Given I spent an hour shovelling snow this morning and then took twice as long to get to my morning appointment, winter weather is definitely on my mind today.
When I saw the latest market data for February, it gave me the idea to talk about how the weather outside actually impacts real estate.
I tried for a while to come up with a short subject line that talked about the weather and real estate. Here were some of the gems I considered:
- Weather or not real estate
- The weather outside is (not) frightful
- Weather – Finally more than just small talk
I finally decided to go direct with the subject line and it must have intrigued you a bit as you opened the email.
As many of you know, there are seasonal aspects to real estate. The spring market is coming soon and it is historically the time when the most real estate listings go on the market and are sold. It is also the time when prices are historically the highest. Here is a chart that shows monthly sales over the past three years. You can see that May is typically when we see the most number of sales.
Not only are there more sales, the average sale price is also higher. In the below chart, you can see that again, May has the highest average sale price in most years.
We also see a high point in the fall, typically September or October.
When most people were farmers, an agrarian cycle made sense. Given most of us don’t till the fields anymore, why do we have these trends?
The short answer (in my opinion) is weather.
When the weather is really cold, with snow and ice and it is more difficult to make houses look appealing from the outside, and getting anywhere is harder, we just don’t have as much interest in either listing our homes or going to see homes. While there are always people who need to sell or buy, when you have an option, lots of people decide to not buy or sell during the dead of winter.
What about the summer then? Why do we see a dip in July and August before ramping back up in September and October? Again, it’s the weather. Despite the joke about Canada having two seasons (Winter and July), we do get fairly nice summers in Southern Ontario on occasion. When the weather is nice, people take advantage of it. We spend time on patios, we play sports outdoors, we spend time taking it in, so that we can stay strong for the winter.
So what happens to real estate when the weather is different than the normal pattern?
It changes right along with the weather.
February, 2016 is a great example.
Yesterday, the Toronto Real Estate Board President Mark McLean announced Greater Toronto Area REALTORS® reported a record number of home sales through TREB’s MLS® System in February 2016. There were 7,621 transactions reported this past February – up 21.1 per cent compared to February 2015.
The number of new listings entered into TREB’s MLS® System was also up on a year-over-year basis by 8.2 per cent.
Even after accounting for the leap year day, sales were above the previous record for February set back in 2010. Sales were up strongly from the 15th day of the month onward as well, despite the new federal mortgage lending guidelines coming into effect that require at least a 10 per cent down payment on the portion of purchase prices between $500,000 and $1,000,000.
So, a heck of a February for real estate. Now…how about that weather?
In February we saw a number of days where high temperatures were higher than average and the low temperatures were not as low as average. February was milder than normal and more people listed their homes, more people felt up to going out to see them and more homes were sold.
I spent a lot of time in February working with buyers and sellers and I can tell you it was definitely not a typical February. Sellers got more done in preparation for their listings and buyers were more interested in spending time looking at houses.
Given that March is forecasted to be mild (the last couple of days notwithstanding) we should see a continuation of higher than normal real estate activity.
If you or someone you like are considering buying or selling and want to enjoy the good weather with me, please get in touch. I’d love to be responsible for what comes next.
Buildings, and especially houses, with graceful transition between the street and the inside, are more tranquil than those which open directly off the street.
As a follow up to last week’s lesson, this is again a crucial aspect to making us feel comfortable. When we see homes that have been built out directly to the street, with no space to transition in, we feel it is somehow too busy, too crowded, too stressful. This applies to condos as well. When the entrance is directly off the sidewalk, it feels far less tranquil than a building that has been designed with a transition space that eases us into the building.