Is now a good time to sell my home?
While it’s an easy decision if you’re a Smyrna Vinings home buyer right now, it’s a little more complicated for sellers. Many homeowners are still underwater, so it makes selling your home difficult. In the Smyrna Vinings market, prices have been slowly increasing since last Summer. So while you can sell for more than you could the past couple years, expect to see prices rise further.
Coming into 2012, we had just about 7 months worth of inventory in both single family home and in the condo/townhome market. Months of inventory is a metric that we use to gauge the health of the market and six months of inventory has always been used as that happy medium between a buyers and a sellers market.
As inventory continued to shrink during 2012, demand was certainly outpacing supply. If you think back to your high school economics class, what happens to price when demand exceeds supply? Prices go up.
One could argue that the prices in a natural market would go up quicker based on the demand we have seen since last Summer, but banks and appraisers certainly don't want a recurrence of the real estate mess that we are recovering from right now. They're being very conservative in valuations.
As we have dropped from seven months to six, then five, then four it became apparent that a lot of buyers have figured out that it is indeed not just a good time to buy, but a great time to buy. At the same time, it’s also obvious that a lot of homeowners still aren’t ready to sell.
In reality, if you are downsizing, it probably makes sense to wait for further market recovery before selling your home. However, if you are a move-up homebuyer, then the numbers would say that now is time to make that move.
As a move-up homebuyer, you may be taking a loss on your current home, but you’re also able to purchase a larger home at a depressed price as well. And as your $200,000 house appreciates 10% over the next couple years, so too will the $400,000 house. Would you rather hang around waiting for the $20,000 increase in the value of your home so you can pay $40,000 more for the next home?
And if you factor in interest rates, it becomes even more of a no-brainer. If you’ve owned your home for awhile, you’re likely paying at least 5% interest rate. While you could refinance again and reduce that rate, you would be paying closing costs on a new loan that you likely only want to keep for a couple more years. Instead, if you go ahead and sell the current home and buy the new one you can lock in around 3.5-3.75% for 30 years. So not only have you saved yourself on the value of the new home, but you also have a much lower house payment going forward.
With the ability to lock in a 30-year loan for 3.5% interest rate, money is cheap. But the big albatross in the room is certainly interest rates. Buyers have been able to take advantage of phenomenal home rates over the past few years. But just a slight increase in rates, will have a big impact on affordability. We're clearly migrating from a period of low interest rates and the only direction we're heading is up. So with prices still great and phenomenal rates, but with pressure on both to move upwards, there really is no better time to buy than right now.
So when you decide you're ready to sell your home and buy your next home, make sure you are ready and well verse on the process. You'll need to be pre-approved and be working with a local market expert.
We are the Smyrna Vinings experts and our team is ready to assist. Contact us today to schedule your consultation where we'll prep you for the process and walk you through all the steps to selling your home and buying a new one in today’s market.