It's safe to say most homeowners want a fast sale that yields top dollar when it comes time to sell their home. This hasn't been hard for sellers to accomplish over the past year and a half, thanks to a housing shortage fueling a red-hot real estate market. But it appears the tables could be turning. As we enter what is traditionally one of the best times to sell a home, sales are starting to slow. And as these three charts will show you, there are several reasons right now may be the best time to sell your home.
Image source: Getty Images.
1. Spring makes moving easier
Image source: First American Data & Analytics.
Year over year, the season consistently affects the housing market sales and prices. Demand dips in fall and winter and then spikes again in spring and summer. Warmer climates certainly make home tours and open houses more pleasurable than trudging out in a winter storm, but spring and summer also mark a break for summer, making moves easier for young families.
Homeowners wanting to take advantage of this trend and benefit from more buyers in the marketplace, which can lead to faster sales or higher prices, should aim to list their homes in mid to late spring. Take time at the start of spring to get your home listing ready. Spring cleaning can go a long way!
2. Mortgage rates are climbing
Image source: St. Louis FED.
Mortgage rates have increased dramatically over the last month, and they're likely to keep rising. The Federal Reserve has indicated they intend to continue increasing the federal funds rate in the coming months to combat today's rising inflation. The increase in this rate will, in turn, push mortgage rates higher, making housing less affordable.
Even a one percentage point increase in mortgage rates can lead to substantially higher costs in a monthly mortgage, leading to a decrease in demand for homes as homebuyers get priced out of the market. But rates could likely go much higher.
The last time inflation reached today's levels, mortgage rates went as high as 17.5% for a 30-year mortgage. Many buyers are aware of this relationship and are looking to lock in the current rates before they go up any further, which could lead to a short spike in sales activity before heading toward a steady decline.
3. Housing demand is expected to peak
Image source: Zillow.
Zillow is predicting a continued increase in home values and sales through the month of May, topping out around 22%. After which, they anticipate a slow slide back down to below 18% by spring next year. By selling at the start of spring or early summer, you could increase your chance of getting top dollar in a seller's market before the overall market cools off.
Going, going, gone
With all this evidence in support of catching top dollar this spring, it is important to remember that individual markets will have varying demands at play. Certain markets could see continued growth from above-average demand or low inventory. No one knows for certain how high mortgage rates may go, how the inflation rates will play out in the coming years, or whether demand will shift as employers begin to require employees to come back into the office.
We like to emphasize looking at your long-term goals and objectives rather than trying to play the day-trader game for not only stocks but also real estate. These three charts indicate that spring 2022 is an ideal time to sell, but always make sure the overall picture fits your needs. If it does, you might just end up making a pretty penny by locking in your home's appreciation over the past few years.
