For families with school-age children, the back-to-school season represents a return to normalcy after a summer of sun, fun, and maybe a bit of chaos. But experienced real estate agents see back-to-school season differently. For agents, the back-to-school season means an abrupt change in the real estate market.
Once summer is over and the kids are back in school, the real estate market’s seasonal shift begins. This article will explain the shift. And it will help you make the transition from the hot summer real estate market to the cool fall market.
How Buyer and Seller Behaviors Change Before and After Back-to-School
There are three major buyer and seller behavior changes that occur beginning in late August and early September.
Families pause their home search. Families with kids prefer to move during the summer when the kids are out of school. This is especially important when the move means a new school for the kids. It's not ideal to have kids switch schools in the middle of the school year.
Buyers and sellers start thinking about the holidays. Thanksgiving may still be three months away. But buyers and sellers know that it can take a month or two to get under contract plus another month or two to close the deal. And the holiday season is busy enough without househunting, preparing for showings, negotiating terms, or moving.
Buyers and sellers aim for a smooth move. In most markets, it's more pleasant to move during the warm summer months than in the cold winter months. And it’s not only about the temperature. Winters are also more likely to come with snow, ice, or rain that can hinder a move.
Three Market Changes Triggered by the Back-to-School Season
Based on these buyer and seller behaviors, the average real estate market slows at the beginning of the back-to-school season. And it continues slowing until the new year.
Here are three things you can expect to see from the real estate market once the kids are back in school.
1. Declining Sales
There is a well-established trend of decreasing real estate sales during the fall and winter months. This means fewer buyers and sellers are in the market during the school year. When you see a graph of home sales by month, you can see distinct waves of more sales during the spring and summer and fewer sales during the fall and winter.
The decline in sales is typically triggered by the back-to-school rush and continues through the holiday season. Then March sees a dramatic uptick in home sales, which continues until its peak in the summer.
2. Longer Periods on the Market
Homes take longer to sell in the fall and winter months than in the spring and summer. Similar to the number of homes sold, you can see distinct waves in the median days on the market graph. In July 2022, for example, the average American home was listed for just 21 days before going under contract. By August, it was up to 27 days, and by September, it was up to 32 days.
3. Sale Prices May Temporarily Dip
Most years, you’ll see a slight decrease in the median sales price because of the lower buyer demand during the winter. This decrease often begins when the kids go back to school. In 2021, for example, the median sales price in August was $378,582. Then we saw a small decrease to $375,319 for September.
You might notice that the temporary value decline started earlier in 2022. This is because of the interest rate hikes initiated by the Federal Reserve to fight the high inflation rates of early 2022. These sharp interest rate increases made home loans too expensive for many buyers, putting a damper on buyer demand that summer and causing home prices to come down a bit. However, even with the higher interest rates, home prices were nearly back to spring 2022 levels by June 2023.
Seasonal median sales price changes are generally mild (when we’re not dealing with major interruptions like those 2022 interest rate changes). But you should be aware of them as a real estate professional so you can advise your buyers and sellers appropriately.
What Real Estate Agents Can Expect from the Back-to-School Season
For real estate agents, the back-to-school season means:
You may see fewer sales
It may take longer to sell a home than it did during the summer
The sales price on a home (and therefore, your commission for that sale) may be lower than it would have been in the summer
But there are ways to protect your business and your income during the slower back-to-school and holiday seasons.
How Real Estate Agents Can Weather the Back-to-School Season
Here are five ways to manage the back-to-school real estate market slowdown:
Explain to your potential buyers that they have more negotiating power because of lower demand. This can help you win new buyer clients.
Reach out to everyone on your contact list and offer to take listing photos now, while the weather is nice. This way they don’t have to list today, but they might sign with you for a few months from now when they’re ready to sell.
Create a supplemental stream of income to keep your business humming through the school year.
Save some of your summer income. You can expect this trend every year, so use this income to supplement your fall and winter income.
Back-to-school may be the end of the hot summer market. But with a little planning, your real estate business will succeed all winter long and be stronger than ever when spring warms the market back up!