Home sellers may face a closing window on today’s still-warm — but cooling — real estate market.
While sellers can still take advantage of low inventory, they should also know that inflation, rising interest rates and perceptions about overvalued homes may be taking some air out of the sellers’ market.
There are also signs that homes are slowly but steadily staying on the market longer, creating a hard choice for would-be sellers: Do you bet that your local market remains enough in demand and lures over-asking-price offers, or do you hold tight and wait for the next big wave up?
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Warning signs for sellers
Elected leaders often quip that all politics is local. That’s true for real estate, too.
In-demand cities and neighborhoods will always defy broad national trends. Things like quality schools, livability, and access to cultural amenities will always help home sellers get top dollar.
But recent numbers are hard to ignore.
Redfin’s Homebuyer Demand Index — gauges home-tour requests and other home-buying services from Redfin agents — rose seven points during the last week of July, with mortgage purchase applications ticking up for the first time in over a month. But Redfin also said the improvements so far aren’t leading to sales.
The organization said pending sales fell in July, and new listings fell 11%, the largest drop since June 2020.
More pessimistic numbers were offered recently by Fannie Mae, whose Home Purchase Sentiment Index dropped to its lowest level since 2011. Fannie Mae said consumers are pessimistic about home buying conditions, and that the percentage of consumers who believe it’s a good time to sell also fell.
Still, it’s a good time to sell
Though many leading indicators might suggest we’re entering a cool-off, a handful of critical factors make now a good time to sell — assuming you’re ready to list:
Demand: Homes may be on the market for longer, but demand remains relatively high, and housing inventory remains low compared to previous years. Some parts of the U.S. remain in bidding-war territory — Utah, Washington, and Florida continue to see 20%-plus appreciation — where sellers can expect offers above the asking price.
All-cash: If you live in a low-inventory market, and buyers outnumber properties, sellers can expect to cash in — sometimes literally. The all-cash-offer market is hot right now, which is great news for sellers because cash offers typically speed up the path toward closing.
Rising rates: Though the Federal Reserve’s moves to raise interest rates can work against sellers — higher rates mean bigger monthly mortgages — looming hikes will likely prompt some buyers to lock in rates now before the Fed’s next expected move. The average rate on a 30-year fixed mortgage is now around 5.35%, significantly higher than a year ago when rates hovered just above 3%.
A good time to wait
There are good reasons to sell. But there are just as many to hold tight.
Your own plan: What happens if your home sells quickly? Do you have a plan for the proceeds from the sale? Do you need to begin the hunt for your new space?
Your new mortgage: If you’re selling because you need a bigger home, that leap up may be unworkable, especially if you’re looking in a popular neighborhood or city. A new, bigger property can swallow the profit on that just-sold property and still carry a bigger monthly mortgage payment.
Rising rates (again): Those same Fed rate increases can, of course, work against you as a seller, because it will likely reduce the pool of would-be buyers by making it more difficult for conventional-mortgage buyers to afford your property.
Get good advice
Making a large real estate transaction — as either buyer or seller — starts with a thorough self-audit. Why buy or sell, and why now? Then, take those answers to an experienced agent who knows your area.
An agent is routinely your best compass for what your city or neighborhood will demand or cost.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source: https://finance.yahoo.com/news/sell-house-prices-crash-wait-202000848.html