Best Time Of Year To Sell A House
During the last quarter of 2018, reports show more housing inventory coming on the market and a slow down in the pace of homebuyers. Now that we are in 2019,
Over the last several years, national home values increased by more than 6% annually. A home worth $300,000 at the start of the year would be worth $318,000 at the end of the same year. A $6,000 difference in just under 12 months!
However, that appreciation rate will slow down in 2019 due to the rising interest rates. The rate of appreciation dropped from 6% to 5% by year’s
This doesn’t mean that home prices will depreciate, only that the pace of appreciation will slow down.
The highest demand is coming from Millennials entering the market looking for their first home purchase. So long as interest rates remain attractive, these buyers will remain out in force as they have done for the past 18-24 months and counting.
Multiple offers in the $150-$250K range are common nationwide and even in secondary markets (smaller cities). Read, “Cat Fight! Home Buyers Forced To Bid On Multiple Homes“.
However, that is likely to change if interest rates continue to rise at the same pace next year.
More inventory means more options. First American’s Chief Economist, explained that this is good news for the housing market – especially for those looking to buy:
“The continued year-over-year growth in completions means more homes on the market in the short-term, offering some immediate relief in alleviating housing supply shortages.”Mark Fleming, First American Chief Economist
What does this mean for home sellers? More inventory equals more competition working against you when you list your home for sale.
As long as housing inventory remains below the normal six months level, you can expect:
- A great price as buyers outbid each other.
- A quick sale since today’s buyers are better prepared.
- Fewer hassles as buyers don’t want to “rock the boat” on the deal.
Competition Is Still Low…But Not For Long
Inventory, that is the number of homes for sale at any given time, is improving but still below normal. Spring 2018, the home buying season started with a dismal 4.1-month inventory supply. Well below the 6 months supply needed for a healthy housing market and 6.1% lower than 2017 inventory levels. Competition among home buyers was fierce.
At the beginning of 2018, inventory was below the three-month level. As of September, it has steadily improved but still under the normal six months worth of inventory needed for a normal housing market.
Certainly good news for homeowners who have benefited from home appreciation rates and are looking to cash in for a housing upgrade. Typically, homeowners move every five to seven years but since 2011 homeowners are staying much longer, nine or ten years.
New Builds Are A Market Indicator
The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of building permits issued in June 2018 was 850,000, a 0.8% increase from May.
Homebuilders are struggling to keep up with demand and not able to fill the gap last year but that will likely change going into next Spring and Summer buying season.
As such, the choices homebuyer’s will have will continue to grow. Don’t make the mistake of waiting for this new inventory to arrive on the market before deciding to sell.
Rising Interest Rates
Interest rates are still relatively low for homebuyers but that’s already begun to change. In August 2018 we saw rates climb for the third time this year to 4.65% with yet another possible hike by year’s end.
Interest rates are on an upward track now and projected to hit 6% by late 2019. As they climb, more homebuyers, especially first-time homebuyers, will begin to drop out of the market unable to afford the payments.
This will naturally have a dampening effect on the housing market and slowing down home appreciation rates and leveling off home prices. Below is a chart created using Freddie Mac’s U.S. Economic & Housing Market Outlook. As you can see below, interest rates are projected to increase steadily over the next 12 months.
If your next purchase will be into a premium or luxury home, now is your window of opportunity. In sharp contrast to the starter and mid-range home market which saw low inventory and high demand, the luxury market is seeing the exact opposite.
Last year we saw a large influx of luxury homes for sale trying to take advantage of the 2018 6% home appreciation rate. The abundance of inventory in the luxury home market a “buyer’s market”.
Anyone looking to trade up from their current starter home will be able to sell quickly and still have plenty of premium and luxury homes to choose from for their next purchase. Luxury home prices are projected to appreciate 5.1% through 2019.
If you’re moving to a higher-priced home, given that interest rates will likely continue to rise in 2019, there’s little doubt that waiting will put a bigger dent in your wallet, which will be reflected in your down payment and monthly mortgage payments next year.
In A Nutshell
Make no mistake, home buyers are still out there. Those that weren’t able to secure a home last year are still searching aggressively. They are highly motivated and well-prepared to lock a home under contract before the next interest rate hike. Check out, “How I Got It Sold In 6 Days“.
Therefore, given all the facts presented here, there’s little doubt that the best time of year to sell your house is prior to the Spring/Summer market. Since new listings typically flood the market right around April, listing earlier in February or
The more homes that buyers have to choose from this Spring/Summer, the longer it will take to find a buyer for your home. More homes for sale equals more competition for you and lower home prices than last year.
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