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Read the news, and you'll hear that it's a seller's market. But is that sentiment really spot-on? According to the December 2020 Fannie Mae (OTCMKTS: FNMA) Home Purchase Sentiment Index, only 50% of respondents think it's a good time to sell a home. By contrast, 52% think it's a good time to buy.
If you own an investment property you're looking to unload, or if you're a regular homeowner wondering if it pays to sell, the reality is that now's actually a pretty decent time to list a home, even if 50% of people don't agree. Here are three reasons why.
1. Mortgage rates are super low
Mortgage rates have been sitting at or near record lows since the summer. As of Jan. 22, the average rate for a 30-year fixed loan is 2.839%. For a 15-year fixed loan, the average rate is 2.296%. These rates won't last forever, and rates have already begun to slowly but surely creep upward over the past three weeks. As such, buyers may be really eager to scoop properties off the market now -- while rates are still attractive and before they climb any higher. That means you, as a seller, stand to come out ahead.
2. There's not much competition
Your home may not be the most updated in the neighborhood, but if it's only one of several properties available in your ZIP code, there's a good chance it will sell anyway. In December 2020, housing inventory decreased 39.6% year over year on a national level. That takes a lot of pressure off of sellers to put perfect properties up on the market. It also gives you, as a seller, more negotiating power. In fact, low housing inventory has been fueling bidding wars, which can hurt buyers but work to sellers' benefit.
3. Home values have skyrocketed
In December 2020, the median listed home price was $340,000, which represents a 13.4% increase from a year prior. Home values are high right now, so if you list yours, there's a good chance you'll command top dollar. This especially holds true if your home is in decent shape, with no obvious flaws. And if there are flaws to address, you can always fix them. Chances are, you'll recoup some, if not most, of the money you're forced to spend in the form of a higher asking price.
What's the right move for you?
There are plenty of good reasons to list a home right now, despite lackluster seller sentiment. But if you're enjoying a steady stream of rental income from your investment property, you may not want to give that up, despite the potential for a quick sale and a higher asking price.
If you're thinking of selling a home you currently live in, you'll need to ask yourself where you'll go once your home moves off the market. Buying another home may be an option, but just as you'll probably get to command a higher price than usual for your property, so too will you then need to pay a premium for a replacement home. Weigh your options carefully, because while selling today could work out well for you, in some cases, it could also leave you in a tough spot.
The "Unfair Advantages" of Real Estate Just Got a Whole Lot Better
Investing in real estate has always been one of the most effective paths to financial independence. That's because it offers incredible returns and even more incredible tax breaks.
These benefits weren't enough for Uncle Sam, though, as a new tax loophole now allows those prudent investors who act today to lock in decades of tax-free returns. We've put together a comprehensive tax guide that details how you can benefit from this once-in-a-generation investment opportunity. Simply click here to get your free copy.