The coronavirus pandemic is changing buyers’ habits, creating more demand outside the normal peaks.

Super Bowl LVI took place last week, and as most of us can attest to, New Englanders take this event very seriously. Not only because our beloved Patriots have appeared a record of 11 times, but also because the Super Bowl has typically marked the unofficial start to the spring housing market.  

However, the past couple of years have looked a bit different; 2021 ended with sales totaling 6.12 million units nation-wide – the strongest market in 15 years – and the spring market has been in full swing since the start of the new year. Now, these events that have traditionally signaled a start to the housing market are no longer reliable indicators and the once-predictable rhythm of seasonality seems to be declining. 

The Super Bowl is just one example, but activity in the housing market has typically been influenced by a variety of factors – from our unpredictable New England weather to the start of the school year every fall. While many of these will always continue to impact seasonality to some extent, it’s important to understand what is causing the current changes in the market so we can better serve our clients and help them navigate this new terrain.  

From rising interest rates to the impact of the pandemic on buying patterns, here’s a look at some of the market changes that will likely continue to influence seasonality in the years to come.   

Tenure Took a Dramatic Dip  

Seller’s tenure – or the average length of time a homeowner stays in their purchased home – is perhaps one of the greatest contributing factors to the decline of seasonality. Prior to the pandemic, seller’s tenure was an average of 10 years. In 2021, this was down to eight years – one of the most dramatic dips on record. As more homeowners make the decision to move, we are seeing this create unprecedented demand that has fallen out of rhythm with traditional seasonal indicators.  

So why exactly is tenure declining at this rapid pace? While there could be a variety of reasons, I believe the various lifestyle changes brought on by the pandemic have had one of the greatest impacts. In the past, most homeowners would make the decision to move based on major life events, including marriage, divorce or downsizing when kids go off to school. However, the pandemic has revealed new needs that we did not have prior, as well as opportunities with the emergence of flexible work and schooling environments.  

Now, it’s not uncommon for someone to move simply because they need more office space, or because they no longer need to be within commuting distance to major cities. 

Second Home Purchases Rising  

The rate of second of second-home purchases are rising: up 17 percent in October 2021 compared to 13 percent in September 2021, and 14 percent in October 2020. Unlike typical transactions in the market, second-home purchases do not free up a home in the process and puts a massive strain on inventory.  

While it’s hard to determine the exact reason second-home purchases are increasing at this rate, like tenure changes this can also be partially attributed to lifestyle changes brought on by the pandemic. With many work environments going completely remote, homeowners have a newfound flexibility to live in more desirable locations year-round, and those with the financial resources can do so while holding onto their previous homes.  

In addition, we also need to consider the pent-up demand in the market over the past few years. While many likely had plans to purchase a second home during this time, travel restrictions and other complications may have delayed these decisions. Now, with restrictions easing and life returning to a semblance of normalcy, I wouldn’t be surprised if this is contributing to the dramatic boom we are seeing today. 

Buyers Eye Interest Rates Predictions  

Another major piece to the decline of seasonality is the expected rise in interest rates. While different experts have various predictions, we can likely expect about a 3.4 to 4 percent increase in the coming year, if not more. Now, those who have been on the fence about buying a home are acting now to get ahead and make a purchase while rates are at historic lows. Essentially, buyers are not waiting for typical seasonal factors to make a purchase but are instead prioritizing affordability for their monthly payments above average sales price. 

Pauline Bennett

All the above changes to the market are greatly diminishing the influence of normalized seasonality. However, I think it’s important to also mention one factor that will continue to promote local seasonality regardless of these other changes: New England weather!   

Whether you love the snow or hate it, there’s no denying that major storms like we saw a couple weeks ago have become the real seasonality these days. In the absence of snow, seasonality declines and continues to be greatly influenced by the above, but two feet of snow will certainly be enough to create a distraction and cause a delay in the buying patterns we are seeing today.  

There’s no denying that seasonality is declining – and many of the above changes will continue to have a significant impact in the coming year. However, I don’t believe that seasonality will ever completely disappear, and there will always be factors that promote normalcy in the market. However, as real estate professionals, it’s important to understand what is influencing the significant changes we are seeing today. Despite the many challenges it may present, I believe we have a unique opportunity to show our expertise and differentiate ourselves through how we continue to guide our clients despite these unprecedented circumstances.   

Pauline Bennett is president of Coldwell Banker New England.