Is It Time To Sell Your Home?
The real estate market is acting as the very definition of a seller’s market. There is sky-high demand from home buyers because of low mortgage rates. At the same time, the inventory of available homes to purchase is at historic lows. This sets up a real estate environment where home sellers have almost all of the leverage. Home sellers are receiving multiple offers on their homes and homebuyers are finding themselves in bidding wars. These bidding wars are happening with rentals too. Home sellers are greatly benefiting from these bidding wars because it drives up the prices. This allows sellers to often get a lot more than their asking price. It is a good time for home sellers. However, the market will not always be this favorable to sellers. This is why it is better to sell your home first instead of waiting for market conditions to change.
Sell Your Home When Leverage is Highest
It is always better to sell your home when you have the most leverage. This allows you to get the highest price possible for your home. When it comes to any market, it’s always ideal to buy at the lowest point and sell at the market’s peak. Unfortunately, it is very difficult to know when you are at a peak. This makes timing a market a risky proposition. However, there are indicators that can help guide you. Price is always determined by supply and demand. You can look at factors that impact supply and demand to give yourself an idea of where you are in the cycle. Right now, there are some decent indicators that the supply of homes might increase and that demand might taper off. The team at Streamline Realty is here to walk you through some of these indicators.
Forbearance Extensions are Ending
Many were scared that the coronavirus pandemic would result in a real estate market crash similar to 2008. The fear was based on the idea that pandemic lockdowns would cause mass unemployment. In turn, this would cause millions to fall behind on their mortgages. This did happen. However, the government stepped in to prevent an eventual wave of foreclosures by putting in place a foreclosure moratorium and forbearance extensions.
A forbearance is when a lender agrees to hold back the process of payment for the person who has borrowed. This means that the payment on a mortgage is delayed to avoid a foreclosure. Due to the COVID-19 pandemic, the forbearance puts a pause or reduces payment for your mortgage. It is not an automatic process and you must request it from your mortgage servicer. If you are experiencing financial hardship from the virus, you most likely qualify. When the forbearance ends, you will pay through a payment plan and not a lump sum.
Home Seller Sentiment is Changing
A lot of market changes are based on psychology. One reason why homeowners have been reluctant to sell their homes is FOMO (fear of missing out). Homeowners have seen their home values rise dramatically since the beginning of the pandemic. While many homeowners could have sold their homes and locked in large increases in equity, many have been reluctant. This is because of FOMO. Homeowners did not want to miss out on even more increases in equity as their home value continued to increase. However, it looks like FOMO is receding and home seller sentiment is changing.
Mortgage Rates are Increasing
It’s also important to note that mortgage rates are rising to where they were in July. This has caused demand for houses to fall. The economy opening back up because of the vaccines has caused a large return to the market. As we approach the end of 2021, more people will be looking to buy or sell their mortgages. Freddie Mac noted that rates will most likely increase, citing a 3.4% mortgage rate by the end of 2021.
It's important to plan ahead while knowing what this could mean for the market. Rising mortgage rates for the future can cause a decrease in home buyers. This is because some people may not be content with a rising mortgage rate. They would compare today’s mortgage rates to those in late 2021 and feel cheated out of a better deal. That feeling of losing out on a better rate would lead them to not sell or buy a home. Staying informed is key to knowing what moves you should make in the market.
Final Thoughts
Remember, it is almost impossible to time a market correction. It is hard to know when you are at the peak or at one of the lowest points of any of the dips. However, when it comes to selling, it’s always better to be one of the first to sell than one of the last. Selling now while inventory is low allows you to take advantage of today’s seller’s market and get the most for your home. Waiting a long time risks that more homeowners will try to sell their home, which decreases your leverage.
One thing to keep in mind is that you do not have to sell your home. If you love your home and see yourself there for the long term then you should not sell. Wanting to stay in your home long-term means that there isn't a reason to sell, even with a seller’s market. Owning a home is about much more than maximizing an investment. It is about having a place where you and your loved ones can make memories. However, if you have thoughts of selling your home, contact us! The team at Streamline Realty is here to talk you through your options. We will give you a realistic picture of what you can expect.
