Why you should (and shouldn’t) sell your home this year.
Few people predict that this year will be a record-breaking year for home prices.
But relatively speaking, the new year might be the best time to put your house on the market especially if you’re on the fence about selling this year or next. Nick Ron, CEO of House Buyers of America, recommends going with the devil you know rather than the devil you don’t.
“I think it’ll be better than 2020 and 2021 – who knows what’s going to happen in those years,” Ron says.
Home price growth slowed in the second half of 2018. Fewer buyers entered the market, at least partially due to rising interest rates issued by the Federal Reserve. This year, consumers shouldn’t expect homebuyers to flood the market again and drive prices through the roof. But it’s also unlikely to be a crisis for home sellers.
If you bought your house in the last year or two, still love it. If, you don’t want to part with it, go ahead and wait another five years before revisiting the thought of selling. But if you’re weighing your options to sell. you can consider selling this year or maybe the year after, don’t play the waiting game.
Here are four reasons to sell your house in this year vs new year.
- New buyers are still entering the market.
- Interest rates are still on the lower end.
- You have high equity.
- Selling now will be better than waiting till 2020.
New Buyers Are Still Entering the Market
As interest rates rise, homebuyer activity tends to slow, especially for higher-priced properties.
This can lead to fewer offers or mortgage applications. Buyers feel the impact of both rising rates and higher home prices. The combination of these factors has recently limited buyer interest. Particularly for homes exceeding typical buyer budgets.
As a result, sellers may experience less demand than before.
However, with the available housing inventory remaining low, even with rising interest rates, buyers who are ready to purchase will still shop for homes. The most significant wave of new homebuyers will be among millennials, who are mostly first-time buyers.
In a Harris Poll survey of 2,000 U.S. adults commissioned by real estate information company Trulia, more than one-fifth of Americans between ages 18 and 34 said they plan to buy a home within the next 12 months.
Already, millennials make up the largest share of homebuyers at 36 percent, according to the National Association of Realtors, which released the number in March 2018.
The bottom line: While houses may sit on the market for an average of a few more days than in the old year when the market was white-hot, buyers remain active, and it’s still possible to profit from your home sale.
Interest Rates Are Still Low-ish
Mortgage interest rates have fluctuated recently, but they remain relatively low compared to historical highs.
As of February, rates are at 4.35% after peaking above 4.9% in November. While rates are expected to continue rising gradually, they will stay far below the record 18% rate from 1981. If you’re looking to secure a low mortgage rate, it’s better to act sooner, as rates are expected to climb over the next year.
You Have High Equity
If you bought your home during or after the recession, you likely benefited from low interest rates and rising home values. This has increased your home equity with every mortgage payment and renovation.
A higher equity gives you more from the sale, which can serve as a larger down payment on your next home. This can improve your chances of qualifying for a better interest rate and reduce the need for private mortgage insurance.
Selling Your Home in the Current Year Vs. New Year
If not selling your home this year means putting your house on the market in 2020, the sooner option is the best one. In a survey of 100 U.S. real estate experts and economists by real estate information company Zillow, released in May, almost half expect the next recession to occur in 2020.
Another 14 percent believe the recession will hold out until 2021, while 24 percent of panelists expect the recession earlier – sometime this year.
Whether you believe the recession is imminent or a long way off, current real estate patterns indicate a sudden upswing in activity or prices is unlikely shortly. Real estate markets tend to operate on a cycle of their own, the length of which varies by market but can be between 10 and 16 years total and flow from a seller’s market to a buyer’s market with a period of balance in between.
“It doesn’t look like there’s anything on the horizon that’s going to cause a big spike in home prices or increase demand dramatically,” Ron says.
