Home sellers may face a closing window on today’s still warm — but cooling — real estate market.
While sellers can still take advantage of low inventory, they should also know that inflation, rising interest rates and perceptions of overvalued homes can take some air out of the seller’s market.
There are also signs that homes are slowly but steadily staying on the market longer, making a difficult choice for potential sellers: are you betting enough demand in your local market and enticing them to inflate asking price offers, or hold tight and wait for the next big wave?
Do not miss it
Seller warning signs
Elected leaders often joke that all politics is local. That also applies to real estate.
In-demand cities and neighborhoods will always defy broad national trends. Things like quality schools, quality of life, and access to cultural amenities will always help home sellers get the best dollar.
But recent numbers are hard to ignore.
Redfin’s Homebuyer Demand Index – measuring home call requests and other home buying services from Redfin agents – rose seven points in the last week of July, with mortgage purchase requests for the first time in more than a month. But Redfin also said the improvements so far have not led to sales.
The organization said pending sales fell in July and new listings fell 11%, the biggest drop since June 2020.
More pessimistic numbers were recently offered by Fannie Mae, whose Home Purchase Sentiment Index has fallen to its lowest level since 2011. Fannie Mae said consumers are pessimistic about the conditions for buying a home, and the percentage of consumers who think it’s a good time to sell also declined.
Still, it’s a good time to sell
While many leading indicators may suggest we are entering a cooling period, a handful of critical factors make now a good time to sell – assuming you’re ready to state:
Q: Homes may be on the market longer, but demand remains relatively high and housing stock remains low compared to previous years. Some parts of the US are still in the bidding war territory – Utah, Washington and Florida continue to see 20%-plus appreciation – where sellers can expect offers above the asking price.
All-cash: If you live in a low-stock market and there are more buyers than properties, sellers can expect to cash in — sometimes literally. The all-cash offerings market is hot right now, which is good news for sellers, as cash offerings typically accelerate the path to closing.
Rising rates: While the Federal Reserve’s moves to raise interest rates could hurt sellers — higher rates mean bigger monthly mortgages — impending hikes are likely to cause some buyers to lock rates now ahead of the Fed’s next expected move. The average interest rate on a 30-year fixed mortgage is now around 5.35%, significantly higher than a year ago when the interest rate fluctuated just above 3%.
A good time to wait
There are good reasons to sell. But there are just so many to hold onto.
Your own plan: what happens if your house sells quickly? Do you have a plan for the proceeds of the sale? Need to hunt for your new space?
Your New Mortgage: If you’re selling because you need a bigger house, that jump can be unworkable, especially if you’re looking in a popular neighborhood or city. A new, larger home can gobble up the profits on that newly sold home and still entail a larger monthly mortgage payment.
Rising Rates (Again): Those same Fed rate hikes can of course work against you as a seller, as it will likely reduce the pool of potential buyers by making it harder for conventional mortgage buyers to pay for your property.
Get good advice
Making a major real estate transaction – as a buyer or seller – starts with a thorough self-assessment. Why buy or sell, and why now? Then take those answers to an experienced agent who knows your area.
An agent is routinely your best compass for what your city or neighborhood will charge or cost.
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This article provides information only and should not be construed as advice. It comes without any kind of warranty.