Deciding whether to sell your home is a big decision. Do you wait until the market goes up again? Or do you sell now and risk not making as much money? There are numerous important questions to sort through, both financial and personal, before putting your home on the market. In this blog post, we’ll discuss some key considerations to help you decide whether it’s the right time for you to sell.
What Is the Current State of the Real Estate Industry?
First, let’s look at the state of the real estate market as of late. Home prices have been steadily rising over the past few years, creating a seller’s market for many areas of the country. Interest rates stayed relatively low, making it easier to get approved for a loan. And buyer demand was very high, which means that your home would have sold quickly if you decided to take the plunge and list it on the market.
However, the market has slowed lately with the Federal Reserve hiking interest rates and looming economic uncertainty. While it’s still technically a seller’s market in many areas of the country, mortgage interest rates have risen, and the pool of buyers willing to pay top dollar has somewhat dwindled. The risk you run with selling right now is that potential buyers may be more skittish, and they’ll be harder-pressed to try to negotiate the asking price down. This can cause you some headaches as the seller, and it can lead to you having your home on the market for longer than you’d like.
How Does the Federal Funds Rate Affect Mortgage Rates?
Numerous aspects can affect mortgage rates, from the inflation rate to the speed of employment growth or whether the economy is shrinking or expanding. When the Fed raises its rate, it affects interest rates and consumer prices in many areas of the economy, such as car loan rates, food and household item prices, home prices, mortgage interest rates, and more. Basically, when the Fed raises its rates, pretty much everything costs more. The reason they do this though is to curb inflation. So, it sounds bad to make everything cost more, but it’s meant to be a temporary thing until the economy levels itself off, at which time prices are supposed to come back down.
Home prices and mortgage interest rates see perhaps the biggest fluctuation when the economy is headed in a downward trend. And, the job market can become volatile and unpredictable. People can get laid off, or demoted, or they might not get bonuses that they’re used to getting during favorable economic times. This can directly affect people’s ability to pay their mortgages, which affects the overall housing market. If people are scared or hesitant about keeping their job and a steady income, then rising mortgage rates and an unpredictable job market can cause the housing market and home prices to wane.
An Uncertain World Is an Investor’s Paradise!
A side effect of this, and a somewhat sad reality is, that when the average homeowner struggles to make their mortgage payments, and when the buyers stop shopping and decide to wait out the storm, the real estate investor thrives. Desperate sellers who are no longer living in a seller’s market, and who need to get out quickly because they’ve lost their job and can’t afford to keep their primary residence create the perfect investment property for an investor who’s been waiting in the shadows for an economic downturn.
What Are the Risks of Selling Now?
The risks of selling now are that you may not get the asking price that you were hoping for, or worse, it could take longer than anticipated to sell your home. It also can be tricky to shop for a new house in this kind of market because there won’t be as many choices and prices will likely be higher than what you’re used to seeing. Additionally, if interest rates continue to rise, then your monthly mortgage payments on a new home could end up being more expensive than what you’d budgeted for.
If you’re trying to weigh your options, don’t do it alone. Lean on a trusted local real estate agent liek Tracy Alford to help you weigh your options. If you’re looking to sell, don’t rule it out just because other people appear to be getting nervous about the market. What’s best for everyone else is not what’s best for you. Talk to a realtor and a lender and have them paint a picture that works for you and your current financial position. And, if they help you come to the conclusion that it is the right time to sell, they can also help you find the best home-selling strategy for your current market conditions.
What Is Your Reason for Selling?
When it comes to determining whether now is the right time for you to sell your home, it’s important to consider both your financial and personal goals. Are you looking for a quick sale? Or are you hoping for a higher return on investment? What kind of capital gains taxes will you have to pay if you do decide to sell? Do you have enough savings or income to cover the down payment and closing costs associated with buying another property? Does relocating fit into your life plan at this time?
What Is the State of Your Local Real Estate Market?
You may also want to research trends in your local housing market—by speaking with a leading local real estate agent, reading industry updates, and keeping an eye on local news. This can help you make an informed decision before deciding whether to put your home up for sale now or wait until 2023.
Is It Time To Sell Your House?
Ultimately, it’s up to you to decide whether the current market conditions are right for selling your home—but by considering all of these questions and doing research into the current market, you’ll be better equipped to make an educated decision about when (and if) it’s time to list your property. Lean on local market experts, like real estate agent Tracy Alford, to help you make conscious, informed decisions about what’s best for you. Good luck!