Is it a good time to sell your home? It could be the best.
First, of course, we could note what others think. The recently-released May 2013 National Housing Survey by Fannie Mae showed that 40% of responders said that now is a good time to sell a home. That is up from only 16% in May of last year. At the same time, 76% of Fannie Mae’s responders said that it is a good time to buy a home — just a little more than the number of those who thought so last year. In another leading survey of real estate agents on the same issue, 82% said that now is a good time to sell, compared to 54% last year.
It’s interesting to know what others think, but we want to know what are the reasons for thinking one way or the other.
Let’s look at those….
Probably the best reason for thinking that now is a good time to sell is because now is a good time to buy. “Wait a minute!”, you say. “How can that be? Isn’t it contradictory?” Well, no, it’s not. Whether it is a good time to sell or a good time to buy isn’t like a zero-sum game where what’s good for one is necessarily not good for the other. Good conditions for buying can mean that there are more potential prospects to sell to. Moreover, just because the conditions for buying are good doesn’t necessarily imply that prices must be low. Of course, if they are extremely high, then that won’t be a good time to buy.
The low interest rates that have recently been available have done two things for sellers. They have created a larger pool of potential buyers and they also have made it possible for prices to rise without shutting out those buyers. This will not, however, last forever. Even now we see occasional headlines that say things like “interest rates recently roared back up to 4.5%”. (Who ever would have thought that 4% would seem high?) While they currently seem to be in a floating back and forth mode, some day the Fed will reverse course and they will begin to rise.
A rise in interest rates clearly and dramatically affects prices. Suppose you had a $400,000 30-year loan at 3.75%. Your monthly payments would be $1,852. If interest rates rose to 4.75%, to maintain the same payment the loan would have to be $355,000. The drop in borrowing power brought on by a rise in interest rates can be expected to be reflected in pricing. No one anticipates that incomes are likely to rise with, and at the same pace, as interest rates.
Another reason to think that now is a good time to sell is because inventory is still low, meaning there’s less competition. To be sure, inventory is creeping up here and there, but it is still historically low (60% of the peak in 2007). Why is inventory so low? There are disparate reasons, but certainly one of them is the belief that prices will continue to rise. Some people want to wait for that to happen. It is not just owners who think prices will rise. According to the same surveys, 44% of agents thought that prices will rise “a lot” in the next twelve months. Only 11% thought that last year.
Whether it is a good time to sell is always, ultimately, an individual question. What would be the reason for selling? Would it entail another purchase? Whether one is planning on moving on to a larger house or to a smaller one, one factor in answering the question will depend on whether or not that can be accomplished. Naturally, everyone wants to sell high and buy low; and, frequently we can look back and see when and where that might have happened. Timing the market, though, is no easy task and is usually more the result of serendipity than acumen.
Setting aside the financial crystal ball aspect, the question to ask is whether, in today’s market, it will be possible to accomplish the next move if and when one sells at today’s prices — and one needs to be realistic about what today’s price might be. Today, the question for many would-be sellers is simply a question of whether or not the low-inventory market offers a selection of acceptable replacement properties.
Of course not every sale implies a next purchase. There might already be a second home that one plans to move to; or there may be no desire to own again. If that’s the situation, whether or not it is a good time to sell is an easier question to answer. You can ask, “What would make another time better?” And then ask yourself if that seems to be likely in the future.
So, is it a good time to sell? Sure. If it fits your situation.
So if you’re looking to buy or to sell, you’ll need a SUPERB Realtor. That, of course, is me. You can reach me or check out some of my listings through my website: http://www.NormaSellsNJHomes.com