I have a friend in another state who wants to sell her home. And, whether a blessing or a curse, she has the luxury of taking her time.
In other words, she doesn’t need to relocate for a new job, she’s not getting a divorce, and she’s not in escrow on another home.
So, suffering from “analysis paralysis,” she drags her feet. She also burns up her minutes calling me for news on what the market is doing.
She’s waiting for that perfect time. You know the one—when home prices are the highest they’ll get.
Sound familiar? If so, keep in mind these famous words from a not-so-famous real estate agent (me):
“Trying to time the real estate market is crazy.”
By the time you learn that home prices have maxed out, it will be too late – they’ll be on the downhill slide.
But, if you insist on trying to time the sale of your home to the optimal time, here’s more advice – this time it comes from just about every real estate agent with a heartbeat:
“Now is the best time to sell your home!”
Yeah, I cringe when I read that too. But, right now, the advice actually has merit. Here are 4 reasons why.
Reason #1: The inventory of available homes is scary-low
In fact, one of the major online real estate portals finds that in 2017’s fourth quarter, the nationwide inventory of available homes fell by 10.5 percent, which is the steepest drop in inventory since 2013. Oakland’s inventory of available homes has dropped almost exactly 10 percent from this time last year.
The biggest drop was in starter homes, but move-up homes are also experiencing a dearth of listings.
What does this mean for you as a homeowner thinking of selling? If the inventory remains suppressed as we head into the spring homebuying season, and demand remains high, you’ll be very happy with your home’s current market value.
Reason #2: Home prices are high
“Listing prices have once again begun their seasonal climb and have quickly reclaimed historical highs,” claims a new report from realtor.com®.
The data also suggests that homes are selling nearly 10 percent quicker than they did last year at this time, despite the price appreciation.
The shrinking inventory is expected to continue to drive up prices throughout the spring homebuying season.
Currently, the median home price in Oakland is up nearly 12 percent from this time last year. Zillow predicts a much more moderate median home price increase (less than 5 percent) over the next 12 months.
Consider this: list your home soon, and you’ll be in the driver’s seat, not only because you’ll get more for your home now than if you wait, but you will also have the luxury of dictating the terms of the purchase agreement.
Need to wait to close until the purchase of the new home is finalized? You’ll find a buyer willing to accommodate you. If you wait until the market changes to a buyers’ market (which it can do on a dime), you lose this advantage.
Reason #3: Interest rates WILL go up
If there is anything that acts as an impetus for homebuyers to speed up the home search, it’s news that mortgage rates are set to increase.
A recent study by a large real estate corporation shows that only 6 percent of potential homebuyers will cancel their plans to buy a home if interest rates rise above 5 percent, and 21 percent say that the increase would cause them to speed up their plans to purchase.
The more alarming statistic, however, is the 27 percent who say that an increase that high will cause them to slow down their search until rates come back down.
If you need to sell your home, losing more than a quarter of the buyer pool is bad news. The more buyers that drop out on the demand side of the supply/demand equation, the quicker the market will change, and it’s already happening.
On top of that, if you’re planning on buying another home, a rate hike between now and then could put a real pinch in your budget.
Count on mortgage rates continuing to climb this year. “The 30-year rate has been on a tear in 2018, climbing 48 basis points since the start of the year and increasing for eight consecutive weeks,” according to a statement by Len Kiefer, deputy chief economist at Freddie Mac.
Reason #4: People are moving out of the Bay Area in droves
The combination of the three reasons above have driven buyers to their wits’ end, and many are leaving the Bay Area altogether, in favor of more affordable places to live.
“Job growth has slowed, and that leads to a lessening in demand to live in the Bay Area,” says Hans Johnson, a senior fellow at the Public Policy Institute of California.
As more people look to move out of the Bay Area, the pool of buyers could shrink, leading to lower demand, which could lead to your home sitting on the market for longer periods of time and hence fetching a lower sales price.
So, if you are planning on selling your home this year, let’s talk. For the above reasons and more, now could be a great time to sell your home, before the market turns against you.
