receive offers closer to their list price. These facts along with less landscaping responsibilities, makes the December housing season less stressful for sellers.

Are There Less People Buying/Selling in December?

Yes, there is less inventory and less buyers this time of year. This can be both good and bad for both buyers and sellers.

Buyers are much less likely to find themselves in a bidding war since there is a smaller number of buyers this time of year. This time of year does mean buyers have less choice because of the limited inventory but winter sellers are generally willing to enter into negotiations.

For sellers in the December housing market there is limited competition, since most people wait to list their properties until the spring. This is because many sellers don’t want to list right before the holidays and others don’t want to deal with people tracking snow and dirt into their homes during each showing. Winter buyers are generally serious about buying and aren’t “just looking” like some spring and summer buyers. Winter buyers are looking for homes because they genuinely want or need a new home, or perhaps they are deal hunters. Sellers may meet with fewer buyers but there is a good chance you will have a successful sale.

Average Price of Listings and Inventory in December vs Other Months

On average December has lower prices compared to other months of the year. Here are some housing statistics for different months of the year.

Total Residential Price

• Dec. 2020 – $422,300
• April 2021 – $451,400
• Aug. 2021 – $459,600
• Nov. 2021 – $461,000

Rowhouse Price

• Dec. 2020 – $280,500
• April 2021 – $293,400
• Aug. 2021 – $300,600
• Nov. 2021 – $299,100

These show how over the course of a year the prices fluctuate and tend to decrease during the colder months and start growing as the weather becomes warmer. The following graph shows this change for Rowhouse prices in Calgary from January 2016 to November 2021.

To answer the initial question of “Should You Be in the Real Estate Market in December?”, the answer is YES. The December real estate market has many opportunities for both buyers and sellers which you won’t find during other times of the year. Now that Winter has arrived, keep an eye on the market to see if there are any great deals you may want to take advantage of.

Source: CREB | Real Estate Resources for Calgary

People tend to overpay for property in a hot market for emotional reasons. Although it is sometimes worthwhile, it is now more vital than ever to avoid overpaying for real estate. Inflation is a threat in the aftermath of the COVID-19 pandemic. Costs are rising across many sectors as economies recover from a severe economic disruption. Because real estate is rarely a short-term investment, understanding the cash flow and subsequent rate of return is crucial to attaining the goal of making profitable investments.

What Is An Inflation Hedge?

An inflation hedge involves investing in an asset that is predicted to sustain or increase in value during an inflationary period. Rent and property values tend to rise with inflation, hence real estate has long been thought to be a good inflation hedge. Real estate and farms have been shown to be excellent inflation hedges in the past.

Cumulative change in inflation and the new housing price index. (Statista, Statistics Canada)

This chart compares inflation to the new housing price index from 2000 to 2020. The change in cumulative inflation was 39 percent, compared to a change and increase in the new house price index of 51.8 percent. According to the data, the new price housing index outperformed inflation, demonstrating that real estate can be used as an inflation hedge.

As your home price increases over time, it lowers the loan-to-value of any mortgage debt, acting as a discount. Therefore, the equity on your property increases, but your fixed-rate mortgage payments remain the same.

Why You Shouldn’t Overpay  

As Will Rogers once said, “Don’t wait to buy real estate. Buy real estate and wait.” It is important to define and stick to a timeline when purchasing real estate to determine if it is worth it to overpay. Overtime, inflation will correct any mistakes made. Easily substituted suburban properties are likely to depreciate in value when held onto for a short period of time. New properties have initial depreciation where the value of the building decreases further than the value of the land increases. The property value will decline until there is more establishment in the area and inflation occurs. So, if you overpay for a property today and you hold onto it for 25 years, you are likely to get a great return on investment.

Final Thoughts

Overpaying is a broad term and could have different meanings to different people. The most important thing is that you know what is worth overpaying for. If you’re holding onto a property for a short period of time but you know you will highly enjoy it’s assets, it might be worth it to overpay.

A good real estate agent will more often than not tell you to not buy a property. Good real estate agents are most concerned with completing a  successful transaction where the client makes the right move for them.