Sharing an article from a local mortgage lender – great information, enjoy!
Phil Forbes, Vice President of Mortgage Lending
Homeowners are sitting on goldmines. Think about it. Many are equity rich. Years after the worst housing crisis in American history, homeowners who managed to buy low and hold are now in a enviable position, depending on their location.
Knowing that location is key, the hottest housing markets — San Francisco, San Jose, Manhattan — have all seen home prices soar. The downside, there are too few properties for sale. Low inventory is starting to stymie the housing market. The most recent pending home sales report was lower than expected as buyers fail to find suitable homes to purchase. The lack of new construction housing hasn’t helped.
That said, now is the time to sell. If you’re a homeowner who has outgrown your current home, list now. January is the perfect time to introduce your house to potential buyers. Not convinced? Here’s why:
- Pent-Up Demand: Buyers are clamoring for properties — paying all cash, or eliminating pesky contingencies. They want your house, or at least a house. Because so many buyers missed out on the opportunity to buy in 2015, experts are expecting a surge of buyer activity in January. If your house hits the market early next year, it will likely face less competition while giving fourth-quarter-of 2015 buyers a second chance.
- Low Inventory: There just aren’t enough houses on the market. According to the National Association of Realtors, there’s less than 5 months of available inventory. In a healthy housing market, there would be six months of inventory. That means, we’re in a seller’s market. With the upper-hand, sellers can be stern negotiators. They can set the terms — closing date, mortgage lender the buyer uses, how much earnest money they will accept — without resistance.
- High Prices: Home prices are rising faster than inflation. In fact, there are 35 housing markets that have reached new median home price peaks. Incredibly, were 20 consecutive months of single-digit price increases, according to RealtyTrac, a housing analytics company. Dallas, Houston, St. Louis, Denver, Detroit, and Atlanta have all experienced 10% median price increases. Those markets have surpassed their respective pre-recession highs.
- Higher Interest Rates: The Fed raised interest rates in December. If you list your house in early January, it’s possible you’re giving a buyer an indirect discount — if that buyer locked their rate before the hike. Knowing that their lock will expire, your buyer would probably be willing to do anything to close quickly to keep that mortgage payment exactly where they want it.
- High Equity: Sure, the California housing market is blazing hot. San Francisco homeowners who sold in October raked in a 75% profit, according to RealtyTrac. Those in Denver, 49% profit. But you don’t have to own in the hottest real estate markets for to gain. Nationally, sellers made, on average, a 17% profit when selling their home in the third quarter of the year, according to RealtyTrac.
I hope it gives you something to think about.
Philip S Forbes
Vice President of Mortgage Lending