Choosing when to sell your home or even think about buying a new one can be a big decision. It shouldn’t be taken lightly. However, when it comes down to it, it’s helpful to look at the market and see where things are headed in order to make the most informed decision. Today, that means being aware of mortgage rates, which can make a big difference in how affordable homes are, and what you can actually qualify for with a lender.
So, where are mortgage rates headed?
Most people had anticipated that interest rates would rise in 2022 from their historic lows of two and one half to three percent, based on reports from the fed. However, they assumed that rates would rise slowly, throughout the year. Instead, they are rising faster than anyone anticipated. Currently, we are seeing most rates somewhere between five and one half to six percent. Many believe interest rates could be close to seven percent within the next few months, which could make a big impact on the housing market!
When is the right time to sell?
Despite the rapid rise in interest rates, right now is still an incredible time to be a seller. With so little inventory on the market, there is still high demand and most buyers are having to compete with multiple offers. Even though the days of 20-30 offers on one home might be gone for now, it doesn’t mean you can’t procure an excellent offer in a short amount of time. There are still more buyers than there are homes for sale, which makes for a seller’s market. The most recent data for King County, showed 4,150 homes for sale, with 3,557 homes pending. That’s less than half a month’s supply of inventory! Most homes are still receiving a steady amount of showings within the first few days, and many times, multiple offers are received within the first week of being on the market.
If the last time you sold a home was more than 10 years ago, there’s a lot that’s changed. Here are a few things sellers have the advantage of in this market: Buyers are typically having to waive all contingencies. This means, financing, inspection, and appraisal. Buyers are usually having to offer over the list price in order to secure a new home. Sellers are not having to offer any type of concessions regarding closing costs or pre-paid for the buyer. This can translate into tens of thousands of dollars for a seller.
The keys in this market are really about three things: 1. Pricing: this will make or break any listing. Over-pricing your home can dramatically reduce your showing activity, offers, if any, and buyers will end up punishing you, therefore offering much less than they would have if a seller had priced their home appropriately in the beginning. 2. Make sure your home is market-ready. This goes from everything to landscaping, roof & gutter cleaning, window washing, light fixtures, paint, etc. And 3. Staging & marketing. There is so much more to selling a home than putting a sign in the yard and adding your info to the MLS. Work with an experienced broker who has a great track record of marketing and listing homes for sale – AND procuring an excellent offer within a reasonable amount of time.
If you aren’t sure what you want to do after you sell, there are lots of possibilities. You may choose to downsize now that your children are out of the home. You may decide to try a whole new location, especially since many people are able to work from home now. Many think about renting while they decide what their next step is. The choice is yours.
When is the right time to buy?
Even though it is a seller’s market, it is usually always a great time to be a buyer as well! How, you may ask? Well, even in competitive markets, buyers who are able to secure a home benefit from home appreciation, tax deductions, and investing in their community and future. They are able to secure a monthly payment they can afford and are not dependent on a landlord making external decisions they cannot control. You will likely need to have a little patience as you try to find the right home, as multiple offers have been the norm. However, there is going to be a house that is perfect for you!
While waiting to buy is certainly an option, you may end up paying more with a higher interest rate which costs you more in the long run. You could even find yourself in a position where you cannot afford or qualify for the same home in 6 months as you can today, with higher rates resulting in several hundred (or more) per month added to your mortgage payment. You might find yourself having to look at homes that are much cheaper, simply because of the increase in your interest rate.
There are many options to consider in today’s market. Talking to a loan officer to determine what you qualify for is a great first step. Next, you will definitely want to reach out to an experienced real estate broker to help you to navigate your home buying needs. But overall, now really is the wisest time to buy, if you’re considering buying at all.
So, what can you do if you are thinking about taking the leap?
Now, more than ever, you need a real estate professional that you trust to help you through the home buying or selling process. Don’t hesitate to reach out so we can connect! I would be happy to discuss your options moving forward.