If you have been thinking about selling your home but weren’t sure when to do it, there may not be a better time than now.
To be sure, the decision to sell your home greatly depends on your own personal circumstances. However, several factors have combined to make this a good time to think about the possibility of jumping into the market especially if you have been cautiously sitting on the sidelines.
A shortage of listings has created a seller’s market
Over the past few years, the inventory of homes for sale has steadily shrunk – even as the demand from buyers has grown. Nationwide, total inventory stands at a 4.4 month supply, according to the National Association of REALTORS®. But in some of our local markets, available inventory is even lower – in some cases just one to two months supply. To put that in perspective, a balanced market should have approximately six to eight months supply.
Real estate has always been a business of supply and demand. As a result of the limited supply, coupled with continued buyer demand, sellers who list their home now may be in luck. In our market we’ve seen home price increases and multiple offers on many homes – some even significantly above list price.
According to NAR®, that imbalance in supply and demand is not likely to change soon. “The 2016 housing market is forecasted to be mainly a seller’s market, filled with increasing home prices, relatively low inventory, and fierce competition between buyers,” said Jonathan Smoke, chief economist for realtor.com, the NAR® website.
Higher mortgage interest rates may be coming
While mortgage interest rates remain close to historic lows, some industry experts are warning that interest rates will gradually begin to climb. In December, the Federal Reserve raised its key interest rate for the first time in nearly a decade and the Fed has signaled it plans to raise rates yet again this year.
The prospect of higher interest rates could actually work to a seller’s advantage – in the short term, at least – by prompting would-be buyers to get into the market before rates go up even further.
“When interest rates are thought to be escalating, we see a wave of activity with people getting off the sidelines,” said Budge Huskey, President and CEO of Coldwell Banker Real Estate.
Now’s the peak season for selling a home
Homebuyers may want to minimize competition when they hunt for a home in a tight market, but for many sellers, the more buyers the better. According to realtor.com’s analysis of sales, the prime home-buying season begins in April and reaches its peak in June.
“Sellers who list their home during the prime spring and summer months benefit from a larger population of buyers and potential bidding wars, which often result in higher prices and faster closings,” NAR’s economic experts noted.
Soaring rents prompting more renters to think about buying
Home prices have certainly been rising, but rents may be rising even faster in those cities that are not impacted by rent-control laws; that could motivate tenants to consider home ownership. According to NAR®, rent prices have risen 15% nationwide in the past five years in 70 metro areas across the U.S..
“Every time there’s an increase, it triggers the decision processes on whether