Could now be a good time to sell your home?
The Dow Jones Industrial Average is just under 25,000. Deputy chief economist Len Kiefer announced a positive economic outlook saying “Treasury yields are higher and the economy has strengthened since December”. As a result, and as I projected in my fall blog, interest rates on a 30 fixed mortgage have gone up; and they’ve gone up 48 basis points since January. When this happens, historically the real estate market slows, however not this time. Coming off of a strong 2017, there still wasn’t enough inventory to meet the demand of the buyer community. “We think the strength of the economy and pent up housing demand should allow the U.S. housing market to post modest growth this year even with higher mortgage rates” Kiefer goes on to say. Along with interest rates and buyer demand, home prices have also been going up, showing an increase of 7.1% over the last year. That means your $350,000 home will now sell for roughly $375,000.
For so many people, the equity they have in their home is a big part of their net worth. I always tell my clients, I don’t determine the price of your home nor does the consumer, the market dictates the price of a home. So we are in a unique moment in time where while rates have increased, so too have the number of qualified buyers and the value of your home; yet inventory remains low. Right now, you have an opportunity to perhaps be one of just a few, perhaps even the only home for sale on your street or in your neighborhood! What does this all spell out? Well, if you’re a home owner that is looking to downsize, now may be a very good time to list. If you are a homeowner and are looking to go bigger, you may also consider listing because rates are still very low, but are climbing. I recently had a client say, “if I list now, I may get more money from the sale of my home, but I’m also going to pay more for my next home!” My response was simple: “use a mortgage calculator and plug in 4.5%, 5%, 6% and 7% because in doing so you will see the impact mortgage rates will have on your decision making. All I’m saying is that if, in the back of your mind you have considered selling, you should have a market analysis done on your home, be presented with the facts and make an educated decision. I’ve seen the cycle of real estate for many years; too many people wait too long, in hopes to max out their equity, which is extremely difficult to project.