Wednesday, September 10, 2014
A Seller's market for Homeowners
Forwarded by Bonnie Fagoh of www.tampacoastalhomes.com in Apollo Beach. A seller's market for homeowners 08-11-2014 11:35 AM Mark Burrage bylineSome good news if you are thinking about selling your house – based on supply, prices and how quickly deals are getting done, it’s a seller’s market in many areas of the country. The number of homes for sale in the U.S works out to less than six months of supply at the current rate of sales, according to the latest estimate by the National Association of Realtors. When there are more buyers than there are homes available (Figure 1), sellers typically have a better chance of getting their asking price. Inventories are exceptionally tight on the West Coast and in Texas and Louisiana. The median sales price of a home is about 5 percent more on average than a year ago, the NAR says, with the strongest gains coming in the West. And with supplies tight, homes are moving fast. More than half of sales are occurring within two months of listing, and only a small percentage of homes are still on the market after six months. Figure 1 Scales graphic.PNG One of the big reasons why housing inventories are so tight is that many would-be sellers are hesitant to hang a “For Sale” sign at the curb. In some cases, homeowners don’t want to give up the very low interest rate on their current mortgages. There’s also the worry that in a rising market they will have to pay more for their next home. If you are among those sitting on the fence, here are some factors to consider: As we discussed above, demand for homes is outstripping available supply. As a seller, this means you may have more pricing power than if supply and demand were more in balance, and it’s more likely that you will find a buyer quickly. In other words, you may have a better chance of a pleasant sales experience. The downside of a limited supply is that you may have a harder time finding your next home. You should be prepared to rent for a while to give yourself time to find the right deal. Housing prices are expected to keep rising at a moderate pace over the medium term. As the economy continues to improve and the jobless rate continues to decline, demand for homes may strengthen from the current level, so you may be able to get an even better price later. Rising prices may especially benefit those homeowners now “upside down” in their mortgages – that is, they owe more than their home is currently worth. A mortgage rate under 4 percent is a wonderful thing, and if you have that now, you shouldn’t give it up for just any old reason. That said, today’s mortgage rates are still very attractive by historical measures. They’re also likely to rise in the next year or two, so if you expect to sell and the only question is when, you should take this into account. At stake is more than just what you’ll pay on your next mortgage: Higher borrowing costs could also reduce buyer demand and thus your ability to sell. As a potential home seller, we advise that you work with a real estate agent to get a comprehensive view of conditions in your area. When it comes right down to it, the national housing market is a collection of local housing markets, each with its own unique supply and demand drivers. How you proceed (or don’t proceed) as a seller will almost certainly be shaped to some degree by those local factors.