Whether you’re a potential homebuyer or considering selling your home, you may be asking yourself, “Is it a good time to buy or sell?” The market is hot with low mortgage rates, rising house prices, and a shortage of properties for sale.
Why is this happening in the housing market?
Many of these factors are a result of the pandemic. For instance, mortgage rates dropped to record low percentages in March 2020. This made it easier for people to afford a house, but with fewer houses, the prices went up and by January 2021, home prices rose by an astounding 11.2% (S&P CoreLogic Case-Shiller national home price index).
Erwin Zacarias, Community Development Officer Manager, recently spoke about the real estate market and mentioned that during the pandemic, buyers got more comfortable bidding on houses that they’ve never seen – especially in popular areas. This caused the average time in the market to reach a record low, and a large percentage of homes are selling above the listing price. And some homeowners didn’t list their homes because of the uncertainty of the pandemic, which meant fewer houses were on the market.
What should I think about if I’m buying or selling a house?
If you’re thinking about buying or selling a house, consider these factors:
Potential sellers:
- The housing market conditions benefit sellers. There are fewer homes on the market, so buyers don’t have many options. This means sellers have more control over prices and you can list your home at a higher price.
- Erwin further emphasized that most buyers are bidding between $20,000-40,000 more than the asking price. That means your home will likely sell above the listing price.
- Make a plan for where you will live if your house sells. Chances are your house will not be on the market very long, and you might end up in the same competitive pool as other potential buyers, needing to bid high for your home.
Potential homebuyers:
- Record low mortgage rates have caused many first-time homeowners to take advantage of the opportunity to buy. Stay competitive with other buyers, and get preapproved for your loan so you can see what you can afford and view available loan options. And use a mortgage calculator to estimate what you might expect for your monthly payments. Many real estate agents require preapprovals before you begin your house search. Most preapprovals last 90 days; many are having to renew their preapproval because it’s difficult to buy.
- It’s vital to find a trustworthy real estate agent who can help get you inside information on upcoming listings or even help set up a time to look at a listing before it’s listed.
- With the shortage of homes, be prepared to compete for your dream house. You should anticipate making a large down payment.
What if I want to wait to sell?
- If you’re waiting to sell your home, equity will most likely continue to increase through 2021 because of the low rates and high demand.
- Take this time to plan any renovations you may want to make. Consider a home equity line of credit to help finance the project and raise your home equity through renovations to make your home more valuable as you sell later.
- Consider refinancing your home, since rates are at a record low. You can save some money by refinancing at a lower rate.