Deciding on the optimal time to sell your house is the million-dollar question!
You can read forecasts and predictions, but does anyone know what lies ahead in the real estate market, or is it all just speculation?
When the market is buoyant, selling your house usually means getting a high price and a quick close. But, there are drawbacks, notably, sell high, buy high.
If the market favors sellers, there could be too much competition for houses like yours. And if you intend to purchase a home, you may end up paying a premium price.
Here, we look at the rationale behind whether you should sell your house right now or wait and how to best make that critical decision.
When Is the Best Time to Sell?
The best time to sell also begs another question: When is the best time to buy?
Most sellers coming to the market want to buy another home as well. If you are only selling and not looking to purchase another house, the answer is simple—sell now and sell quickly for a high price in a buoyant market.
The complication for most people is that while they may reap the rewards of being a seller in the current climate, they then swap hats and become buyers. This change in roles means grappling with many people competing for fewer houses and higher asking prices.
Working out the best time to sell is all about finding the right balance for your particular circumstances, taking into account finances, work, and family life.
If you are downsizing or going into a rented house, the decision is easy—sell in a rising market with low-interest rates.
If you are also looking to buy, you have to weigh whether the higher price you may pay for your new house is worth the lower monthly repayments on your new mortgage.
Reasons to Sell Your House Now
If you have been paying a mortgage over the last ten years, you will have spent thousands of dollars less in interest than a homeowner with a mortgage in the early 1980s.
Low-interest rates mean you will pay significantly less to own your house outright over the lifetime of a mortgage.
Low-interest rates also mean that property owners can afford to upgrade to a larger house where the monthly repayments would usually be out of reach if interest rates were higher.
Interest rates can also impact buyer demand. Historically, low rates mean plenty of market activity. If interest rates start to rise, this will have a dampening effect on people looking to buy property.
There is a clear correlation between interest rate rises and the level of new mortgage applications to financial institutions.
When rates rise, some buyers are priced out on the affordability stakes and can’t afford the same house as before when rates were lower.
Fewer buyers will mean that the property market will stall, leading to a buyer’s market and a price favorable for buyers—but not necessarily sellers.
Just a quarter of a percentage point can make all the difference for some mortgage applicants. Selling now before rates rise is a smart move.
Increased Interest Rates Mean Fewer Properties Coming to Market
If you are thinking of selling and buying simultaneously, the choice is good currently.
A market that is depressed due to rising interest rates will mean fewer buyers coming forward for your house and less stock on the market.
Low supply also means higher prices. You can beat that by selling when interest rates are still low and the market is still active.
The Advantages of a Low Inventory Market
Sell now, and you get to reap the rewards of a low inventory market. You could have multiple bids and even cash offers if your property is desirable.
Push above the asking price and start a bidding war! Low-interest rates mean that sellers have the whip hand. If rates rise, the balance of power will shift to buyers, and you will wait longer for your home to sell.
The Backlog of Foreclosed Properties
Covid has been a game changer for peoples’ lives and income levels.
There is a foreclosure backlog due to a moratorium during the pandemic. Some homeowners are now going to struggle with rising interest rates and perhaps less job certainty/income than they had pre-pandemic.
Once the backlog of foreclosed houses hits the property market, this will impact local supply and lower the price of homes nearby.
Foreclosed properties often sell for less than the market value as the lender is only interested in recouping their money quickly.
More Homes Will Come to the Market Due to the Population Demographics
With an aging US population—around 1/3 of US housing stock is owned by people aged 57-75—there is a tidal wave of properties waiting around the corner to come on the market. Factor in the aging population and the 64% of millennials who regret buying their current home, and you can bet that the market is about to become oversaturated.
You can get ahead of a market flooded with homes if you sell now. Oversaturation only depresses prices and makes it harder to sell.
Normalcy Has Resumed
The last couple of years has been an odd time, no two ways about it.
Unsure about what the future would bring, many homeowners hung onto their properties due to the local difficulties in selling in a pandemic and uncertainty over future income.
Now, you can move on, literally!
Any changes in your working life, like ditching the daily commute, will have settled down now. It’s an excellent time to sell, particularly if you are looking for a bigger property with space to work from home.
Reasons to Wait To Sell Your House
Interest Rates May Rise
The game-changer that is the global pandemic leads some industry experts to predict that interest rates may rise.
Pressure on America’s central bank to lift interest rates is mounting since the perfect storm of supply shortages and rising energy costs across the globe sent inflation raging to a high not seen in the US for more than thirty years.
In the UK, the Bank of England has raised the base rate for the first time in more than three years. Sure, it is only 0.25%, but is this a sign of things to come?
Taking on a mortgage for a bigger or more expensive house is fine if you can more or less guarantee that interest rates won’t go up but, if we are on a rising trajectory, those monthly repayments could quickly become unaffordable.
If you are both a seller and a buyer, although you may sell for a lower price, you can also buy for a lower price.
Buyers are in demand in depressed markets, which means you can push the boundaries when it comes to making offers for your next home.
For many homeowners, Covid has been a game-changer.
You may now work entirely from home, or perhaps Covid has led you down a completely different work direction, or you have decided to live away from the city for the first time.
The dust is still settling, and as you evaluate your new life, you may not yet be sure how this will impact your choice of home and location.
Changing your exercise habits or exercising for the first time might mean moving to a house where you can opt for greener forms of travel, like walking or cycling to work, or perhaps you want to ditch city life for a more rural backdrop.
The pros and cons of selling your house are easy to understand. However, this can be a finely balanced judgment for most homeowners and comes down to a personal review of your unique circumstances.
If you decide now is the right time to sell, then contact Kind House Buyers, the real, real estate professionals. We can make a quick and detailed evaluation of your property and provide a cash offer so you can move quickly on a date that suits your plans. Plus, you can avoid all costly repairs and realtor fees.
Call us now or use the quick inquiry form online. With just a few details, you could be on your way to a brand new home.