Introduction
Groundhogs Day is a very important day in the real estate market. It’s when we all look to see if there will be six more weeks of winter or not. The answer is usually no, but that’s not always the case. There are many factors that influence the real estate market that are outside our control, such as interest rates and supply and demand for homes in different parts of town. I’m here to tell you that Groundhogs Day has no influence over spring pricing because it’s nothing more than a popular myth among homeowners who don’t understand how markets work. So let’s take a closer look at what happens on groundhogs day and why it doesn’t matter what happens on this particular day!
The Answer: NO.
Groundhogs Day is the time when people are most interested in buying or selling homes. It’s also the time when many buyers and sellers are confused by what they hear about Groundhogs Day having an influence on the spring market. The answer: NO.
The spring market will be driven by supply and demand, just like any other time of year. If you want to know how much your house is worth, call me at (262) 909-8106 or email me through the contact form below.
It’s all about Supply and Demand.
It’s all about Supply and Demand.
The basic law of economics is that the price of a good or service is determined by supply and demand, which are inversely related: as one goes up, the other goes down. In real estate, this means that when there are more buyers than sellers (aka “buyer’s market”), prices go down; when there are more sellers than buyers (aka “seller’s market”), prices go up. When we consider Groundhog Day as an influence on spring home sales, we need to look at how it affects both sides of this equation–how much people want homes vs how many homes there are available for sale.
The demand is driven by several factors.
The demand is driven by several factors. The economy is good, the job market is strong and people are buying homes for their families. There’s also a lot of speculation about interest rates going up in 2019 and 2020, which has led many buyers to take advantage of lower rates now while they can.
The cost of renting vs buying has become more favorable over time–the rent-to-own ratio has dropped from 24% in 2000 to only 13% today (a number I expect will continue to decline). This means that it’s cheaper than ever before for first time homebuyers or those looking at moving up into larger homes with their growing families.
New buyers arriving in the market every day
- New buyers are coming into the market every day.
- The number of new buyers is increasing.
- Why? Because of the cost of renting vs buying, which has become more affordable than ever before.
The cost of Renting vs Buying is driving an influx of new buyers.
The cost of renting vs buying is driving an influx of new buyers. Renting is not as affordable as it used to be, and many renters are finding that their monthly payments are rising faster than their income. The reason for this is because the price of rent has increased at a much higher rate than home values over the past decade. In fact, according to Trulia’s Rent vs Buy Report (2018), “the median asking price for homes sold in January was $200k higher than it was 10 years ago.”
As a result, more people are choosing to purchase rather than rent because they believe owning will provide them with greater financial stability in retirement while also helping them build equity over time.
Buyers will continue for the foreseeable future to be in the driver’s seat in a very competitive real estate market.
Buyers will continue for the foreseeable future to be in the driver’s seat in a very competitive real estate market. Groundhogs Day is a fun day and an opportunity to take advantage of all the good deals out there, but don’t forget: buyer’s are still in control of this market.
Conclusion
With so many factors driving demand, it’s hard to imagine a scenario where the Spring market will slow down. Buyers are still in control and there’s no sign of that changing anytime soon.
