Author: Seth Pfaehler

The Big Advantage If You Sell This Spring

Thinking about selling your house? If you’ve been waiting for the right time, it could be now while the supply of homes for sale is so low. HousingWire shares:

“. . . the big question is whether we are finally starting to see the seasonal spring increase in inventory. The answer is no, because active listings fell to a new low last week for 2023 . . .”

The National Association of Realtors (NAR) confirms today’s housing inventory is low by looking at the months’ supply of homes on the market. In a balanced market, about a six-month supply is needed. Anything lower is a sellers’ market. And today, the number is much lower:

“Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.”

Why Does Low Inventory Make It a Good Time To Sell?

The less inventory there is on the market when you sell, the less competition you’re likely to face from other sellers. That means your house will get more attention from the buyers looking for a home this spring. And since there are significantly more buyers in the market than there are homes for sale, you could even receive more than one offer on your house. Multiple offers are on the rise again (see graph below):

If you get more than one offer on your house, it becomes a bidding war between buyers – and that means you have greater leverage to sell on your terms. But if you want to maximize the opportunity for a bidding war to spark, be sure to lean on your expert real estate advisor. While we’re still in a strong sellers’ market, it isn’t the frenzy we saw a couple of years ago, and today’s buyers are focused on the houses with the greatest appeal. Clare Trapasso, Executive News Editor at Realtor.com, explains:

“Well-priced, move-in ready homes with curb appeal in desirable areas are still receiving multiple offers and selling for over the asking price in many parts of the country. So, this spring, it’s especially important for sellers to make their homes as attractive as possible to appeal to as many buyers as possible.”

Homebuyer Activity Shows Signs of Warming Up for Spring

The spring season appears to be warming up in housing as more and more buyers enter the market. And after rising mortgage rates sidelined so many buyers last year, that’s a good sign for sellers. Realtor.com has the latest:

“Spring is officially here, and like green shoots emerging from the bleak winter, new data suggests that more buyers are back in the market, although more subdued compared to a year ago.”

We know buyer activity is trending up because of mortgage purchase application data. According to Investopedia:

“A mortgage application is a document submitted to a lender when you apply for a mortgage to purchase real estate.”

That means the number of mortgage applications shows how many buyers are applying for mortgages. Put another way, an increase in mortgage applications means an increase in buyer demand – and as Joel Kan, VP and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains, application activity started ramping up as mortgage rates fell steadily in March:

“Application activity increased as mortgage rates declined . . . recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”

In fact, we can see how mortgage rates have a direct impact on applications over time. As rates rose dramatically last year, applications fell in response (see graph below):

The recent uptick in mortgage applications, as well as the decline in mortgage rates, is good news for sellers because it means more buyers are actively looking for homes.

What This Means for You

Buyers are coming this spring, which is typically the busiest time of the year in real estate. And as Realtor.com tells us, if you’re a seller, you need to prepare:

“If homeowners are planning to sell in 2023, now is the time to get ready.”

The means working with a local real estate agent to maximize your home’s appeal and get it listed at the ideal price for your area.

The Key Advantage of Investing in a Home [INFOGRAPHIC]

Trying To Buy a Home? Hang in There.

We’re still in a sellers’ market. And if you’re looking to buy a home, that means you’re likely facing some unique challenges, like difficulty finding a home and volatile mortgage rates. But keep in mind, there are some benefits to being a buyer in today’s market that give you good reason to stick with your search. Here are a few of them.

Long-Term Benefits Outweigh Short-Term Challenges

Owning a home grows your net worth – and since building that wealth takes time, it makes sense to start as soon as you can. If you wait to buy and keep renting, you’ll miss out on those monthly housing payments going toward your home equity. Freddie Mac puts it this way:

“Homeownership not only builds a sense of pride and accomplishment, but it’s also an important step toward achieving long-term financial stability.”

The key there is long-term because the financial benefits homeownership provides, like home value appreciation and equity, grow over time. Those benefits are worth the short-term challenges today’s sellers’ market presents.

Mortgage Rates Are Constantly Changing

Mortgage rates have been hovering around 6.5% over the last several months. However, as Sam Khater, Chief Economist at Freddie Mac, notes, they’ve been coming down some recently:

“Economic uncertainty continues to bring mortgage rates down. Over the last several weeks, declining rates have brought borrowers back to the market . . .”

Lower mortgage rates improve your purchasing power when you buy, and that can help make homeownership more affordable. Hannah Jones, Economic Data Analyst at realtor.com, explains:

“As we move into the spring buying season, mortgage rates have ticked lower, a welcomed sign of progress towards affordability.”

The recent drop in mortgage rates is good news if you couldn’t afford to buy a home when they peaked.

Home Prices Will Increase

According to the Home Price Expectation Survey, which polls over 100 real estate experts, home values will go up steadily over the next few years after a slight decline this year (see graph below):

Rising home prices in the coming years means two things for you as a buyer:

Waiting to buy a home could mean it’ll become more expensive to do so.
Buying now means the value of your home, and your net worth, will likely grow over time.