What poses a greater risk: acting on the known or waiting on the unknown? It’s a fundamental question facing many would-be buyers and sellers today. Sitting on the sidelines was a no-brainer in the turmoil following the housing crash. Now, the bigger gamble could be staying there.
After all, looking down the road a year, no one knows for sure where prices and interest rates will be; how stepped up foreclosure activity will affect supply; or what the broader economy will be doing. What is known is the market today, and that market has many positives. In fact, we believe now is an opportune time for both buyers and sellers to be in the market. Here are three reasons why.
Low Interest Rates – Buyers and sellers should be paying at least as much attention to interest rates as prices. Today’s record low rates are making homes more affordable for buyers and keeping the buyer pool deep for sellers. A significant uptick in rates could have a far more serious effect on the market than a drop in prices.
Rising Prices – Home prices are finally rising. That’s great news. However, there are a number of variables that could pull prices back down in the short term. Would-be sellers waiting on significant price improvement over the next couple of years should think about this: many economists are predicting gradual price appreciation; some are predicting further depreciation; none are predicting a sudden and pronounced increase. Anyone holding out for that scenario is in for a long wait.
Low Supply – Supply is at its lowest level in years…so low in fact, that in some places, technically, it’s a seller’s market. But supply isn’t likely to remain this low forever. Foreclosure activity is up significantly since banks lifted their moratorium, and many new foreclosures will soon hit the market. If these listings can be absorbed, and prices continue to rise, more sellers will jump in, keeping a floor under supply. If you’re a seller, you want to get your home on the market ahead of this wave.
Compared with the last several years, market conditions today are pretty good. Hopefully, they’ll continue to improve. A good strategy is looking at known variables, such as interest rates, pricing and supply, and coming up with a plan to accomplish your objectives.
If you’ve been on the sidelines, it’s time to get back in the action. Call or e-mail me to talk about your real estate needs. And remember, I always appreciate your referrals.