You have probably noticed that the housing market is a little different this year, and by different, we mean holy smokes, lightning speed fast. Picking up from 2015 and 2016, sellers have been in the "driver's seat", but this year seems to have just the right combination of factors to really be the year of the seller.
If you are on the fence about selling your home, now just may be the time to get off and get going. Here are 5 reasons why listing your home now is ideal.
1. Mortgage rates are low...for now.
Low mortgage rates translate to lower monthly costs. Lower costs entice buyers, which is good for sellers.
Although mortgage rates have been ticking up since mid-October to slightly over 4%, the rates for a 30-year fixed mortgage—the most popular home loan—are still hovering near 30-year lows. For now.
“We expect them to hold at this (4%) level for a while and continue to adjust up,” says Danielle Hale, managing director of housing research for the National Association of Realtors®. “Mortgage rates rarely move in a straight line. They could be in the 4.6% to 4.8% range by the end of the year.
What does that have to do with home sellers? Well, potential buyers who are armed with that knowledge might hustle to close on a home before a rate hike. Even if rates nudge up by the end of 2017, they’re still expected to be low enough to seduce buyers. The tipping point is when rates reach 5%, experts say. That’s when they could put the brakes on the robust real estate market.
2. Home prices are rising
Lower inventory and greater demand have pushed up home prices. The median existing-home price in November 2016 was $234,900, up 6.8% from November 2015, when it was $220,000, according to the NAR. And that’s no fluke. That was the 57th consecutive month of year-over-year gains.
Higher prices particularly benefit the seller whose property value plunged during the recession, sometimes to less than he owed. Thanks to rising prices, many homeowners whose property was underwater can now sell without suffering a big loss.
“2017 [is becoming] a rare ‘balanced market’ for buyers because even though mortgage rates are edging up, many sellers have recovered enough equity to be able to afford to sell,” says Colby Sambrotto, president, and CEO of USRealty.com.
3. Job markets are improving
As unemployment decreases and wages (finally) increase, consumer confidence will climb. Increased confidence will spur buyers to jump into the market—which is, you guessed it—more good news for sellers.
These pieces of the puzzle create a “virtuous cycle,” says Jonathan Smoke, chief economist of realtor.com. It’s not a term he coined, but it’s one he hasn’t had a chance to use in many years.
“These things are all connected,” Smoke says. “If people are confident, they’re more likely to buy big-ticket items like houses and cars. And then they spend more money on other things. It reinforces the economy, creating a virtuous cycle.”
4. It's a seller's market
This season is expected to be an extremely good time to be a seller, said Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors.
"This year in the spring buying season, things have intensified with more buyers and fewer sellers than last year," he said.
This high-demand, low-supply environment means sellers will see a lot of foot traffic from eager buyers and, if the home is priced correctly for the local market, they could get multiple offers.
This trend looks like it will continue despite rising mortgage rates, Yun said, as job growth and the U.S. economy as a whole remain strong.
5. More buyers=bidding war
As mentioned above, with low inventory and plenty of buyers, for many homes on the market this could mean a lot more offers on the table. We are seeing homes going under contract within days and sometimes even hours after being listed- with multiple offers.
What does this mean for a seller? It means getting more money for your home and having your net output be that much higher. It could also mean that you have that much more negotiating power when it comes to how long before closing, inspections, and type of financing you are willing to accept. Pretty much, the ball is in the seller's court.
However, it can not be stressed enough that a home must be priced right, to begin with. Homes that are not priced right for the market are either leaving money on the table (if priced too low) or if overpriced, spending more days (or even weeks and months) on the market. Takeaway: work with a local Realtor and price your home correctly.
What to do when you become the buyer
You have sold your home, in multiple offers, above asking price, in just a few days. Great! Now what? What do you do when you become the buyer?
Fortunately for sellers, there are many ways to still have the upper hand when it comes time to buying. Working with a knowledgeable and local realtor can help sellers alleviate the stress of finding the home of their choice in a seller's market. Just ask us how.
Bottom line: don't wait, because the market and mortgage rates won't.