Should I sell my home before prices really drop — or wait for the next big real estate boom?

Should I sell my home before prices really drop — or wait for the next big real estate boom?

Home sellers may be facing a closing window in today’s still hot — but cool — real estate market.

While sellers can still benefit from low inventory, they should also be aware that inflation, rising interest rates and perceptions of overvalued homes can take some of the wind out of the seller’s market.

There are also signs that homes are slowly but surely staying on the market longer, creating a tough choice for would-be sellers: Bet your local market remains in demand enough to tempt overpriced offers, or hold on tight and wait for the next big wave up;

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Warning signs for sellers

Elected leaders often quip that all politics is local. This also applies to real estate.

In-demand cities and neighborhoods will always defy broad national trends. Things like quality schools, livability and access to cultural amenities will always help home sellers fetch top dollar.

But the recent numbers are hard to ignore.

Redfin’s Homebuyer Demand Index — which measures requests for home tours and other home-buying services from Redfin agents — rose seven points in the final week of July, with home loan applications rising for the first time in more than a month . But Redfin also said the improvements so far aren’t driving sales.

The agency said pending sales fell in July and new listings fell 11 percent, the biggest drop since June 2020.

More pessimistic numbers were recently provided by Fannie Mae, whose Home Buyer Sentiment Index fell to its lowest level since 2011. Fannie Mae said consumers are pessimistic about home buying conditions and the percentage of consumers who believe it’s a good time for sale also decreased.

However, it is a good time to sell

While many leading indicators may point to us entering a period of renewal, a handful of critical factors make now a good time to sell — assuming you’re ready to list:

Demand: Homes may be on the market longer, but demand remains relatively high and housing inventory remains low compared to previous years. Some areas of the US remain in a war zone – 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-inventory market and buyers outnumber properties, sellers can expect to cash out—sometimes literally. The all cash offer market is hot right now, which is great news for sellers because cash offers usually speed up the path to closing.

Rate rise: While moves by the Federal Reserve to raise rates can work against sellers — higher interest rates mean bigger monthly mortgage payments — the looming hikes will likely prompt some buyers to lock in rates now ahead of the next expected move Fed. The average interest rate on a 30-year fixed mortgage is now around 5.35%, significantly higher than a year ago when rates hovered just over 3%.

A good time to wait

There are good reasons to sell. But there are just as many that need to be held tight.

Your plan: What if your house sells quickly? Do you have a plan for the income from the sale? Need to start hunting for your new space?

Your new mortgage: If you’re selling because you need a bigger home, this jump may not be feasible, especially if you’re looking in a popular neighborhood or city. A new, larger property can swallow the profit on that property that was just sold and still carry a larger monthly mortgage payment.

Interest rates are rising (again): These same Fed rate hikes can, of course, work against you as a seller because they will likely reduce the pool of potential buyers by making it more difficult for conventional mortgage buyers to afford your property.

Get good advice

Making a big real estate transaction – whether as a buyer or seller – starts with a thorough self-examination. Why buy or sell and why now? Then give those answers to an experienced agent who knows your area.

An agent is usually your best guide to what your city or neighborhood will demand or cost.

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This article provides information only and should not be construed as advice. Provided without warranty of any kind.

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