You may have heard a time or two recently that the housing market is looking pretty good. If you have a home to sell, you may breathe a sigh of relief to hear that the average sales price for the month of February was 9% higher THIS year than last. According to Heartland MLS, 68.1% of houses in Johnson County were sold within 90 days in the month of February. On top of solid sales numbers, interest rates are holding steady somewhere around 4.5%. You have heard me talk about “moving up” before, with interest rates staying put (for now) and the home prices on the rise, you have potential to find equity in your new home in addition to the extra space that you have been wanting. So the $300,000 question is…Is NOW the RIGHT time for ME?
1. Do You Have Equity?
The price of any item (including residential real estate) is determined by the simple economic theory of ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases. The current inventory in our market is tight. According to the National Association of Realtors (NAR), the supply of homes for sale dramatically increases every summer. Putting your home on the market now instead of waiting for the increased competition of the summer might make a lot of sense. Sellers in some areas are receiving multiple offers and frustrated Buyer’s Agents are clamoring to get the scoop on hot new listings which leaves you in an excellent place to negotiate.
So will this market work for you? Equity is the answer. At one point in time, most found themselves a little upside down on what they owe vs. what the market says it was worth. If you have been in your home for a few years and have been able to recoup that loss then it may be something to consider. If you are ready to downsize, and you have equity, this is your time to shine. Which brings me to the next question…
2. Does Your House Still “Fit”?
Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates are still below 5%. There is no way to predict the future. However, you look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait.
Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down and taking a mortgage of $360,000). By waiting, their house appreciated by 13.8% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $341,400. But, the $400,000 home would now be worth $455,200 (requiring a mortgage of $409,680).
Here is a table showing what additional monthly cost would be incurred by waiting:
So back to the question of, does it fit? If you feel the walls closing in or if you are ready to downsize, sooner rather than later is the way to go, wouldn’t you say?
3. Is When to Move a Factor?
Summer is one of the most common times to move for one BIG reason. Sure most people would rather move in sunshine than in -10 and snow, but the most common reason given is that the Summer months are the least disruptive for schedules. The kids are out of school, most people will schedule a vacation (or 2) over the summer months, so why not? For those with children, if a move involves a change in schools it is easiest to begin when everyone else is also returning. If you have a pretty flexible schedule and schools are not a priority, the lower inventory of the Fall or Winter seasons may net you more proceeds if you are still working toward building equity.
When you are ready to list with me, I would be happy to provide you with a Custom Home Analysis to answer any questions you have as to whether the timing is just right. I will give you a little hint…in my professional opinion. If you even have a thought about selling right now, you should really entertain the idea. I’m here to help you through every step of the way!
Happy Spring Market!
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Sara Van Allen is a Licensed Realtor in the state of Kansas with Keller Williams Realty Partners, Inc. Each Office is Independently Owned and Operated.
Graphics and Statistics from Heartland Multiple Listing Service and Keeping Current Matters