Most consumers have no idea about current housing statistics and the market until they become involved in the purchase or sale of a home. What determines a buyers' or sellers' market? What factors influence home prices?
There are many answers to these two questions. As a consumer, being aware of a few of the most important factors will help you keep more of your money when you make the final decision to buy or to sell real estate.
Pay Attention to Interest Rates
It is common sense that obtaining a lower interest rate for a mortgage allows for a lower payment. Therefore, low interest rates make home-buying an attractive venture—and, even whispers of a rate hike can spur folks to get out into the market. We are now in a market where interest rates are slowly rising. This means it is a good time to buy.
There is always hope however. For instance in late in 2016, mortgage interest rates rose eight times in nine weeks, according to bankrate.com. Sounds rather gloomy until one understands that, post-hike, rates were still at historic lows.
The bottom line is that if you're in the market for a home and interest rates decrease or remain attractively low, it's time to get excited about the housing market.
The current economy is a key factor affecting the real estate market. When the economy is humming along, the housing market is at its most attractive. Additionally, when job growth is strong, consumer confidence rises and consumers are able to spend money on high-ticket items, such as cars, appliances, vacations and—of course—homes.
Exciting Markets for Sellers
Get excited if real estate professionals mention the words “sellers' market.” This is a period in which there are few homes for sale but buyer demand is high. During sellers' markets prices typically increase rapidly and homes sell at or above list price. Competition is fierce among buyers!
If you're one of the fortunate who has no compelling reason to sell (such as a job offer in a different town or a divorce situation), you have the luxury of choosing when to put the home on the market and a sellers’ market is a great time.
Be aware though, that one of the biggest mistakes we see in sellers' markets is the homeowner who feels that the market itself will bring top dollar for the home, regardless of condition. Homes in good condition sell the quickest and for the best price. Regardless if market conditions favor sellers, if your home isn't in move-in condition, it may be passed over by homebuyers.
In a sellers' market, however, it's more important than ever to have all your finances in order before making an offer on a property. You should know exactly how much you can spend and obtain a pre-approval letter from your lender. Make your offer stand out from others with the shortest time periods for contingencies as possible. Finally, come in with your highest and best offer. A sellers' market moves too quickly to assume the homeowner will negotiate over price.
Buying a Home This Year?
A buyers' market—when there is a large selection of homes for sale and few other buyers in the market—is a great time to purchase a home. Prices aren't rapidly rising and you won't be competing against many other buyers. These markets are more relaxed, so homebuyers can take their time deciding.
Despite the media's perception of the housing market, there is always a mix of good and bad news—depending on whether you are in the market to buy or sell. Consult with a professional real estate agent who can supply you with current and local market information and follow their advice. Then buying or selling a home in any market will be an exciting process! I have the expertise and knowledge to arm you with the knowledge to make an informed decision.