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Peaks & Valleys (or Mountains vs. Molehills) - Dan Vollmer

Peaks & Valleys (or Mountains vs. Molehills)

This article appears in the August/September issue of Lynchbrealestate1-1000x640urg Business Magazine…

Lots of folks move to Lynchburg from outside the area, many even from outside the state.

They arrive in our fair city with their experiences and expectations in tow—both of which are often misaligned with how Lynchburg real estate “works.” I hesitate to use that word, because it sounds very “inside the box”—as if we aren’t open to change or new ideas. I don’t mean it in that sense. I mean it in the sense that every market has its own behaviors… its own unique blend of how real estate is transacted.

Here’s what I mean. I have friends who used to live in Ohio, and in conversation one day they explained how real estate, for the most part, shuts down for several months at a time in the winter. Therefore, the “selling season” is much shorter, and timing your listing to hit at the right time is crucial. So the peaks are high and the valleys are low, and in between is pretty steep.

As I write this, my family is enjoying our summer vacation to the Outer Banks. Real estate here likely follows a similar pattern, as many of these homes are second homes or vacation properties. Listing a house here in October or January is probably not going to expose it to the greatest number of potential buyers. Listing it as the vacation season heads into full swing would catch more eyes and a greater chance of a sale. (P.S.: If I ever convince my wife to buy a beach house, we’re going to shop for it over Thanksgiving.)

So what about Lynchburg? What assumptions do buyers and sellers (and maybe even magazine readers) have about the ups and downs of our market? For starters, yes, our market does look like a bell curve (with January-December on the horizontal, and number of homes sold on the vertical). We enter the year with low inventory and that number gradually rises through the spring into the summer. With slight variation, it levels off in June or July and holds steady until early fall, at which point the inventory begins to drop off as we head towards the holidays. Pretty much as you’d expect.

But the variance between the low and the high is what’s interesting.

For example, at the start of 2014 there were 1607 homes on the market.

The market that year peaked in July at 1918 homes, and then dropped back to 1547 by December. So basically, up 300 homes, then back down 371 homes… or an increase of 19.35% from January through July, then a decrease of 19.34% from July through December.

The following year (2015) saw an even tighter curve—the year started with 1584 homes on the market, peaked in July at 1728 homes and ended the year at 1408 homes. That works out to an increase of 144 homes through the first six months (9.09% increase), followed by a drop of 320 homes through the second six months (a decrease of 18.51%).

What I have come to realize and understand about our market is that while we do not experience sharp peaks and deep valleys, what we do have are predictable ripples that occur within this bell curve. So within the gentle increase and decrease across the calendar, there are “blips”—some expected and others not.

So for example, the week preceding and following the start of a new school year is traditionally quiet. People are wrapping up vacations, trying to squeeze in the last little bit of summer… and then they are working themselves into new routines, getting adjusted to school calendars and new priorities. For those two to three weeks, business often slows down noticeably.

The week including the Fourth of July is often slower. Graduation weekends are typically not great for our home sales. While you’d think a lot of folks would want to be moved before a new school year starts, I rarely have had clients make that their top priority. (Sure, some do, but not nearly as many as I would expect.) As a result, there usually isn’t a huge crush of sales by mid-August, with a precipitous drop off after Labor Day.

Understanding these “ripples” helps both buyers and sellers. On the buying side, you can expect there to be more and more homes listed between April and July, and then fewer and fewer choices from August through December. For sellers, it’s important to note that there will be ripples in the bell curve, so if things go quiet for a week or two, there could be a reason beyond your control.

Have a question or an idea for a future article? Email me at dan@danvollmer.com.

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